How Do I Get Out of Debt: Saving Yourself From The Financial Blackhole

2007-03-08 10:33:40

( Financial )



So you ask: How do I get out of debt?

Firstly, acknowledge and assess your debt. Evaluate and chart your monthly bills and statements. Once you figured the scale of your debt, you can devise an appropriate action.

Creating a budget and identifying all your earning resources is a starting solution. List all your expenses, no matter how small. With that, you’ll be able to track your spending habits and prioritize your payments.

If your debts are too much to handle, there are debt consolidation loans to consider. Debt consolidation is combining your multiple loans into one loan with longer and lower payment schemes, thereby increasing your credit and giving you a chance to control your finances. This is best for credit card bills since credit card companies charge higher interests.

On the negative side, it may just offer a temporary solution, and size up your loans instead of downsizing it, hurting your chances of getting out of debt – especially for those who have a problem with over spending. Once you can’t follow through your payments, your home could risk repossession.

There are a lot of debt consolidation scams going on, so be sure to check their credentials. Take time to research for a reputable company for good track records and reasonable interest rates through your local consumer agencies. Take note of hidden fees and consolidation bills, and make sure their counselors are fully certified and can answers your questions up front.

It’s best to consult with a finance professional and calculate all charges from your accounts before anything else, because even if debt consolidation programs have extensive services to fit many needs, they may not be for you or for your financial position.

Be your own debt buster, whether you choose to join a debt consolidation program or not. Create a "How do I get out of debt" journal, where you can write specific goals and keep track of your loans.

Increase your income – take on a second job or sell assets. Lessen your expenses like conserving your utilities. Have a savings account as your rainy day money. Set aside 3%-10% of your income and place them in the highest earning placements possible.

Most importantly, change your buying habits. Know why and how you shop. Seek professional help if necessary.

With a little self discipline, hard work and support from family and friends, you’ll never be asking, "How do I get out of debt?" again.


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