Learn to Eliminate Debt and Reduce Your Debts. Last Updated: July 1. Have you taken on more debt than you can handle? Thousands of Americans are in the same boat, with many of them defaulting on loans, losing their homes and cars, and some even filing bankruptcy. It doesn't matter how much money you make, if you can't live within your means, you will become a slave to your creditors. This article is by no means a comprehensive treatise on financial planning, but rather a list of strategies you can use to start eliminating and reducing your debt. Why Are You in Debt? Money is a powerful force that can destroy you if you let it. You have to learn to control your money instead of letting it control you. If you don't, you'll never get out of debt and will continue to dig a deeper hole. Be brutally honest with yourself and really examine the reasons why you are in debt. Credit Card Debt Elimination Programs CreditWe are not referring to financial conditions which may be beyond your control, but about the times when you let the lure of shiny new toys control you. Ask yourself the following questions - and be honest in your response! Do you buy stuff to mask your own insecurities? Confused by Debt Resolution Options? Get Unbiased Credit Card Debt Advice to Find Honest Debt Settlement Programs, Credit Counselors, and Bankruptcy. Credit Card Debt Elimination Programs ScamMany parents today are finding out that their kids have racked up thousands in credit card debt. Often it was to float tuition payments and associated school expenses. Debt Elimination Plus Video Link. Click Here if the Above Video Doesn't Play Automatically for You. Creating Wealth through Debt Reduction How to Do Away With All DEBT. One of the most frequent issues that readers contact me about is more information about a debt reduction or debt elimination program that they heard about on the. Seek Real Methods of Credit Card Debt Elimination. You may have seen ads that promise you can use personal grants to pay off debts. Grants are monetary gifts that do. Advantage CCS offers consumer credit counseling, debt management, bankruptcy counseling and financial education. We can help you get out of debt. Unlike many other debt consolidation companies, No Debt Today provides you with a free consultation along with a professional overview of your debt problems. In the aftermath of the Great Recession, Americans battered by job loss, foreclosure, and plummeting home values tightened their belts and paid down debt. Welcome to ' Consumer Finance Report ', Dedicated to Mortgage Refinance, Debt Relief, and Bad Credit Loan Options.a website dedicated to providing meaningful. Are you using money and buying things as a way to comfort yourself? Do you feel you have to compete financially with your friends, neighbors, or family members? Are you trying to impress someone? Otherwise, it's like treating cancer with a Band- Aid. You might even consider psychological counseling for your money difficulties. How Much Debt Do You Have? It is important you be fully aware of how much debt you actually have no matter how painful it is to closely scrutinize this aspect of your finances. Take a sheet of paper, write down the amounts of all your debts and total them. Keep this total amount fixed in your mind. It's been said that pain and pleasure are powerful motivators. If the image and/or idea of all that debt is causing you enough pain, the theory is that you will take aggressive measures to change your behavior and start on the elimination path. How to Eliminate or Reduce Your Debt. Put Away Your Credit Cards. Put away your credit cards and make a commitment not use them. If you don't think you can kept the pact you've just made with yourself, give them to a friend or relative to hold. Or better yet, cut them up. The thing you don't want to do is cancel or close your accounts. Closing accounts that are old (6. If you have some extra money at the end of the month, put that extra money on the loan with the highest interest rate. By making a dent on the principle owed, it will lower the amount of interest you will pay on that money which will in turn save you money in the long run. According to a study done by a consumer behaviorist at the Olin Business School at Washington University in St. Louis, people really like closing accounts. That is, they will close a small debt account that has a low interest rate at the expense of paying down a larger loan with a higher interest rate. Throughout a series of debt- management experiments, the researchers found that participants consistently paid off small debts first, even though the larger debts had higher interest rates. In fact, no participant in their study used their cash to pay off the loan with the highest interest rate. Bottom line, paying off your highest interest rate credit card first will shave months off your debt. With your other debts, continue paying just the minimum. After you finish paying off your highest interest rate card, move on to the next highest interest rate card. Roll over the amount you paid each month from your first card to pay off this one. Don't be tempted to use the money elsewhere - stay disciplined. Continue this strategy until all your debts are paid. Contact Your Credit Card Company. If you find yourself unable to pay your bills on time, communicate with your creditors. Ask them to reduce your payments or the interest rate. Tell them you plan to pay off the debt. The worst thing you can do is not communicate. They may assume you are unwilling to pay your bills and get nasty. Transfer Balance to a Lower Interest Card. If you can, try to obtain a lower interest credit card and then transfer the balance of the high interest card to that one. Make sure to read the fine print when making this transfer. Sometimes