Debt Reduction Advice | Debt Reduction Advice

Now that the nation is fully aware of how much debt we are facing as a country and individuals the time has come for each person to address their own personal finance demons.  The one thing that commonly holds consumers back from achieving their financial goals is high interest credit card debt.  Statistics vary on how much debt each household is currently carrying but the sad truth is many people are living paycheck to paycheck just trying to make ends meet.  When credit card payments and living expenses are paid, there are many households that have nothing left for savings or enjoying the small things in life.  The only way to stop the cycle is by eliminating your credit card debt once and for all, freeing up much needed money for other aspects of your life.

Ditching Your Debt


Getting out of credit card debt is neither easy nor fun but it is necessary to avoid a lifetime of financial trouble.  Depending on your personal situation and level of debt there are several ways to approach debt elimination. 
 

• Do it yourself method-  One of the hardest yet most recommended ways to get out of credit card debt includes good old fashioned hard work and sacrifice.  This method is best suited for people who have the ability to reduce spending in areas of their life and apply that money toward debt payments.  This approach only works if you can aggressively tackle at least one debt at at time. If you are only able to make the minimum payments, then you may want to consider other options to eliminate your debt.  If you are able to apply more money toward your payments, that is the best route you can take to reduce your debt while leaving your credit intact.
• Debt consolidation-  Some people choose to consolidate debt by either joining a credit counseling agency or taking a consolidation loan.  The concept is the same however the process is much different for each.  A consolidation loan normally is only given to people who have some form of collateral such as their home or other assets.  Using the loan to pay off high interest credit card debt can result in lower monthly payments which make it an affordable way to reduce debt.  Credit counseling agencies on the other hand will negotiate with your creditors to reduce interest rates and waive fees.  You make one payment to the program which is then dispersed to individual creditors to pay your debt.  Again, your monthly payment is often lower and more money is going toward your principle making it possible to repay your debt in a timely manner.  Both options have risks which you should consider before moving forward.
• Debt settlement-  A risky move for credit card holders is attempting to negotiate a lower payoff on current credit card balances.  This option is legal and should be considered by individuals who have no reasonable way to make structured payments to repay their debt.  If your creditor agrees to a settlement you make one lump sum payment for less than the amount you owe and your debt is considered paid.  Again, there are negative consequences to this method which should be carefully considered before enrolling in a program to settle your debt.
• Bankruptcy-  Filing for bankruptcy is the last resort for individuals who can no longer meet their financial obligations.  Your debt may be forgiven or you may have some of your assets sold to repay creditors.  In any case filing for bankruptcy will have a lasting and damaging effect on your credit and carries with it a social stigma that many find hard to live with in the years following a bankruptcy filing.

Getting out of credit card debt is rarely easy or without consequences.  The fact remains that without tackling your debt today you will face years of continual struggle trying to maintain your payments and reach other financial goals.