Steps to Reduce your debt

2007-03-08 10:33:40

( Financial )



If you want to reduce debt you must first learn how much debt you owe and start listing and tracking all your debts. Jot down the amount, minimum monthly payment, and the interest rate you’re paying. Assess your situation, prioritize your debt and create a smart repayment plan. If you have secured property, deal with these creditors first.

Reduce debt by creating a budget for yourself and sticking to that budget. A finance software can help you track your spending and make comparisons with your budget. One debt buster solution is to commit to a day, week, or month when you will not spend your money on anything. During this period you will not see any movies, buy gifts, eat out or buy new clothes and shoes. This will help you get out of debt faster by increasing your savings and giving you the resources to reduce debt faster by paying more than the minimum each month.

Call the credit card companies and negotiate for lower interest and lower monthly payments. Call your other creditors and ask for a grace period or lower monthly payments. One option you should be wary of is getting a personal loan or a new card with a lower interest rate than your current loan. This do-it-yourself debt consolidation program only works if you are sure you can make regular payments on this new loan to ensure that the interest charges will not be increased.Also, low interest charges on this new card are valid only for a period thereby making this type of debt consolidation loan option very risky.

It is more prudent to ask for help from a debt consolidation service company to develop a plan for you and prevent you from sinking further into debt. However, be very cautious when getting a debt consolidation loan since the total payments may be higher than what you are paying right now but is masked by the convenience of just paying one account instead of paying several loans on different schedules. Seek advice from several debt consolidation service companies to make sure you are getting the best debt buster deal.

Increase your financial literacy by reading debt buster articles in the library or the internet.It is never too late to manage your money wisely, reduce debt and gain financial freedom.


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