People who spend more than they earn often find themselves in debt, sometimes heavily. On average, a United States consumer has 13 credit accounts recorded at the credit bureau; nine of these are credit card accounts, the remaining being installment obligations. As of the end of 2008, the average outstanding obligation of every household from credit cards alone was $10,679. There are strategies you can employ to try to reduce your debts or otherwise eliminate them altogether.
Debt Elimination
With the recession, it is no wonder many people default in their payments, nor is it surprising that people are looking for ways to eliminate or reduce their existing obligations.
Debt elimination is the process of arranging for the possible settlement of your obligations quickly so you can stop paying the excessive interests charged on such loans.
Strategies to Eliminate Debts
Draw up a budget and adhere to it. It is important that, once and for all, you examine where your income is going and into what type of expenditures.
Stop using credit cards, especially while you're in financial crisis. Resist buying items on impulse.
If possible, pay more than the minimum required on your monthly credit card bill. This will speed up the debt elimination process. If you cannot pay more than the minimum, pay the minimum.
If you have two or more credit cards, use the snowball technique, giving priority to extra payments to the card with the smallest account. As soon as this card is paid off, apply the available amount to the next, then to the next, until all the card accounts are settled.
Try negotiating with your creditors for a lower interest. Some creditors understand what it means to be in a fix and may agree to your request.
Avail yourself of a balance transfer to a different credit card, but first know which card company is charging the lower interest.
If you have obligations other than in credit cards, and you have some properties, consider a debt consolidation program.
Considerations
If you have missed payments on several accounts already, take a look at some formal debt settlement programs, debt management programs or, as a last resort, a bankruptcy proceeding.
In reality, you need not even look at any formal debt elimination arrangements to be debt-free. All that is needed is a firm resolve to eliminate debts, reduce your spending, increase your earnings and live within your means.
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