How to Reduce your Debt in 5 Easy Steps

Written by Chileshe Mwape

If you have incurred substantial personal debt, consider these options: budgeting, debt consolidation, credit counselling from a reputable organization and working with your creditors. You will need to choose a debt reduction method that will work best for you? The method you use will depend on your level of debt, how much spare money you have, your level of discipline, and how quickly you want to get out of debt.


The first step towards taking control of your financial situation is to do a realistic assessment of your income and expenditure. Work out how much you earn (your total income) and write this figure down. Then total your expenses. This is how much you spend each month for rent, fuel, food, clothing, heating, water, electricity and other bills. The difference between your total income and your total expenses isrepparttar amount of money available to pay your creditors or lenders.

Decide if there are any monthly expenses that you can reduce or live without. Focus on lowering your expenses so that you can increase your income. You'll be amazed at how many things you can do without.

a) Debt Reduction Methods

Choose a debt reduction method that fits your situation and givesrepparttar 148134 maximum benefit. You could choose to focus on repaying debts that are most important to your credit rating or to maintaining your family's safety. Or you can start by paying off those debts withrepparttar 148135 highest interest rate thus reducingrepparttar 148136 total spent on interest charges and increasingrepparttar 148137 amount available to pay off debt.

Alternatively, you could focus on paying off bills withrepparttar 148138 lowest balances. Thenrepparttar 148139 money used for those payments can go to pay off other debts.

If your credit payments (excluding mortgages) exceed 15-20% of your take home pay, you can work with creditors to set up monthly instalments that are more in line with your income.

b) Credit Cards

Transfer your credit card debts (balance) to a card offering an introductory 0% interest rate for balance transfers. Make sure you keep uprepparttar 148140 repayments and then just before your 0% introductory offer is up, apply for another 0% card, transferrepparttar 148141 balance over before you starting paying interest Ė and repeat. With a good credit record, you could do this for years, moving your debt from one card to another until itís paid off.


This is when you use a new loan to pay off multiple debts. Your monthly payment will be lower because repayment is spread out over a longer period of time. This will usually eliminaterepparttar 148142 hassle of having multiple creditors, multiple bills, and multiple payments to make. It's very important not to take out any additional loans until your consolidation loan has been repaid. Borrowing against your home is a cheap way to raise money, but itís risky. If you canít makerepparttar 148143 payments - or if your payments are late - you could lose your home.

Debt Management - How A Debt Consolidator Can Reduce Your Debt

Written by Carrie Reeder

A Debt consolidation program starts with evaluating your financial situation. This process involves an in depth analysis of your financial standing. That analysis will help you to evaluate whether it is better to file for bankruptcy or go for a debt consolidation program. A debt consolidation analysis will estimaterepparttar debtorís potential savings throughrepparttar 148133 program.

When a deal is finalized withrepparttar 148134 debt consolidation company andrepparttar 148135 debtor. The next step is for one ofrepparttar 148136 counselors to contactrepparttar 148137 creditors and work out a reduction inrepparttar 148138 interest rates and monthly payments at an amount that will be affordable torepparttar 148139 debtor.

Through negotiations withrepparttar 148140 creditors,repparttar 148141 debt consolidation company usually reduces or eliminatesrepparttar 148142 interest charged. The balance owed towardsrepparttar 148143 creditors is reduced and they can giverepparttar 148144 debtor a reduction in evenrepparttar 148145 principal amount.

The Debt consolidation program will also helprepparttar 148146 debtors by inducingrepparttar 148147 creditors to stoprepparttar 148148 legal actions which they were taking againstrepparttar 148149 debtor which means they can no more devour debtorís income nor can they takerepparttar 148150 debtor to court. Also this starts bringing uprepparttar 148151 credit rating ofrepparttar 148152 debtor because nowrepparttar 148153 debtor is repayingrepparttar 148154 debts underrepparttar 148155 new agreement.

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