Are you trying to get out of debt? Have you run out of money? If so, you’re not alone. Millions of people in this country are struggling to pay off their debts. The average household credit card debt in the U.S. is $15,191. Student loan debt stands at $33,607.
Over 33 percent of the total amount of consumer debt is revolving debt. Every year, less than two million Americans seek the help of a credit counseling agency to avoid bankruptcy in Toronto or Las Vegas. Is it possible to get rid of debt and gain financial freedom?
Problem Many People Deal With Every Month
Debt is a problem that many families must deal with every month. Overdue bills or emergency expenses can start to negatively affect credit while also draining away income. Dealing with debt is a process that requires some determination, planning, and budgeting. Five methods are available that will help families to become debt-free.
Debt is a huge problem throughout the world. Unfortunately, people are starting to get in serious debt much earlier in life than they did years ago. Many credit card companies go to college campuses and encourage students to sign up. It usually does not take long for the purchases to begin.
Very soon afterward, they are only paying the minimum balance each month and are firmly entrenched in a cycle of debt that is difficult to get out of. The following tips will help you to dig your way out of the debt you have accumulated. If you stick with it, you can have the debt-free life you have always dreamed of:
1. Contact a financial expert
If you have major debt that exceeds $10,000, you could greatly benefit from the help of a professional financial advisor. These people are specially trained to help people in the exact position you are currently in.
They will look at all of your debt and all of your income to devise a strategy that allows you to stay on your feet and begin to pay off your debt at the same time.
2. Reduce your credit cards
It goes without saying that more credit cards mean more debt. While having more than one credit card is acceptable, having many will not do you much good. Once you have paid off debts, you should start canceling credit cards and resist from opening more.
Keep that one you’ve had the longest or that have the best rewards system for you, and get rid of the others. The fewer credit cards you have, the easier it is to stay out of debt and track your spending.
3. Take a good look at your spending
Make a list of all your expenditures every month. Which ones are essential and which ones need to go? If you are seriously in debt, perhaps paying over $100 per month for satellite TV is a little silly. It may be necessary to cut back on eating out, going to the movies or buying extra clothes. Find out where you are spending the most money, and make adjustments as needed.
4. Do not borrow any more money
There are many car dealerships and other businesses that will still work with you if you have bad credit or no credit at all. Do not be tempted by these places. Stop taking out home equity loans, cash advances, car loans and anything else that will only keep you in debt. Focus on paying your debts first before creating new ones.
5. Pay in cash
You might be used to pulling out your plastic every time you make a purchase, but that is probably what got you into debt in the first place. You must start to only pay for things in cash. If you don’t have enough cash, forget about it and move on.
6. Always pay more than the minimum
Credit card companies love it when you only pay the minimum payment. This is how they keep people in debt. Pay as much as you possibly can to prevent getting slammed with interest fees.
7. Analyze Your Budget
Assess your budget and set realistic goals for getting out of debt. Determine its interest rate and then try to figure out how much you have left to pay off. Decide which debts you’re going to tackle first. Set up a weekly budget and put money aside for paying off what you owe, and look for expenses coming up and create an emergency fund.
8. Limit Your Daily Expenses
If you want to become debt-free without going insane, make small lifestyle changes to save money in the long term. For example, you can stop buying coffee from the store and brew your own cup of joe in the morning. Hold off on buying luxury products for a while like your hair and face creams.
Use discount coupons and vouchers to make savings. Cook your own food and stop going out for lunch or dinner. Of course, you can spend a night out once in a while, but don’t make a habit out of it.
9. Freeze Your Credit Cards
Stop using your credit card to make it to the next paycheck. Put the card in a drawer and forget about it. If you keep using it, then paying off your debt is going to be next to impossible. Use cash every time you go shopping and make sure you have lists ready to remedy any impulse spending.
