Credit and Debt Relief Solutions

Debt does not open the door to your dreams and desires. Instead, it can cause a nightmarish financial situation that can take several years to eliminate. Credit and debt relief solutions involve more than just making a phone call. You also need discipline, will power, a commitment and the courage to admit you need help. With strategic planning and addressing the issues behind problem spending, you can find a long-lasting solution to your debt.

Calling Credit Card Companies

While credit card companies may seem like the enemy with high interest rates and annual fees, they can be sympathetic to those facing financial hardships. If you are experiencing a loss of income or more debt than your monthly income can cover, you may find it worthwhile to call your credit card companies to see if they offer assistance programs. Many major credit card companies offer lower monthly payments and a reduced interest rate for six months or more.

Budgeting

Budgeting is the process of allocating your monthly income to avoid spending more money than you earn. Create a budget by calculating how much essential items cost, such as housing payments, utility bills, debt payments, insurance, health care and groceries. With the leftover money, assign different amounts to nonessential items, such as eating out for dinner. A wise choice to make with leftover income is to place some of it into a savings account or use it to pay off debt faster. Additionally, do not rely on credit cards to help with any expenses. Pay cash for everything so you can see your debts begin to shrink.

Paying Off Small Debts

Some financial experts may recommend that you tackle your largest debts or those with the highest interest rates first. Dave Ramsey, a financial expert, states that you should focus on eliminating your smallest debts first. By adding more money to your monthly payment, you will pay off your smallest debts faster. Consequently, you will have more money to apply to your larger debts once you eliminate the smaller ones, which will help you find relief sooner.

Credit Counseling

The Federal Trade Commission (FTC) states that those who have trouble creating a budget or managing money should consider credit counseling to find credit and debt relief. A good credit counseling program uses trained and licensed individuals who help clients create a budget, develop money management skills, control spending and eliminate debt. Some credit counseling offer complimentary workshops for clients or the public on topics such as saving money or staying out of debt.