Take Charge of your Debt! How to Own Your Debt, and Finally Pay it Off
Saturday, February 7, 2015, 6:00 AM | Leave Comment
With the recent economic upheaval, there are a significant number of people who have found themselves in an exceptional amount of debt. Additionally, many of these people have encountered an immense amount of difficulty in their attempts to effectively manage and eliminate their debt.
If you are one of these individuals, take heart in the fact that you can make 2015 the year that you take charge of your debt!
While there is no quick fix, if you are willing to put in the time, effort, and discipline to paying off your debt, you can take back control over your finances.
-
After Budgeting, Negotiate
The first thing that you should do is perform a financial analysis of their current financial situation. This means to evaluate all revenue streams, expenses and assets.
Once you have a panoramic view of your financial situation, you can prepare an itemized spending plan or budget that will allow you to gain control over you finances — helping to relieve debt in the process.
A lot of people are aware of the process of preparing a functional budget; however, there are many who are not aware of their ability to negotiate lower rates and overall debt with their creditors.
After establishing a budget, the person should contact their creditors and negotiate lower interest rates on their debt as well as negotiate a reduced number on their total debt.
This highly effective with certain types of debt, such as medical bills.
-
Consolidate Your Debt Obligations
Having the capacity to merge multiple loans and credit card debt into one loan can make debt easier to manage.
It can also reduce the aggregate total of the debt owed, when the interest rate is less than on the initial loans.
It is wise to consolidate student loans in a manner that offers the lowest possible interest rate, since interest rates are what usually buries students in the long run.
Transferring debt to a low-rate card is another option that should be considered.
There are certain credit card companies that offer a zero-percent teaser for balance transfers, which is a great opportunity to move high-rate debt into a lower interest bracket.
-
Prioritize Payments
There are those instances in which a person may not have the income revenue to pay all of their debts each month.
When this is the case, it is important to prioritize the manner in which debt is paid.
Most experts recommend keeping current debt that is secured, such as home mortgages and auto loans.
They also recommend granting high priority to debts that are considered necessities, such as utilities and other debts that cannot be discharged like federal taxes and student loans.
In addition to prioritization, it is also important to develop an effective method for addressing credit card debt.
A person can extend the time it will take to pay off their credit card debt by more than half by only paying the minimum.
By increasing the minimum monthly payments to 10 percent of the total debt, you can drastically reduce the amount of time it would take to completely pay off the debt and the total payoff cost, depending on the interest rate.
-
Seek Professional Assistance
Debt problems can quickly become convoluted and frustrating; however, acquiring the assistance of a professional debt counselor can provide you with the help that is necessary to systematically alleviate the weighted burden of exorbitant debt.
A debt counselor can help create an effective spending plan, while negotiating with your lenders.
-
The Last Resort
As a very last resort, there will be some people who will have to file for personal bankruptcy under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code.
Although some people consider this to be the financial form of a nuclear alternative, many experts say that when the bankruptcy is managed correctly, it can provide the opportunity and relief necessary for a person to stabilize their financial situation. In fact, it may be the only viable option.
Debt can be an overwhelming force; however, breaking it down into manageable sections can help alleviate a great deal of the anxiety, allowing for an easy and highly effective management.
Throw us a like at Facebook.com/doable.financeAUTHOR BIO
This article was written by Dixie Somers, a freelance writer who loves to write for business, finance, and women’s interests. She lives in Arizona with her husband and three beautiful daughters. Dixie got advice for this article from the professionals at Power Finance Texas who offer cash advance services.