10. Seek Help from a Credit Counselor
A credit counselor or a Harris & Partners Inc bankruptcy firm can show you the best ways to reduce debt. The counseling agency will analyze your budget and expenses, create a plan, and consolidate your debts. The earlier you can get to a credit expert, the better.
Make sure you choose a reputable company that has the experience needed to help you get rid of debt. It’s important to hire a counselor who specializes in consumer credit, money, and debt management. Ask about their fees before signing a contract. Some of the best credit counseling services are free, so it’s worth shopping around.
Getting out of debt is possible with small changes and better money management. It’s important to seek the help of financial experts if you feel overwhelmed with your debt and don’t know where to start.
11. Financial or Credit Counseling
Households in serious debt will want to meet with a financial or credit counselor. These professionals can look at every aspect of the debt and the household income in order to determine a plan that will pay down overdue bills and loans. Some professionals even provide credit repair services that will work to improve credit scores so that the family can borrow again in the future. Credit counseling services are an important first step when trying to become debt-free.
12. Raise Extra Money
Another way to become debt-free is to find ways to raise extra money every month. This could mean working longer hours or taking a second job temporarily. Families can sometimes raise money by selling extra possessions or furniture. The extra money raised can be used to pay down overdue debts and stop late fees or penalties.
13. Talk To Creditors
Some individuals might be able to negotiate with creditors. Negotiating with credit card companies or utility providers could result in a plan that allows the debt to be repaid without consuming all income every month. Some creditors might even be willing to forgive part of the debt in exchange for a single lump-sum payment.
14. Reduce Spending
Families who are dealing with debt will want to reduce spending as much as possible. Canceling expensive services like premium cable television will make more money available to repay debts every month. It might also be possible to reduce spending on entertainment, gas, and clothes. Reducing monthly spending will go a long way towards repaying debt quickly.
15. Transfer Credit Card Debt
This is a quick and easy way to reduce the amount of debt you owe on your credit card and sometimes to even freeze or reduce interest.
Basically, all you are going to do is to shop around for another credit card and one that offers you better rates or the same rates with an incentive for switching (such as 0% interest for the first few months/year).
The credit cards here want your business which is why they are willing to buy your debt off of your current credit card company and why they are willing to offer these incentives to you to switch.
For you, this means that at the very least you will have reduced or frozen your interest for a short period of time and that’s worth doing when you’re deep in debt.
16. Pay Off a Chunk
If you are in debt then you will likely be trying to save as much money as possible and that means paying back the minimum you can as slowly as possible. This though is a big mistake, as it means you will be essentially increasing the total you have to pay back.
What makes much more sense then is to try and fight harder to get out of debt – which might mean paying a big chunk and living uncomfortably for a while, or which might mean selling something to raise the funds.
17. Debt Management
Debt management means getting a professional to help you with your financial problems. This is highly worthwhile if you are struggling to improve your situation on your own and using the help of a professional you can greatly improve the various issues particular to your situation that might be contributing to your struggle that otherwise could go unnoticed.
18. Debt Consolidation
A final option for some households is debt consolidation. This involves getting a loan for all of the debt owed and then paying off everything at once with the loan. The only debt left afterward is the new loan. This can reduce expensive late fees and immediately restore the family to financial stability. Debt consolidation is not for everyone, however, since it is necessary to qualify for a loan.
Sometimes consolidating your loans can help you to reduce the overall amount you owe. Basically, loan consolidation means that you use one company to pay off all your existing loans and then you owe just that company the money for those loans.
In short, you are taking out one large loan to pay off lots of smaller ones, which will, in turn, mean you only have one loan to pay back and one date to remember.
This makes it easier to remember and organize your loan repayments, but more importantly, if you choose your loan consolidation well you can also save yourself a lot of money if the total APR is now lower than it was previously.
Just ensure that you will be paying less in total and not more overall as you will in some cases – shop around for various options and see which benefits you most.
Families who are working to become debt-free must take steps to avoid accumulating overwhelming debt in the future. This often means creating a budget that includes limits on monthly expenses and some amount for savings. Saving money for emergencies and following a budget will help to keep the household debt-free.
