Debt Consolidation: Tips to Help you with your Debt Troubles

Large amounts of debt can create stress in one’s life that could have otherwise been avoided. With that said there are steps you can take to relieve that stress by consolidating debt so that you can eventually get it to a level where you can pay it off. Here are some tips that may help you reach that goal.

Ok so this tip is a no brainer and that is to stop using your credit cards. By continually using them you will never get ahead. From now pay for items with cash and if you don’t have the cash to buy the item then you should not be buying it. Make purchases based on need, not want and you can eliminate your credit card use altogether.

If you have multiple credit cards with debt on them, move all of the debt to a single card under a lower interest rate. You will periodically receive offers with convenience checks for a lower rate to do just that. You might have to pay a check fee, but that fee is far less then paying 20% interest on a card. Once you have moved the debt, cancel the cards that are free and clear. This will help you in not using them again.

Your minimum monthly payments are usually set up in such a way where it would take 30 years to pay off the balance if you never used the card again. Simply doubling the minimum payment cuts that down to 10 years. Sure 10 years sounds like a long way off but it is a lot closer and cheaper than 30 years. If you can afford to triple the monthly payment then you are looking at a payoff in about 7 years. You get the point. In other words pay more than the minimum. If you have to get a second job to do it, then do it and get rid of that stress.

Ok so you have gotten in over your head with credit cards. First just relax nobody is coming to haul you off to jail. Your credit may take a hit for a little while but your credit is always fixable. If you have found that you can’t pay your credit cards, you are better off settling your debt then paying the minimum to just stay afloat. A settlement is where you pay a reduced amount of the overall amount owed, but you do so in one lump sum. There are a couple of stipulations about settling. First, your credit card must be more than 3 months late and it should be closed. Second, if the amount of debt settled exceeds $600 you could be taxed on that settlement (see your accountant for more information). In order to settle you should call the credit card company up and ask them for a settlement offer. In today’s economy, chances are they will do it to get your account off their books.

Nobody likes being in debt, but nonetheless people do it. However, it does not have to be a painfully stressful situation that you just can’t get out of. Follow some of the tips above and talk to a financial professional for more advice on getting your money and credit back in order.

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