Falling into debt is easy, climbing out of it is much harder. However, the sooner you take action to deal with your debt, the easier it will be to tackle. Short of filing for bankruptcy, which has a long-term negative impact on your credit score, you can use a series of financial tools to get your debt under control.
Budgets
One of the simplest and most effective ways to tackle your debt, or avoid falling into debt in the first place, is a household budget. Simply by tracking how much money you spend over the course of a month or a year you may be able to identify places where you can afford to cut back or note where your debt actually comes from. A budget should also include a detailed account of your income so you can balance what you earn with what you owe.
Calculators
Many financial websites offer debt calculators, which are simple programs that allow you to analyze your debt and compare options for paying it back. One type of calculator is a credit card debt calculator; it allows you to enter your interest rate and balance, and tells you how long it will take to pay off the card based on how much you pay each month. Mortgage calculators compute how much your monthly bill will be if you refinance your debt with one of several available options.
Credit Counseling Agencies
Credit counseling agencies are nonprofit groups that the major credit card companies fund to help customers deal with debt. If credit card debt is a major source of your debt problems, consider contacting one of these agencies. They will negotiate with your creditors on your behalf after examining your financial situation. The goal is to find a payment you can afford, not to eliminate your debt completely.
New Loans
Depending on the extent of your debt and what types of accounts you have, the best tool for reducing your debt might actually be a new loan. Loan consolidation involves getting a single, large loan that you can use to pay off all of your existing debts. This will eliminate future late fees and keep your interest charges at a more manageable level. Loan consolidation means a single monthly bill instead of calls and letters from a long list of creditors.
0 comments:
Post a Comment