Debt affects millions of people today. Bankruptcy's are on the rise and more and more people are struggling to stay afloat.
The effects of bankruptcy can be far reaching and can impact people's lives long after the bankruptcy has actually ended, making it difficult to obtain credit and even spoiling many employment opportunities when companies credit check potential employees.
Often the situation has got so bad that there is no other choice, however, for many, there may still be time to turn things around, if you start now!
Consumers in general now carry a huge amount of revolving debt on credit cards and 47% of people who don't pay off the full balance each month pay only the minimum balance, a terrible strategy for paying off your credit cards and a very expensive one.
It seems to be almost the norm in our culture to think that we are owed something and that we should be able to get the things that we want as soon as we want it. The banks and credit card companies have spent allot of money trying to convince us of this. That way, they can keep us owing them money and working for them forever!
Fortunately, there is still time for most of us to avoid the inevitable if we make the change now. Here are my top 7 tips to get you out of the debt trap.
Tip 1. Put it all down on paper. Make a list off all of your debts. It sounds like an easy task and it is. You need to write down your creditors names, total amounts outstanding and monthly payments. Be prepared as it can be a bit scary especially if you haven't listed them all before. But don't worry; you'll get on top of it.
Tip 2. Work out which debts to focus on. One good strategy is to only pay the minimum payments on all of your debts except one which you deem to be the most pressing. (Normally the one with the highest interest but it could also be pressing for other reasons.) You pay as much as you can to that one until it is paid off then you add the payments for that one to the next most pressing debt. This can significantly shorten the amount of time it takes to get out of debt.
Tip 3. Cut up those credit cards! Don't just put your credit cards away somewhere and defiantly not in your wallet. Cut them up so that you won't be tempted to use them. When you pay each one off, contact the company and cancel the account. Don't fall back into the same trap!
Tip 4. Examine your credit report. Your credit report shows you your payment history. You can get a copy cheaply from many places online. You should check it for any errors that could harm your credit rating and write to the companies concerned to have them corrected. This will ensure that your credit problems do not cause you trouble into the future.
Tip 5. Work out a spending plan. Spendig plan or budget, they are both the same and the benefits of working out a realistic plan can be huge. Apart from the benefits of knowing exactly where you stand, you will know how much you can spend without feeling guilty.
Tip 6. Don't switch one debt for a worse one! If you are a home owner, it may be tempting to take out a loan secured on it to pay off your credit cards. This can backfire badly though if you fail to keep up the repayments because now your creditors can take your home away from you. If you are considering this route, you should seek professional help from someone who does not stand to profit from you first.
Tip 7. Help is available, take advantage of it. Don't face this problem alone. There are debt charities and non-profit organizations that can offer you advice and an understanding ear so before you take any drastic action or sign up for anything drastic, take the time to hear what they have to say. You may be surprised.
About the Author:
Debt Management can really help you to get back on your feet when you are in debt trouble. To find out more, click the link above. You will also learn how to negotiate with your creditors and legally write off your debts. The fastest way to becoming Debt Free.
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