Sometimes personal debt can become overwhelming. However, there are many options available to people who want to reduce or eliminate debt. Following a plan can help you get debt-free over time.
Debt Consolidation
Debt consolidation can move debt from high-interest credit cards to one low-interest rate loan. When you consolidate your credit cards, you also replace multiple sets of service charges and administration fees with one manageable fee. You can consolidate your debts on your own by using a personal loan, a home-equity loan or you could refinance your home for a lower interest rate and get additional money to pay off your credit cards as well. There are also debt consolidation organizations available to help you. With the money you will save from consolidation, you can apply extra money to the payments of your other debts.
Monthly Budget
Some people find themselves in financial trouble simply because they do not take the time to organize a monthly budget. Gather your bills and list them out on ppaer or a spreadsheet. Record the due date of each bill and the minimum payment due. Remember to include such one-time bills as book club payments or doctor's bills. Total your bills and then compare that number to your monthly revenue. Now you know how much you have to spend on expenses such as food and gasoline. You can use this information to develop a monthly entertainment budget, and apply any extra funds to paying off your debt.
Debt Negotiation
You can also negotiate with credit card companies for a lower payoff amount that can fit into your monthly budget. You may need to agree to cancel the account, but a negotiated payoff can save you money on interest and principal payments, and help you pull yourself out of debt. Call your creditors and explain your situation. Then tell them that you would like to negotiate a payoff amount that is less than what you currently owe. In many cases, your creditors will work with you to put together a program you can afford. If you do not want to close your accounts, then contact your creditors and ask them to lower your interest rate. If your current credit card interest rates are higher than 12 percent, then ask the credit card companies to lower your rate to no more than12 percent. Tell the company you would be willing to transfer your business to a credit card company that will lower your rate. In many cases, your rate will be lowered and you will save money on interest payments.
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