Deal With Your Debts
The biggest decision of the whole debt cycle is facing up to the problem and dealing with it, the longer you leave it and deny its existence the worse it gets. You have debts, and now you need to do something about it in order to control it.
It doesn’t matter whether you are in deep in financial difficulties, or you have only just stopped yourself from falling into the pit of debt trouble, you are at a point in your life where you need to stop your debts from taking over your and the only way to do this I’m afraid, is to, let your debts to take over your life – for a little while that is.
It is important that you continue on with your regular life, but to enable you to live debt free in the future you will have to give in to your debts and get rid of them as soon as possible. To do this there a number of different options available to you, more than can be covered in one article.
It is more than likely that getting rid of your debts sooner rather than later is the preferred option. If you want to deal with your debt, fast, you will be able to do so, but you will need to cut back on some things in order for this to happen. This will involve commitment, dedication and knowing what to economize on.
To start you will need to get a pen, piece of paper, all your debts. What you will need to do is put down on a piece of paper all your debts and put them in order of the smallest to the largest. This puts all your debts as a monetary value in one place, From here you can lay out a payment plan base on your available budget. The idea is you pay each debt its minimum monthly payment every month, while concentrating on one debt till its paid. This is done by paying off the minimum payment every month plus some extra to get the debt paid sooner, when paid off this money is used to pay the next one off, creating a snowball effect. Below are a few options available to you
* Pay off your debts one by one, in an orderly manner
* Use the snowball method to pay off your debts
* Talk things over with your creditors to be able to pay off your debts in any which way that you can
* Debt consolidation and pay it off with only one smaller payment
* You also have the option of considering bankruptcy as a way to deal with your debts – but this should not be your first choice!
There are of course other ways to deal with your debts which are not, strictly speaking, dealing with the debts you have accrued now, but instead deals with debts which you might accrue in the future.
This might sound silly now, but the truth of the matter is that after you manage to extract yourself from the pile of debts you are under right now, you will have to think about the future, and ways and means of keeping yourself debt free in the future so that you don’t become mired in the same situation once again.
* Controlling your spending – this means no impulse buying!
* Staying away from the temptation of credit cards
* Practicing better economy in your life
* Trying to better yourself and find a higher paying job
* Keeping track of your spending – basically you keep to a budget
* Learning to recognize the signs when you might be going off track again
* Getting your family involved in the whole thing so that they too can help – this not only spreads the burden from your shoulders to others, but it really does help if you can share your troubles with somebody else
Like with any financial undertaking, a professional opinion based on your circumstances is the best way to proceed, as the financial world is continually changing to offer new products and money management.
Debt Reduction Options
Millions of individuals are deep in debt and experiencing much difficulty meeting their monthly financial obligations. Well, I can assure you that issuers of credit cards are not experiencing the financial difficulties many Americans are. As a matter of fact, take a look at the following profits earned by credit card companies:
Profits earned by credit card issuers from interest charged to consumers during the year 2015 totaled $90.1 billion.
Profits earned by credit card issuers from fees charged to credit card holders during the year 2015 totaled $55.2 billion.
It’s no wonder credit card issuers earned such astronomical amounts of money; after all, if a debtor (consumer) happens to make a late payment – in many cases just by one day – they’re penalized with skyrocketing interest rates and uncalled-for late fees. This practice, which many consider the equivalent of legal loan sharking, is wreaking financial havoc on many households already struggling financially.
If you’re frustrated because you’ve been charged these insane fees, it’s time to take a long hard look at your finances and decide what options are available and will best assist you in becoming free from debt.
Debt Consolidation – Debt consolidation is utilized by good intentioned individuals who want to do the right thing by paying off their credit card debt and obtaining a loan for the entire balance owed to their credit card companies. If your credit is decent, and you have sufficient equity in your home, you may qualify for a home equity loan or line of credit. This will enable you to reduce the amount of interest you pay, and you’ll only be responsible for one monthly payment, as opposed to making numerous payments to your various creditors. Most financial experts aren’t fond of debt consolidation loans due to the fact that you’re putting your home equity on the line and many people who consolidate their debt end up charging their credit cards up all over again, only to find that they owe all of their credit card companies, as well as the bank who funded their home equity loan.
Consumer Credit Counseling – This may be the right choice for you if your job is secure and you’re able to commit to a long-term payment arrangement. Consumer Credit counseling agencies will work with your creditors to negotiate reduced interest rates on your credit card accounts. You will then make one monthly payment to the consumer credit counseling firm, and they’ll in turn distribute the agreed-upon monthly payments to your various creditors. Unlike bankruptcy or debt settlement you’ll continue to be liable for paying the entire balance owed over a number of years, but as stated, if you can realistically commit to a long term payment arrangement consumer credit counseling may the path that best meets your needs.
Bankruptcy – Most individuals who resort to bankruptcy only do so because they have no choice. You see, most people want to avoid a bankruptcy filing due to the long-term consequences, as well as the fact that bankruptcy is a matter of public record. If you’re considering bankruptcy, it’s best to weigh all of your options prior to actually filing. If you find that you’re unable to obtain sufficient funding for debt consolidation or debt settlement, and you cannot realistically afford a repayment plan, be certain to hire a bankruptcy attorney with whom you’re comfortable.
Debt Settlement – Debt settlement is the process whereby individuals (or a debt settlement firm hired to represent them) negotiate with their creditors to accept less than the full balance, as payment in full. Normally creditors will agree to settle your outstanding debt for 50% or less, either in one lump sum payment, or 4-6 installment payments. Debt settlement is best used by people who simply can no longer afford to pay their monthly bills, or are reluctant to commit to a long term repayment schedule due to unforeseen circumstances. Debt settlement has assisted many individuals and business that otherwise would have had no choice but to file for bankruptcy.
Prior to making a final decision regarding your path to financial freedom, be sure to educate yourself in the areas of all of your options so that you’re comfortable with your decision, and certain it is the right choice for you.