Working your way towards reducing or removing all your personal debts can be a very slow but rewarding process. Many Americans are surprised when they calculate how much money they actually owe when they add up all their small debts.
It can come as something of a surprise discover that you may owe tens of thousands of dollars, and be paying out several hundred dollars a month in small payments to credit card companies and other loans. Once you have decided that you need to deal with these debts, by either significantly reducing them or removing them totally. It can be a difficult task to know exactly the best ways start to reduce your overall debt problem.
Here are a few pointers that may assist you in your efforts to get control of these strangling debts. Firstly, make sure that you have gathered all your paperwork together and you know exactly what bills need to be paid each and every month.
It is a good idea to make a simple list or a chart to show how much you owe to each company and when the bills are due. That way can see who you own the most money to, and you can avoid missing any payments by overlooking them. It is also a good idea to start with your highest debt and attempt to clear that one first. You should concentrate all your efforts on this first debt and paying off as much as you possibly can each and every month, until you have cleared that debt.
It is very important that if you have multiple payments, that you are never late or even worse actually miss a payment. Missing payments can cause serious credit history problems down the line that may affect your ability to get other loans such as mortgages. In addition, many late payments will incur late payment fees, which is another expense that could have been used to help clear your debts.
Try not to add to your debts, as there is little point in making a concerted effort to pay off one debt. If you are increasing another by, for example, using your credit card. You should avoid using any credit for as long as you possibly can. Keep only one credit card with you for a genuine emergency use, and never use it just because you are short of a few dollars.
If you feel comfortable, it is also a good idea to tell your friends and relatives that you are making a concerted effort to clear your debts. This is the sort of advice given to other people with problems, such as alcoholics. Although you have a very different problem, the fact of telling other people helps you to commit you to the process.
If you have a good buddy or relatives that can help you to clear your debts with a small loan then you should definitely consider taking it. A small loan that may pay off one of your credit cards and save you a fortune in interest. Assuming that your buddy will only expect to get his money back in a reasonable time without interest.
Consider taking on overtime or additional part-time work to help fund your credit relief efforts. The quicker you can pay off your debts the less interest you will have to pay. This chicken and egg situation means that the less interest you have to pay, the quicker you will pay off your debts.
Another idea is to not attempt to make a long-term commitment to pay off your debts. Instead, take out a debt consolidation loan to kill off all your debts in one go. This loan will pay off all your existing debts and dramatically lower the amount of interest you have to pay, and also your regular monthly payment.
This is an option that more people are turning to as a practical solution for clearing all of their debts in a very short period. And then taking a much longer time to clear one loan with a much easier payment schedule.