For man of us, credit card debt eats up more than half of our monthly expenses. There are several options for people who are in debt, including debt consolidation agencies.
A Few Tricks To Reducing Debt
If you want to try it on your own, here are a few tricks of the trade. Begin by evaluating your current debt. This is sometimes a painful process and one that many have put off far too long, however, if you truly want to get out of debt, it is important to have an accurate picture of where you are currently.
Write down the balances for each account, with the amount due each month and the interest rate. Be sure to include credit cards, car loans, payday loans and any personal loans. In addition, make a notation of the annual fees charged by credit cards.
What About Mortgage And Student Loans?
You probably will not want to include your home mortgage or student loans right now. The terms on these loans include long terms and low interest rates, so put your focus on the higher interest loans first. If the amount of debt discovered is overwhelming, you may need to consider seeking help from professional debt counselors. After collecting debt information, you will need to consider your monthly budget. This involves putting on paper your monthly income after the taxes are deducted and subtracting the cost of housing, utilities, insurance, childcare, student loans and groceries.
No do the math to see what is left for paying off debts. If there is not enough money, consider reducing spending. This could include dropping cable subscriptions, taking a brown bag lunch to work or carpooling to cut back spending. The more you can pay toward the debt on a monthly basis, the sooner your debts will be paid in full.
The next step is to make a plan to reduce your debt. Use every available penny to pay off the highest interest rate debt first. At the same time, continue to make minimum payments on all the other accounts. Once the first debt is paid in full, move to the next highest debt.
While the system may seem strange, it will quickly reduce debt. Avoid use of credit cards as you attempt to pay off the debt and take steps to pay more each month. At the same time you are following the repayment plan, contact those to whom you owe money and ask for help. It may be possible to lower interest rates just by asking. In other cases, you might even be able to negotiate a settlement amount through the customer service department.
Debts And Collections
Debts that are already in collections or charged off are often the easiest to negotiate. In some cases, it is helpful to transfer a high interest credit card balance to one that offers a zero percent introductory rate.
For the best credit rating keep all card balances at 35 percent or less of the card limit. In addition, consider a consolidation loan.
Stay Consistent With Your Payments
Each month it is important that you do your very best to meet the goals for payment. Even if the amount that is paid toward the most expensive debt varies monthly, be sure that your are consistently putting as much of your income as possible toward debt reduction.
For some people, an automated payment system works best. Others need the reward of personally writing the debt reduction check monthly and watching the debt grow smaller. Take time to celebrate each time you reach a major milestone.
Stick To Your Plan To Succeed
Most people that find themselves deep in debt and in need of debt reduction did not get there overnight. In most cases, getting out of debt may take time. However, if you have a plan and stick to it, you will be able to overcome the challenge. If the debts you face are simply too overwhelming for you to attempt debt reduction on your own, you may need the help of professional credit repair companies.