Recent surveys have said that there is an overwhelmingly debt increase in the American population. Debt issues that have stretched over a long period of time to the extent that people dealing with the said debts become uneasy and anxious. This may sound alarming, but it is the hard reality that we must face nowadays.
Debt Reduction Method – The Way to Effectively Help Trim Down People’s Debts
The debt reduction method has been known to be one of the preferred debt elimination by most consumers, from individuals, households and even business entities. This method’s primary goal is to make all of your debts go away as soon as possible, meaning, in the shortest amount of time and as painless as it could. For the reason that it does take a lot of months and even years to resolve these debt problems.
Furthermore, people in debt want to solve their problems as quickly and as efficiently as possible. You are given 2 possible options which are both equally effective. You can either do a personal debt reduction (meaning, like a do it yourself project) or acquire the help of a debt reduction institution.
The Main Difference Between Personal Debt Reduction and Debt Reduction Companies
First, doing it on your own minimizes further spending and expenses. Since there is no need to pay off anyone’s services and it is a given fact that certain companies offering debt help can be quite expensive. Also with personal debt reduction, you have the advantage of personally dealing with every little detail of your finances:
•from organizing your expenses
•listing them down
•listing all your debts in the manner of making the biggest or the debt which is close to its due date first and marking it as the most important debt which you need to tend to,
•negotiating with your creditor’s to get a decreased and manageable amount,
•Personally paying your creditor’s
•Setting up a budget plan to avoid getting into debt again.
Personal debt reduction can be beneficial to you if you want to experience doing all these things. However, this is not an easy task to do if you do not take time to sort out your expenses and if you are impatient. Results do not show up immediately and it is a slow and gradual process.
Second, opting to seek help from a debt reduction company is also a good choice if you are willing to:
•Shell out some money. You need to pay your debt reduction company’s services.
•If you want to be saved from the trouble of personally facing your creditor/s.
•If you need counseling and expert help, especially when it comes to setting up a plan to improve and repair your credit rating and financial management.
Important Things to Remember
Doing this method can be a slow process of paying off your bills. Furthermore, there are some moves that you must think twice from making or if possible, not make them at all since not everything is effective and helpful. Research and knowledge of whatever things you decide to seek out is always essential and probably, one of the most successful ways to do everything with ease and effectiveness.
What are the debt reduction moves you must avoid making?
a.) Using your credit card/s.
Keep in mind that one of the major reasons why you are in knee-deep debt is because of overusing credit cards. Out of hand use of these “plastic money” is dangerous and if not done properly, will harm not only your finances but as well as yourself. Never use your credit cards when you are doing debt reduction because it will just complicate things more and will lower down your already bruised credit score.
Also, in connection to credit cards; you should not pay the minimum payment required, transfer your credit cards to another one and canceling your credit cards once these have been paid in full.
b.) Paying the debt with the smallest amount first.
Professional finance advisers never advice consumers to pay off the debt in the least amount since more debts can possibly pile up. Do it the other way around, repay your debts from the biggest to the smallest amount.
c.) Going for loans and mortgages (home equity loans, car mortgages, etc.) when you are not capable of paying.
It is never wise to engage your house and any of your asset and you them as mortgages or collateral when you know that you do not have the capacity to pay on time. This only deepens your debt problems and you will risk losing your home as well as your other assets.