The downturn in the economy has caused millions of Americans to lose their jobs, their homes and their savings. It's also caused many to reevaluate their finances. The result is that for the first time in decades, consumers are paying down debt faster than ever before. Luckily, regardless of your financial position, there is plenty of free help available.
The National Foundation for Credit Counseling
Take advantage of the National Foundation for Credit Counseling's free one-hour budget consultation. The NFCC's counselors undergo a rigorous training program and will review your finances thoroughly, making suggestions where needed. If you are over your head in debt, need housing assistance or even bankruptcy advice, the counselors can assist you. Further consultations may be subject to a $55 fee. If necessary, a counselor may intervene with your creditors to stop collection calls and can put you in a payment plan so you can eliminate your debts; this program may also have a small fee.
Debt Management Plans
A counselor may suggest a debt management plan, in which the consumer makes one payment to the counseling agency, who distributes it to creditors on the consumer's behalf. Interest rates, fees, and payments are often lowered, and debts are paid in full within five years. Counselors can also arrange to have the account appear as "current" on credit reports. In exchange, the accounts are closed.
Note that participation in a debt management plan may affect your credit rating, so use caution if you need to apply for a loan in the near future. However, participation in such a plan is far better than having late or missed payments.
Do It Yourself
Management your own debt by making a list of your creditors, including the balances, interest rates, minimum payments and telephone numbers. Call each creditor and ask that it lower your interest rates -- representatives are often authorized to make changes like this easily. If possible, maintain your payments, even if the minimum payment is lowered -- this will reduce your principal even faster.
Free Debt Reduction Calculators
The website Vertex 42 offers a free debt "snowball" reduction calculator. In a snowball plan, the consumer applies every spare dollar toward paying off the highest interest rate loan first, while only paying the minimums of the other debts. Once the first loan is repaid, that payment is applied to the next highest rate loan. The consumer continues in this fashion until all of the debts are repaid.
Use the website's free calculator to see how long it will take to get completely free of your debt. Although paying debt is not instantly gratifying, watching the balances go down each month is satisfying.
Tip
The key to managing any debt payoff program is not to run up any new balances while you are paying off the old. Discipline equals success.
0 comments:
Post a Comment