the wording of these low interest cards sounds good at first until you really dig down to the nitty gritty and read the fine print of the contract. Sometimes these low to zero interest credit cards are only available to those with good to excellent credit. If you have not been late on your payments and think your credit may be pretty good, give it a shot. Also, some offer introductory rates of 0% and then jack it up to 1. Try to stick with a card that starts off with a low interest rate that does not increase. Borrow Against a Life Insurance Policy. One way to get out from under this enormous amount of credit card debt is to find some other sources of money from which you can borrow or withdraw. A great source may be a life insurance policy with cash value you can borrow against. We know, you are still borrowing money to pay off borrowed money, but the interest rate on the life insurance policy will be far lower than what you are paying the credit card company. Pay off the card with the highest interest rate and then you can make payments back to the life policy. Negotiate a Better Interest Rate with Your Creditor. If you cannot get a lower rate card and you do not have any other means to get some additional funds, try negotiating a better interest rate with the credit card company. Let them know about your situation and tell them that if they do not work out some new terms with you, you may have no choice but to file for Chapter 7 bankruptcy. More often than not, a creditor would rather work out a deal with their customer than to completely lose the entire account. Roll Your Debts into a Second Mortgage. If you own your home, you might consider a debt consolidation loan. This kind of loan is a second mortgage on your property which allows you to consolidate your debts into one payment. Some loan programs require no equity or appraisal. You can use this loan to consolidate credit card bills, car payments, or any other bills. Interest on this loan may be fully tax deductible depending upon your situation. Consult your tax advisor. As with any home loan, this is a lien on your property. If you sell your home, you must pay off both your first. In addition, although you may be making lower monthly payments, you may be paying for a longer time period than if you paid off each individual debt. Consider Consumer Credit Counseling. Make an appointment to see a credit counselor. You should be able to find a free service in your area that will help negotiate payments with your creditors, and give you good financial advice. You can find one on this site: NFCC. They'll give you a fresh perspective on your financial burden, and help you realize you're not the only one dealing with debt. They'll also be candid with you and tell you whether or not you should consider bankruptcy as an option. How to Live Debt Free. Now that you've reviewed some of the personal reasons you've found yourself in debt, and taken some drastic measures to attack your debt, it's time to develop a plan to determine where all your money is going, and develop a healthy financial strategy. You must be able to account for every penny you spend each month. Don't worry, you won't have to cut your spending yet. Here's a simple method to develop a plan which may fit your comfort zone. Step 1. Take a sheet of paper, and write . On one side, list all your relatively fixed expenses (mortgage/rent, telephone, electric, water, gas, car, credit card minimums, etc.) Better yet, if you have a smart phone, there are tons applications online you can download to track your expenses and make a budget. A nice thing about using a smart phone is that you always have it with you. Step 2. Now comes the tough part. You must estimate how much you spend on various expenses like food, eating out, entertainment, stuff for the house, school, clothing, car repair, gasoline, etc. If you have old receipts, you can use them as a guide for real expenses. Step 3. Track all your expenditures for one month. At month's end, total each category, and you'll know exactly how much you spend on everything. If you're not using a smart phone application, you'll need to carry your budget notebook where you go. Carry this notebook with you wherever you go. Be very detailed on your categories. For example, one category might be . If you don't know where your money is going, how can you expect to control it? After you've totaled your categories, transfer them and their respective expense totals to your Master Budget spreadsheet. Step 4. List your take home income after taxes on your Master Budget. You might want to develop different budgets based on your pay periods. Should you pay the phone bill on the first of the month, or would it be better to pay it later in the month? You may find one pay period has a tighter budget than the other because you have to pay the bigger bills like your mortgage, rent, or car payment at the beginning of each month. Some lenders will let you change the payment date - this might be a good way to space out your large payments. Step 5. Now the challenge begins. Balance your income and expense categories, so you stay within your budget. Leave yourself a $2. Take a long hard look at your expenses and see how you can reduce them. Why not only spend $1. You may be shocked to realize how much you spend on little things. For example, if you spend $2 per day on gourmet coffee, you spend $4. Why not buy a nice coffee maker, and make your own, or at least have coffee out only once or twice a week? You'll have to play around with the amounts you set for your expenses categories. You don't want to completely cut out your fun. Otherwise, you'll give up on your budget completely. Cut back a fair amount, and see how it feels.
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