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6 simple steps for do-it-yourself debt relief
Getting yourself out of debt is a great feeling. It is a feeling of accomplishment, of feeling like you've won a hard fought battle.
Knowing that you finally have your monthly bills under control can make you feel like you have your whole life in control. But best of all, debt relief is a do-it-yourself job that anyone can do.
Here is a simple, step-by-step plan to help you get out of debt yourself. You get the satisfaction of taking control of your debts and the freedom to start keeping more of the money you earn each month.
But best of all, this debt-reduction plan will only cost you about $5-$6 a day over what you're currently spending on your bills to help guide you from 'debt-consolidation' thinking to 'debt-free' thinking!
Debt Relief Step 1: -- Analyze your current situation: earnings, bills, obligations, etc. It's important to know exactly how much you owe, how much you earn, and establish a plan to pay off debt. Determine the maximum you can apply to your bills. For instance, you commit $500 a month to clear your debts. If your budget is tight, you'll have to make some hard decisions on scaling back on daily expenses such as regular coffees vs. Starbucks lattes, brown bagging it at the office vs. $10-$15 lunches out, borrowing a book from the library vs. buying one at Barnes & Noble. Almost everyone can find that extra $5 a day to add the $150 extra it will take to eliminate those nagging bills.
Debt Relief Step 2: -- Now, total all credit cards and bills you want to eliminate. Look at the minimum payment due for each one, then add 20%. So if the minimum payment is $50, the monthly payment you'll make from now on will be $60. Total all these bills for Step #3....
Debt Relief Step 3: -- You've set aside $500 a month to clear these debts you've identified. The total from Step #2 is $350. Subtract this amount from the $500. You now have $150 extra money to pay down debt. This $150 will allow you to knock out debt fast.
Debt Relief Step 4: -- Keep paying all your bills on time with the additional 20% added to each. But, most importantly, apply the extra $150 toward the debt (credit card, personal loan, whatever) that is the largest total on your list, ON TOP OF your regular monthly payment. Not instead of, IN ADDITION TO your regular payment! This is important to eliminate this debt as quick as possible. Furthermore, put those credit cards away where you won't use them anymore while you're eliminating debt (some say to cut them up, but let's keep the credit cards in case you need them for an emergency).
Debt Relief Step 5: -- When your largest debt has been paid off completely, apply its respective monthly payment and that extra $150 you've used to pay it down, and apply ALL OF THAT MONEY to the next-largest debt. Same thing: make the regular monthly payment, plus 20%, plus the monthly payment you were making on the paid-off credit card, PLUS the extra $150 you were using to pay it off, and pay this entire amount on that 2nd highest debt, until it is paid off too, and then repeat the process on the 3rd highest debt. This process may take months, perhaps years to complete, but it will start to accelerate once you've finally got a large portion of that $500 going to only a few monthly bills.
Debt Relief Step 6: -- I'd recommend analyzing your need for all those zero-balance credit cards, and close out the ones that have annual fees or that don't meet your future needs by calling the credit card companies and requesting that the account is closed by consumer (make sure they report it that way, it's important that it shows up this way on your credit report in the future so it won't affect your credit score negatively).
Conclusion: Don't miss an opportunity to make massive impacts on your debts by applying a large tax return or extra-large sales commission you weren't expecting to pay down on your bills. It may look like a good idea to "bank" the extra money, but when you're paying out 15-22% interest on your credit card balances and only getting 2-3% on savings account balances, it's clear that you can "earn more" by reducing debt than by setting aside that extra money.
Small debt reduction steps make a big impact. The sad truth is, however, I've noticed that people generally will piddle away any extra income they get throughout the year, and then they can't really say where it went and what they actually bought with it.
When you do finally pay down your debts yourself, the feeling of financial relief you'll feel once you've gotten control of your bills will make all this tedious effort very worthwhile. Share these debt reduction ideas and information you've found on FindHow2.com with your friends and family to help them restore good credit after they get out of debt .... they'll thank you for it!
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How you can recover from your lingering holiday debts
The holidays may be long gone, but for many people, the bills racked up during the winter are still lingering. If you aren't diligent about paying down the balances, those leftover holiday expenditures could really hurt your ability to meet your financial goals for the year.
By allowing outstanding holiday debt to linger for months (or longer) on your accounts, you run the risk of reducing your credit score, which can significantly impact your ability to get the best loan rates or access to other lines of credit.
Maxine Sweet, vice president of public education at Experian, the leading global services information company, offers some tips to help consumers manage the holiday debt "hangover" and take proactive steps to help improve their credit and use it wisely.
Assess your overall financial situation.
