Reduce Your Debt With These 5 Tips

It's never pleasant to realize that you're in financial hot water, but pretending the situation doesn't exist is NEVER the way to deal with the problem. If you're having trouble meeting monthly payments, find yourself borrowing or using credit cards to meet daily expenses, or have one or more of your credit accounts turned over to a collection agency, it's time for you to get proactive and bring your debts back under control. Below you'll find five ways to reduce your debt. Some take time, all take some level of commitment and effort - but it's worth putting in the time to start cleaning up your debt situation.

1. Develop a budget - and stick to it.

The first step toward getting control of your finances is to realistically assess your situation. Sit down and draw up a budget that takes into account all your income and expenses. First, list all your income. Next, list each of your 'fixed expenses', the ones that don't vary from month to month. Those may include your rent or mortgage payment, your auto loan payment, and your utilities if you're on a budget plan to pay for them. Next, add in necessary expenses and payments on bills that vary from month to month. Finally, list all your daily and regular expenses for entertainment, transportation and the like. Your goal is to develop a budget that lets you meet all of your monthly fixed expenses, and figure out where you can cut expenses to start paying down your credit card and other debt.

2. Contact your creditors.

Communication is one of your best tools to help you through difficult financial times. Your creditors would really prefer NOT to take stronger measures to collect the money that you owe them. After all, it costs them more money to refer your debt out to a collection agency. As soon as you know that you're having trouble making ends meet, call your creditors and explain the situation. In most cases, they'll be happy to work out a modified payment plan that will make it easier for you to meet monthly expenses. It may mean extending the period of your loan, or renegotiating the terms of a loan agreement, but in the short run, it will take the heat off and in the long run, it will save your credit rating.

3. Pay down your highest interest loans.

Pick and choose among your credit card payments and loans. While it's generally not a good policy to pay only the minimum payment on credit cards and revolving loans and lines of credit, there is one exception. If you have one or two high interest outstanding loans, one of the better ways to get control of your debt is to eliminate them as quickly as possible. By meeting the minimum payments on other debts for a few months, you can concentrate on bringing the balance down on your most expensive loans.

4. Transfer your balances to lower interest loans and lines of credit.

If you have outstanding debt in high interest loans and credit cards, your finances can benefit from moving the balances to a lower interest credit card. Credit cards with 0% introductory rates for six to twelve months are widely available right now, as are low interest balance transfers. Take advantage of one to transfer a high interest loan and pay it down during the introductory period.

5. Get a debt consolidation loan.

A debt consolidation loan makes sense if you are paying on several different debts with varying interest rates. By taking out a home equity loan, second mortgage or other secured loan in the amount of your total debt, you can pay off all your other creditors, and have one monthly payment to deal with. By using a home equity loan to consolidate your debt, you take advantage of a longer payment term and lower interest rates to bring down your monthly payment and free up your resources for savings and other investments.

Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk.

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Debt Relief Information:

Related Articles


Do It Yourself Debt Relief
With mounting bills and unforeseen hardships, you may be considering some form of debt relief. There are many options to help you, but the best may actually be you helping yourself.
Individual Voluntary Arrangements- A New Alternative to Bankruptcy
This May, the Department of Trade and Industry in the UK found that there were 10,091 bankruptcies in the first quarter of 2005. This represents an increase of 24.
Getting Past The Idea Of Budgeting & Saving Money
I'm sure you'll agree that budgeting, saving money, and eliminating debt are very appealing ideas. If effectively tackled, these goals can secure your financial status for the future, and allow you to live a comfortable, debt-free life.
Help to Get Out of Debt
Debt Help is the stepping stone to debt elimination and financial recovery. Debt help analysis guides you to save thousands of dollars in interest charges.
New Bankruptcy Law Will Not Protect You from Identity Theft
Recently passed by Congress with overwhelming support, the oddly-named Bankruptcy Abuse Prevention and Consumer Protection Act was designed to eliminate "bankruptcy of convenience." The perceived problem is that many compulsive gamblers, shoppers and drug users often run up huge debts on easily available credit cards with no intention of paying their bills.
Debt Collectors; And what you can do to Get Them Out of your Life
FTC opinion letter on validation Section 809(a) of the FDCPA, 15 U.S.
How to Choose a Debt Settlement Company
As consumer debt continues to spiral out of control, debt relief is fast becoming a major concern for many American's. In 1999, American's made $1.
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.
Why You Should Get Out of Debt Today?
The main reason for getting out of debt today, is because people with little or not debt have more control over their future:1. They have more discretionary income, meaning that you won't be living pay check after pay check as you probably are right now.
Debt Management Systems
What is a debt management system, and when do you need it? Like any kind of management system, debt help systems can be good or bad. We will take a look at what you can do to manage your debt better.
The Five Most Popular Questions About Bankruptcy
WILL MY CREDITORS STOP HARASSING ME?Yes, they will! By law, all actions against a debtor must ceaseonce bankruptcy documents are filed. Creditors cannot initiateor continue any lawsuits, wage garnishees, or even telephone callsdemanding payments.
Stop Debt Collectors
Can you stop debt collectors ? . .
The Last Debt Solution Should Be Bankruptcy
A debt solution like bankruptcy should really only be used as a last possible solution. The problem with this solution of debt problems is that it includes a lot more than simply eliminating debt.
Dont Drown Your Debts, Manage Them!
Are you among the millions of people who have found themselves unable to make even the minimum payments on credit cards and other unsecured debts? If so, there is relief in sight. It is no longer necessary to keep paying constantly but never really make any progress towards reducing or eliminating your debts.
Reducing Debt Before Its Too Late - How to Avoid the Pitfalls of Creeping Debt
Reducing debt usually isn't a high priority for people until they have already gotten into trouble with overspending. Using a few basic guidelines, and debt calculations, can help you see when your debt load is getting into the danger zone.
Credit Repair? Its All Up to You
Log onto to a search engine such as google.com and type in the term credit repair.
The Simple $10 Debt Elimination Solution
Ask a friend what resolutions they made for 2004 and your bound to hear them reply "Pay off my credit cards." Ask them how they planned on reaching that goal and many of them will not have a clear cut answer.
Craving For Financial Freedom
Have you ever felt trapped in a Rat Race and wished to retire quickly but rich?Have you ever felt that you are spending way too much time working with your boss at your office instead of with those you love? Your spouse, children, friends?Have you ever felt frustrated because you are so deep in debt that you think you won't be able to retire because as soon as you do, the money will stop coming and thus you won't be able to pay off your mortgages and credit card?Have you ever felt that you have no control over your life anymore in terms of time? Think about it: can you take a vacation just anytime whenever you want/ need it and as long as you want/ need it?Have you ever wished that you can work whenever you want and wherever you want?You are not the only one!Too many people are trapped in a Rat Race because they have to. There are too many bills to pay, and too many dreams to fulfill.
Bankruptcy: What the New Law Means to You
On April 20 of this year, President Bush signed a bankruptcy reform law. When this law goes into effect in October of this year, it will be much more difficult for Americans to use Chapter 7 bankruptcy to get a fresh start on their financial lives.
New Bankruptcy Law Makes it Harder to Stop Foreclosure
On October 17, 2005 President Bush's sweeping bankruptcy reform law goes into effect forever changing the rules of debt collection in this natiion. Consumer advocates and the public appear to be completely unaware of the total and complete victory of the creditors under the new legislation.