Drug testing

How to Reduce Your Debt in 5 Easy Steps

If you have incurred substantial personal debt, consider these options: budgeting, debt consolidation, credit counselling from a reputable organization and working with your creditors. You will need to choose a debt reduction method that will work best for you? The method you use will depend on your level of debt, how much spare money you have, your level of discipline, and how quickly you want to get out of debt.

1. REALISTIC BUDGETING

The first step towards taking control of your financial situation is to do a realistic assessment of your income and expenditure. Work out how much you earn (your total income) and write this figure down. Then total your expenses. This is how much you spend each month for rent, fuel, food, clothing, heating, water, electricity and other bills. The difference between your total income and your total expenses is the amount of money available to pay your creditors or lenders.

Decide if there are any monthly expenses that you can reduce or live without. Focus on lowering your expenses so that you can increase your income. You'll be amazed at how many things you can do without.

a) Debt Reduction Methods

Choose a debt reduction method that fits your situation and gives the maximum benefit. You could choose to focus on repaying debts that are most important to your credit rating or to maintaining your family's safety. Or you can start by paying off those debts with the highest interest rate thus reducing the total spent on interest charges and increasing the amount available to pay off debt.

Alternatively, you could focus on paying off bills with the lowest balances. Then the money used for those payments can go to pay off other debts.

If your credit payments (excluding mortgages) exceed 15-20% of your take home pay, you can work with creditors to set up monthly instalments that are more in line with your income.

b) Credit Cards

Transfer your credit card debts (balance) to a card offering an introductory 0% interest rate for balance transfers. Make sure you keep up the repayments and then just before your 0% introductory offer is up, apply for another 0% card, transfer the balance over before you starting paying interest ? and repeat. With a good credit record, you could do this for years, moving your debt from one card to another until it's paid off.

3. DEBT CONSOLIDATION

This is when you use a new loan to pay off multiple debts. Your monthly payment will be lower because repayment is spread out over a longer period of time. This will usually eliminate the hassle of having multiple creditors, multiple bills, and multiple payments to make. It's very important not to take out any additional loans until your consolidation loan has been repaid. Borrowing against your home is a cheap way to raise money, but it's risky. If you can't make the payments - or if your payments are late - you could lose your home.

However, you could replace expensive debts with a cheaper personal loan (unsecured loan). Before taking on new debts, you might want to check out your credit history.

4. CREDIT COUNSELING

Some people are not disciplined enough to create a workable budget and stick to it. If you can't work out a repayment plan with your creditors and you can't keep track of mounting bills, consider contacting a credit counselling organization or a financial advisor. In the UK you can use free debt counselling services such as the Consumer Credit Counselling, the National Debtline and the Citizens Advice Bureau. Similar services are available in the US.

5. CONTACTING YOUR CREDITORS

A creditor is a company or person to whom you owe money. Many people struggling financially ignore debts and fear contacting their creditors. This reaction will damage your credit record. Creditors or lenders may take action against you in an effort to get payment. If you're finding it hard to get your bills paid, be the one to contact creditors. They will be more willing to work with you. Work out arrangements that satisfy you both. Explain to each lender that you aim to repay each debt in full over time, but that they must accept reduced repayments for now. Decide how much you can pay them each month and set up a debt repayment plan.

Conclusion If you're serious about reducing your debt you should stop spending on your credit cards and stop taking out new loans. To increase your income, consider finding a second job or a lodger. Claim every state benefit that you qualify for and work on cutting down your expenses. Sell stuff that you don't need on eBay or at Car Boot fairs. Put enough money aside for emergencies, but use the bulk of your savings to pay off debt. Debts usually cost you far more in interest than you gain on your savings. Also, if you have a fairly good credit record, you should transfer your debts to cheaper lenders. Finally, shop around for better deals for services and products that you use.

Disclaimer: This article does not constitute financial advice. If you require such advice, you should seek appropriate professional guidance.

Copyright ? 2005. Chileshe Mwape writes for Debt Consolidation Loans UK: http://www.best-debt-consolidation-loan.co.uk/ . Visit our site to consolidate debts and apply for a loan online.

This article may be reprinted as long as all the above links are active and clickable.

limousine chicago service
In The News:

Bankruptcy - Is It The Right Choice For You?

Bankruptcy is one of the tougher choices we as adults... Read More

Debt Reduction, a Necessary Endeavour

Massive debt is something many Americans face. Debt reduction is... Read More

Bank Like a Banker

The business of banking has changed dramatically over the last... Read More

Individual Voluntary Arrangements- A New Alternative to Bankruptcy

This May, the Department of Trade and Industry in the... Read More

Bankruptcy Reform

There are some new bankruptcy laws going into effect before... Read More

Debt

We all know about debt. If you don't have too... Read More

Selecting A Credit Counselor; Asking The Right Questions.

When you find yourself thinking about using a credit counseling... Read More

Is There A Way Out Of Your Debt Problems?

Do you have multiple debts? Do you have just one... Read More

The Last Debt Solution Should Be Bankruptcy

A debt solution like bankruptcy should really only be used... Read More

The 7 Secrets to Getting?and Staying?Out of Debt

As vice president of the American Credit Foundation, a nonprofit... Read More

Is Filing for Bankruptcy an Option for You?

Bankruptcy laws give debtors a way to resolve debt by... Read More

New Bankruptcy Law Will Not Protect You from Identity Theft

Recently passed by Congress with overwhelming support, the oddly-named Bankruptcy... Read More

A Debt Elimination Process Must Be Initiated From You.

The first and maybe most important step in a debt... Read More

Reducing Debt Before Its Too Late - How to Avoid the Pitfalls of Creeping Debt

Reducing debt usually isn't a high priority for people until... Read More

Life After Debt ? Strategies for Dealing with Problem Debt

Honorably and ethically rid yourself of burdensome debts using the... Read More

Bankruptcy ? Bankruptcy Myths

Bankruptcy has long been a big question mark in the... Read More

Five Major Ways to Save Money

There are two main roads to improving your personal finances:... Read More

New Bankruptcy Law Makes it Harder to Stop Foreclosure

On October 17, 2005 President Bush's sweeping bankruptcy reform law... Read More

Life on a Debt Management Program

Signing up for a debt management program is easy; it's... Read More

Corporate Debt Management ? Perspective on the Why

Entrepreneurs have a tough time in their formative years. They... Read More

Start Small and Your Wealth Will Get Bigger

We've all heard the phrase, "You have to start somewhere."... Read More

Debt Collectors: Men or Mice?

Who are these people anyway? They viciously harass you and... Read More

Why You Should Get Out of Debt Today?

The main reason for getting out of debt today, is... Read More

What Does A Bankruptcy Trustee Do?

Once you file bankruptcy a court appointed bankruptcy trustee will... Read More

Yes to Less Debt

Feeling stressed by the amount of debts you have? Three... Read More

induction light bulb street lights design Pete's produce ..