It’s not impossible to get out of debt, and saving money doesn’t have to make you neurotic. Just pay attention and have a plan ready to go. You’ll be financially free in no time.
Tips To Avoid Getting Over Your Head In Debt
Excessive debt takes away financial freedom. Those with debt cannot take vacations. Their retirement accounts suffer. They can find certain jobs out of reach when prospective employers call for a credit check. The worst part of debt comes when a debtor is no longer able to pay off all of their outstanding debt. Here are some tips to avoid drowning in debt.
Stay at Home
This tip can be taken in a couple of different ways. Those who are always on their way to and fro spending money on entertainment with their friends will find it difficult to avoid debt if they do not have a large amount of money coming in on a regular basis.
Additionally, some younger adults will be well served by continuing to live at home for a few months or years while working to build up a bit of a nest egg. This nest egg will be beneficial in avoiding getting into excessive debt.
Pay for School
One of the largest debts that many adults have today is related to higher education. A degree can definitely improve job prospects after graduation. The unemployment rate for college graduates is much lower than it is for those who do not have a degree.
A college degree can cost tens of thousands, and many students choose to take out student loans to pay the bills. Working while in school to avoid having to take out loans that are quite so onerous is a good move for those who can swing the busyness.
Set a Budget
This common-sense move is not followed by a large segment of society. Those who do not know their monthly balance of income vs. expenses will have trouble staying out of debt. A budget can allow one to trim the fat out of their finances. Additionally, setting up a monthly amount for savings can help avoid emergency debt.
Use Credit Cards Sparingly
Credit cards can be a major source of debt for people. The interest rates on these conveniences can be quite high. Those who are unable to pay their bills each month might have to contact a bankruptcy firm like Abakhan & Associates Inc., and no one wants to fall into bankruptcy. Therefore, it is important to use cards sparingly and judiciously.
Debt can strangle a family or a business. It is never easy to have to turn to the option of corporate restructuring in BC. While some debt like an affordable mortgage can actually save money over renting, most debt is of little benefit. These tips can help people avoid getting in over their heads and preserve their credit.
Five Tips for Resolving Debt Woes Once and For All
One of the worst things about being in debt is the feeling that the effort to regain fiscal soundness is an endless struggle. That kind of negative feeling only makes getting your financial act together that much harder, as negativity only generates more negativity.
What you want is to have the sense that you are resolving your debt woes once and for all, and here are five ways to make that happen:
1. Know Your Rights
You are not powerless in your struggle against debt. You have rights as a debtor and consumer, but you have to know what they are. Contact the U.S. Federal Trade Commission for information about your rights. Your state attorney general can also send you material on what your rights are under the laws of your particular state.
2. Be Aware
Sometimes people try to avoid the stress of debt by pretending it doesn’t exist. They toss collection letters in the trash unopened and refuse to talk on the phone. This is a disastrous policy because in the long run it only makes your problems worse. The longer you do nothing, the more the situation shifts in favor of the people you owe.
3. Don’t Talk Too Much
Just as you don’t want to hide from your creditors, neither do you want to make it too easy for them to go after you. Choose carefully the information you give out, preferably with the help of someone with experience in debt resolution.
4. Keep Records
Never assume that an accurate record of what you owe and what you have paid exists “somewhere.” The only certain protection you have that your financial situation is being presented accurately is if you have the documents to back it up.
5. Use Certified Mail
Don’t let the lame excuse that “the material you mailed us got lost in the mail” derail your fiscal recovery. For the crucial documents and exchanges you send by mail, it is worth the extra expense for the peace of mind of knowing that it actually got where it needed to.
How To Reduce Your Debts Using Financial Apps
Isn’t it weird to use apps (in smartphones) as a medium to clear off your debts? Of course, it is not strange but true. You can brief all your debts on your mobile phone and it guides on what should be done next. This job is done by finance apps that are present in your smartphones today.
