Today, many people are looking for debt solutions. They are tired of being stressed out by mounting debt and exorbitant interest rates. Millions of Americans require immediate debt help in order avoid foreclosure or bankruptcy.
Several debt solutions exist including: budgeting, debt consolidation, debt management, debt settlement, credit counseling and bankruptcy. Each option carries its own set of pros and cons. Not all options are available to everyone. Some require debtors to meet specific criteria, while others charge fees for services rendered.
Budgeting is the most efficient and least expensive debt solution. However, it requires the most will power and a partner to help keep you on track. Most people do not realize how much money they waste on a daily basis.
Financial experts recommend carrying a pen and notepad or using your cell phone to record every expense for at least seven days. To get a full perspective of wasteful spending, track expenses for an entire month.
If you're using credit cards for daily purchases and making the minimum monthly payment, you will be drowning in credit card debt for years to come. Budgeting can help you pay off credit cards and outstanding debts through the creation of a get-out-of-debt plan.
Start by making a list of income and expenses. Include your rent or mortgage payment, insurance premiums (health, home, life, pet), medical expenses, gasoline and auto maintenance, clothing, groceries, utilities, credit card payments, school or work lunches, magazine subscriptions, salon visits, etc.
Finally, determine how much you need each month to pay your bills. Create an envelope for each bill and place money in the envelope each week to cover the expense. Most banks offer electronic envelopes which allow you to distribute money to each expense. If you use the cash envelope option, you must commit to leaving the money in the envelope until it is time to pay the bill.
Debt consolidation is generally reserved for homeowners. Borrowers take out a home equity loan using their property as collateral. The money can be used to pay off debts, pay for college tuition, or invest in real estate or financial investments.
Debt consolidation loans require borrowers to either take out a second mortgage or refinance their current mortgage note. Both options can place the real estate at risk for foreclosure. Careful consideration should be given before using your residence to pay off outstanding debts.
Debt settlement is typically handled by debt settlement companies or lawyers. Consumers pay a fee for debt settlers to negotiate with creditors and reduce the amount of debt owed. There is no guarantee creditors will engage in negotiations.
Should you decide to use the services of a debt settlement company be certain to conduct thorough research and ask for a list of references. Take time to contact each referral. Lastly, be certain to read the fine print to determine actual fees. Debt settlement can be an expensive debt solution if you aren't careful.
Credit counseling is an excellent debt solution option for individuals who have a hard time managing their finances. Credit counselors are trained to review debtors' financial situation and offer debt solutions. The U.S. Department of Justice offers a list of approved credit counseling agencies via their Trustee Program.
Overcoming debt can seem impossible, but with patience and persistence it can be done. Remember it took time to create a mountain of debt and it will take time to eliminate it. Take time to research available debt solutions, decide which is best for you, and make a plan to kick debt's butt.
We encourage you to spend time in our debt solutions article library. Here you will find dozens of informative personal money management articles and valuable resources to help you make informed decisions.
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Published on September 26, 2009 at 02:45 AM