Before you do anything else, it is important to examine your entire financial situation, including your monthly budget and your short- and long-term financial goals. Make a list of all of your debts, payment due dates, minimum payment amounts, interest rates and the timeframe in which you would like to pay down your debt. Don't forget to consider the other financial goals you may wish to accomplish.
Select a payment strategy that works for you.
Consider paying down the credit cards with the highest interest rates first. If that seems too daunting, try paying down your smallest balance first so you can see your progress toward eliminating your bills right away. Pay more than the minimum payments, if you can, but most importantly - always pay on time. If you need additional help managing your debt, you might consider reaching out to an accredited credit counselor such as a member of The National Foundation for Credit Counseling (www.nfcc.org/).
Stop spending frivolously.
While it may sound simple, an important step is to curtail unnecessary spending. Put yourself on a financial diet and try not to spend money on non-essential items until you catch up on any extra debt you incurred during the holidays. Using coupons and comparison shopping for essential items and cutting extra expenses can really make a big a difference in your monthly budget. In fact, simple lifestyle changes can help you save thousands of dollars over the course of the year. The money you save can help pay off debt or be saved for next year's holiday shopping.
Check your credit score so you have a benchmark for improvement.
It is important to know where your credit stands after the holidays. Check your credit report and purchase a credit score so you understand the baseline of where you stand and how your credit may have been impacted by your holiday spending. During times of high activity on your credit accounts, it is also especially important to make sure that your credit report is accurate. Then, after you have had time to achieve your goals and pay down your debt, get another score to see how where you fall in the range of risk has changed once you have paid down your debt.
Knowing where you stand after you have paid off your debt from the holidays can leave you on the right foot for future purchases. For more credit information, visit LiveCreditSmart.com.
(Article courtesy of ARAContent.com)
Make yourself look better with a head-to-toe debt makeover
Haircuts come and go out of style, color preferences change seasonally, jean cuts expand and contract with reliable frequency - a style makeover is as easy as following the trends shown on TV and in magazines. While good credit and low debt are always in style, many people believe that a financial makeover is simply too difficult to attempt. But making your financial self look great and up-to-date is easier than you'd think. And now's the perfect time for a makeover that will have your financial profile looking good, inside and out.
* Get yourself organized. This is a little like stepping on the scale before starting a diet - it might not be fun, but you need to do it. Collect all of your credit card and other debt information that you have. Access your credit report, which you can get for free annually from credit reporting agencies like Equifax, to ensure everything is accurate. Tally up your debts, record your interest rates and carefully review your credit report to get a clear picture of where you're starting.
* Stop digging yourself further into a hole of debt. One of the biggest steps you can take toward making over your financial profile is to stop the bad habits that got you into debt - and first among those is over spending. If you have debt, don't add to it by making credit card purchases you can't repay. If you stop digging further into debt, the only way to go is up - and out of debt.
* Pay off what you can, as fast as you can. Simply put, you need to make all the minimum monthly payments on your debts - but to give your finances a whole new look, you need to go beyond that. Financial expert David Bach, who frequently appears on The Today Show's "Money 911" segments and is the author of Debt Free for Life: The Finish Rich Plan for Financial Freedom, advocates a systematic approach to paying off debts. Taking into account how much you owe, what your interest rates are and what the minimum monthly payments are, you can find out which debts to pay off in the order that will help you get out of debt faster. To make that process easier, Bach points out that Equifax's Debt Wise tool is an automated way to prioritize how you can pay off your debts. The system also can help you with organization - since it pulls from your Equifax credit report all of your outstanding balances and interest rates automatically populate. Debt Wise will then put your payments in priority order, and automatically update you on your progress toward paying off your debt.
* Negotiate your rates. If you had the opportunity to make it easier to pay off your credit card bills, would you take it? Most people don't, even though they have the chance. Simply call up your credit card companies and ask to negotiate a better interest rate. If you've been making your payments regularly, you've got a good bargaining chip and can show them that you're trustworthy enough to have a lower rate.
* Don't be afraid to ask for help. If you feel like you need someone with a bit more expertise than you have, there are options. Contact a non-profit credit counseling center, where you can get questions answered without adding to your financial worries. Look for a member of one of the two major trade associations - the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies - in your local area.
* Make a firm commitment to living a debt-free life. Envision the positive outcomes of paying off your debt to help keep you on track. Bach recommends recording your goal to help keep yourself accountable. He's partnered with Equifax on the Debt Free Challenge (www.debtfreechallenge.com) - a website where you can join others pledging to get out of debt. Making over your financial profile shouldn't be a short-term aim - the real goal is to be debt-free for life. Not only will it free you from the stresses of debt, but it will also open doors to new opportunities, and keep your finances looking good for years to come.