It’s only the apps related to finance makes you rid of the debt problems as they design all the dues with interest added and show you the exact amount that you have to pay to clear the loans. This not only summarises the total but also directs you to make quick payments by recommending several possibilities.
All the present-day smartphones (iPhone, Samsung Galaxy S3, Sony Xperia Ray, HTC Sensation XE, etc.) constitute financial apps namely,
- Pay off debt: This is a paid android app. This employs a fiscal ploy called the ‘debt snowball’ which grabs the debt loan starting from greater interest or low balance rates. This pays off the amount in full as per the convenience. Once the debt is cleared, it comes to the list and selects the second debt that has to be paid. It follows this rule of the payment in a structured manner and often prompts the user about the pending dues by reminders.
- Expenditure: it’s a unique app that keeps a record of all your purchases and expenses. You can also take pictures of the receipts of your consumptions. This gives your credit transaction details individually. It categorizes your outgoings with time and date updated. This also records regular spending.
- Mint.com – personal finance: This app has an atypical way of abstracting all the accounts like credit & debit cards, bank accounts, PayPal, etc. on to a figure which lets you know how much exactly you owe and save to manage your needs. It’s a free app for Android and iPhone.
- Money strands: This is an easy-to-use and explicable app employing graphs and statistics of the disbursements. It gives an idea of your consistent expenditure and thus you can minimize your spending habits. It reminds the user about the latest payments and lists dealers you regularly visit.
- Credit card debt payoff: It’s a credit card debt calculator. It estimates the credit card debts up to date and generates the date by which you clear the due by providing the credit card number and interest rate and this pulls out the history.
The financial burden is no more a headache. Don’t get frustrated computing the interest rates on papers and diaries. It’s time to get smart. Grab a smartphone, utilize the best apps to stay relieved from pecuniary pressure.
One can opt for Payday loans (which don’t require any credit check) if you run short of money and to clear your obligations. Also, this serves your needs online. The money can be repaid after you receive the next paycheque. This is called technology in moderating your debts.
Debt Advice Your Granny Might Give You!
Debt is in the media in a big way. Granted, the focus at the moment is on Government deficit and when you’re talking about the billions and trillions that our Governments owe, your credit card bill probably seems perfectly manageable.
But consumer debt is, some would argue, uncontrollable. We’ve become accustomed to ‘buy now, pay later’ and as the lenders reigned in their lending during the recession, our pockets felt the pinch. This gave rise to more and more media coverage about debt management plans, IVA solutions, bankruptcy, and other professional debt solutions.
But sometimes, all you need is some good old-fashioned advice and where better to get it than from your Gran?
My Grandmother lived in a time when credit was harder to come by – a completely different consumer landscape from today. Perhaps that’s why her advice on debt is so completely back to basics. But she makes some very good points! Here’s Granny style advice on debt:
- If you can’t afford it, don’t buy it. It seems straightforward enough but a great point. In other words, if you don’t have the money in the bank, don’t make purchases! Forget about ‘buy now, pay later, and toss your store cards in the bin! A fab way of avoiding monthly repayments, of course, but not always completely realistic in modern society.
- Take a shopping list and stick to it! My Gran absolutely swears by shopping lists as a means of sticking to a setlist of items to purchase. If you make a list of everything you need and have the willpower to stick with it in the supermarket, you can avoid unnecessary purchases and save some money!
- Packed lunches! It seems another very straightforward piece of advice from Granny but it really can save you loads of money. If you buy lunch at work every day this could amount to £20 (or $30+) each week. If you make your lunch at home you can cut costs drastically. And your Gran would say it would taste better anyway!
So there you have it – three pretty simple, old fashioned bits of advice. Yes, they’re simple tips involving no professional intervention. But they’re bits of advice that could a long way to helping you to curb your spending, stop relying on credit and ultimately to make your bank balance a whole lot lovelier.
Feel free to share hints and tips of your own in the comments!