Creditors
Ringing Your Phone off the Wall? 15 Tips to Reduce Your Debt
By Sandra Wellman
When
the creditors are ringing the phone off the wall you know it’s
time to make a serious decision to reduce your debt to pay your
bills. Don’t worry you are not alone. The United States alone
has millions of individuals and families struggling to find a way
out of debt. This is why when you go online you see thousands of
web sites that say they have the solution for relieving debt. Be
Cautious! Many of the companies that claim they can get you out of
debt will only bring forth more problems. Be fully aware of what
will be happening with your debts.
With
Debt Consolidation you are simply transferring debt from one place
to another. While this seems like a good choice, and may be for
some, the fees are high, you retain the same amount owed, but you
will pay more interest in the long run because you are making
smaller payments. Also, one potentially bad aspect is your assets
are the collateral and at risk if you default on the loan.
Credit
Counselors are more prone to help you find a solution to reducing
your debt. Credit Counselors are the solution when you do not see
a way out on your own. The Professionals work closely with you,
your creditors, work toward a resolve, minimizing payments
temporarily, etc. This is certainly a way to get creditors off
your back, work out an agreement with your debts, and reduce the
stress level that comes along with financial burdens. Some of the
Credit Counseling Services offer a low fee for their services and
provide you with a financial managing solution. The services often
offer help with managing your money, as well as offering
counseling to homeowners, students, and so on.
There
are many solutions for debt relief so the key then is not assuming
the worst. Again, the main solution is paying off the debts that
are considered priorities. If you have secured loans, it is always
wise to find a way to pay these bills first. If you have credit
cards and can’t pay some of your bills any other way, you might
want to consider paying your bills with them, which will give you
more time to find a solution to your debt problem. Pay as much as
you can on the credit card before the bill comes in so that you
have funds available to pay your bills the following month in case
you need it. There is always a solution, so never assume that you
can’t deal with any problem.
One
of the main things you need to do to reduce your debt is to cut
back on your spending and live within your means. Cutting back is
one of the harder things for people to do, but one of the best
ways to reduce your debt. You will have more money to pay on your
credit cards, which will accrue less interest and start reducing
your debt.
Why is cutting back so hard?
We
work hard and we feel we deserve to have certain things and say
‘life is short, why not be happy”.
Ok these things are true to a certain extent, but if you
don’t want to end up with bad credit, lawsuits, foreclosures,
repossessions and so on, you better suck it up and put your pride
aside.
Ways to save money and reduce your debt
There
is no one answer for all of us, but there is an answer for us all
individually, which will differ depending on your situation and
how extreme your debt is. We list here 3 categories for getting
out of debt: minimal debt, moderate debt and extreme debt. The
more debt that is owed, the more strategies should be applied.
Remember all these things can be temporary until you are out of
debt or at least reduce your debt. Then just keep on budget so you don’t get back into debt.
Minimal Debt
Buy
food that is less expensive and last longer. This is not for
people on low carb diets; exercise instead, it’s good for your
stress level. Eating rice, potatoes and pasta with your meals will
fill you up and they are inexpensive. Don’t buy $3 artichokes,
just because you like them. Prime steaks are out of the question.
If you like them, buy a pkg when on sale, put it in the freezer
and when you have done a good job all month, treat yourself. Buy
larger pkgs, separate and put into freezer bags when you get home.
Buy almost everything on sale. If I can do this, so can you. Spend
10 minutes reading the grocery ads and go to the one with the best
overall deals. If it’s not on sale this week it will be next
week. Don’t spend much or any on alcohol. It’s not necessary
and not good for your health. Buy your sundry items either at
stores like Target or Walmart or on sale.
Get
a part time job. This doesn’t have to be many hours. You can
write articles, or books for people who bid for your services
online. These are brief and can be done in days or weeks.
Sell
items you can live without on Ebay or at garage sales. Check the
paper to see if neighbors are having one and will let you put in
your items. Give them 10-20%.
Stop
spending money on things you really don’t need. If it’s not
necessary for survival or to keep your job, don’t buy it, rent
it etc. Your friends and family have enough DVD’s or videos for
you to watch, you don’t need to spend money renting or going to
the movies. If you spend a lot on TV cable, reduce it as much as
possible.
Pay
your bills on time and avoid late fees. Credit card companies
charge the most. $15-35, even if you are only 1 day late. You can
call them if it’s your first time and they will waive the fee
once, but that’s it.
If
you haven’t ruined your credit yet, try to transfer your higher
interest rate credit card debt to a lower one.
If
you are married and your other half is a big spender, talk to them
about it and tell them what your plans are and that you will need
their cooperation.
Keep
your air conditioning set high and your heater low. Put sweats on
when in your house/apt or even thermals depending where you live
to stay warm. Only keep lights on in the room you are in plus one
other so you can see where you are going.
Refinance
your car loan if you still have at least a few years left on the
loan.
Moderate Debt
Sell
your car and buy a cheaper one. Have it checked out first by a
mechanic to make sure your repair expenses won’t be high. This
is a rough one for most and moderately extreme, but you can save
hundreds per month if you are making payments. Hey no one said it
would be easy, but it’s better than filing bankruptcy or the
other things I mentioned. Bankruptcy stays on your report for 10
years, plus in most cases you will still have to pay your debts at
some point.
If
you live in an apartment, shop around to see if you can get a
better deal somewhere else. You may even get a move in bonus or
first month discount worth a few hundred dollars.
Shop
around for less expensive insurance for yourself, your car and/or
your home if you own one.
Get
a home equity line of credit if you own a home, but beware to pay
as much as you can, or you’ve just moved your debt and are not
reducing it.
Call
your credit card companies if you can’t make the minimum
payments and settle on a payment plan. Beware they will not let
you use your card if you do this, so if possible only do this with
the one you owe the most and have the least available credit on,
leaving one credit card available to charge for emergencies.
Extreme Debt
Hopefully
you own a home because you are going to either need to sell it,
refinance it or get a home equity line of credit if you don’t
already have one. Selling your house is very extreme, and should
be considered one of the last resorts, but possibly a necessity if
you’re really in a bad place and owe a mountain of debt.
Consider
taking in a border. If you don’t want to sell your house, but
you’ve got extra room, definitely consider this. You can go
through agencies that do background checks on possible borders.
Also, your local church may be a place to look for one. You can
charge $300-500 per month, depending on whether they eat your food
or not.
Of
course, as I said earlier, you need to apply all or most of the
strategies listed for all categories if you have extreme debt, to
save money and reduce your debt.
If
you have a family member that is good with accounting, budgeting
or finances, ask for their help before going to a counseling
service. It may save you time, money and energy. If you are too
embarrassed to speak with family members and you just can’t do
it yourself, then by all means check out the credit counseling
services listed here on our web site.
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