Strategies To Reduce Debt

Many people are suffering from too much debt.  Some people have said that being in debt is not the fault of the debtor, instead it is the fault of the lender for making credit so easy to obtain.  This theory is nonsense.  Unless you have experienced some type of financial catastrophe you are in debt because you spend too much.  No one forced you to take vacations in exotic places, go for cruises, dine in fine restaurants and purchase the top of the line clothing and the most expensive gadgets and car.  You did not have the cash to purchase this stuff, but you did have available credit to use.  Now you find yourself with too much debt.

Sit down and make a list of the principal for the debt you owe, the interest rate and the monthly amount you need to pay for each debt.  If you have enough money each month to cover all your outstanding bills, then you want to decide how to get rid of them.  Some people prefer to start with the bill with the lowest balance.  Others prefer to start with the bill with the highest interest rate.  Whichever plan you decide to use, take the bill you are going to focus on paying off and add extra money to the payment each month while continuing to pay the minimum on all your other obligations.  When the first bill is finished, add the extra money to the next bill you want to eliminate and continue this process until your bills are paid.  If you are only make the minimum payment on your credit card bills it can take you fifteen or twenty years or more to get out of debt and you will be paying a fortune in interest.

Call your creditors and see if you can negotiate a lower interest rate.  Continue paying the same monthly payment you were required to pay before your interest rate was lowered to speed up your repayment.

You might consider a debt consolidation loan, but this will not work for many people.  With a debt consolidation loan you borrow enough money to pay all your debts.  The interest rate for the debt consolidation loan will probably be lower than your current interest rates.  However, many people get into trouble with debt consolidation loans because they continue using their credit cards after they have been paid off and wind up with both more credit card debt and the consolidation loan.  They are in worse shape than before.

If you are having trouble paying your bills, if you have missed some payments or are making your payments late it is time to contact your creditors and talk with them.  Contact each creditor individually and see if they will be willing to work with you on a payment plan you can afford to pay.  Many companies have hardship programs they can offer you.  These programs can reduce your interest rate and forgive penalties.  The hardship program may only last for 6 to 12 months, but it can help you.  You may not be able to use your account during this time.

Getting out of debt is hard and takes time, but with determination it can be done.  Think how much better life will be when you do not need to send a bunch of money to creditors each month.