Drowning in Debt? Tips and Tricks for Getting Out of Hot Water with
Creditors
Do you, like millions of other Americans, feel like you're sinking in an
ocean of credit card debt? Well, fear not--there are many options for
reducing your debt way before you have to be concerned about receiving
notices or daunting telephone calls from debt collectors. The important
thing to remember is to be proactive in handling your credit card debt.
Unmanaged debt can ultimately lead to lawsuits, loss of property, and
tarnished credit reports.
Here are a few ideas for managing and/or reducing your debt:
-Get in touch with creditors right away. Often times, creditors will
reduce credit card interest rates if you simply ask for a break. Explain
your situation, and let creditors know if you're having trouble meeting
your minimum monthly obligation. Many creditors will work with you to
arrange a customized payment plan.
-Develop a budget. While many people dread this very important step in
reducing debt, it can be extremely important in taking control of your
financial situation. Compare and contrast fixed expenses-mortgage
payments, rent, car payments, and insurance premiums, for example--with
variable expenses, such as entertainment and recreation. List all your
expenses, even those that seem unimportant. This is an important step in
determining your spending patterns, prioritizing expenses, and determining
whether or not you have additional money to contribute to the monthly
payments on your credit card.
-Consolidate, consolidate, consolidate. While debt consolidation is a
sometimes daunting and drastic step, it can be an important move in the
quest to reduce your credit card debt. If you're a homeowner, consider a
second mortgage or a home equity loan to pay off high-interest rate debt.
While these loans often require you to list your home as collateral,
remember that if you start skipping out on credit card payments, you could
easily lose your home. What's more, these loans provide tax advantages
that are not available with many kinds of credit.
-Go to counseling. Credit counseling, that is. Many credit counseling
organizations will help you come up with a feasible solution for ridding
yourself of debt. You can find credit counselors on the Internet, and many
credit unions, universities and military bases provide credit counseling
programs.
Also, get in touch with your bank, friends, and/or family for a
recommendation. Some of the services credit counselors provide: Advice on
how to manage your debt, assistance in developing a budget, and classes
and workshops that are geared towards teaching consumers about money
management, credit card debt, and budgeting. Counselors can also recommend
a debt management plan (DMP), which allows you to make monthly deposits to
the specific counseling organization that you're working with. Your
counselor will then develop a payment schedule with your creditors that
includes lower interest rates or waives certain fees.
For more suggestions and information on how to manage your credit card
debt, please visit http://www.informedcredit.com.
Beth West has an extensive background in marketing and public relations,
serving in management positions in both the hospitality and software
industries. Currently acting as the Director of Marketing for
InformedCredit, Beth is also trying to launch a freelance writing business.
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