In the world of debt and IOU’s, there are reasonable debts of investment that could (potentially) turn you a profit at the end of its term, i.e. a mortgage or a student loan. But when journalists report on the dismal state of America’s s debt and repay ratio they are sounding the alarm on a system bloated with short-term high-interest credit card and personal loan debt. Currently, the amount of consumer debt in America is five-times that of the U.K. and debt in Australia combined; while we only have three-times as many people. Is it not safe to say that America has a debt addiction? Most Americans are awaiting a governmental messiah to come and wipe away all of their debt, bill collectors and other personal anxieties in one fell swoop. But part of the reason you’re reading this article is because you’ve decided to take an honest look at your personal circumstance and get help on what to do, and you’re fed up of loans for people with bad credit. Here are a few tips on how you can take control.
Things You Can Do to stop the Bleeding First and foremost stop using credit cards (at least until you’ve cleared or drastically reduced your debt portfolio). “Cut them up,” some say. While cutting up your credit cards is more personal than to just take as an order from someone else, it is a wise consideration. Separate what you actually need from the things you desire; and then take a period of time where you give your bank account a break from multiple spontaneous transactions. Talk to a more financially stable person, ask them to help you create a budget and stick to it. Debt accumulates over time and never disappears. Disintegrate the debt snowball and begin reversing the process.
Once You’ve Bandaged the Cut
The healing process begins as you begin to organize your debt portfolio for a period of pay-offs. Once you’re organized, gather the courage to contact your creditors and ask for payment plans and settlements to clear out your accounts. A “best practice” is to place your debt on a percentage scale. By using this method, you’ll calculate your total debt and tally the total at 100%. Once you’ve tallied your total, take each individual debt and run its percentage against the total. Then simply pay the smaller percentages first. Yes, a more simple way to put it would be to just pay the smaller bills first and work your way up; but making a percentage chart will help you to keep track of the bigger picture and help you make better decisions on how big a sacrifice you should make to have your debts paid by the end of the year.
Things You Can Do to Ease the Healing Process
Systematically cut into the percentage of your overall debt by settling out as many accounts as you can. Account settlements are usually available when an account has gone delinquent. A settlement is an amount agreed upon to relinquish the overall debt. For example, you may be able to agree with an agent to allow a pay-off of $200 on a bill totaling $500; this is more common than you think.
Contact a credit-counseling or debt-settlement agency. These are companies that will help assess your debt to income ratio and negotiate with creditors so that you get a low month-to-month payment plan or negotiate a settlement on your debt. A “best practices” approach to credit counseling agencies is to go reputable. There are more than enough agencies that will collect money from you and never pay your creditor.
About the Author: Nisha Sharma represents a site called CompareLogbookLoans.co.uk. She love to write, especially about travel, finance and offer business advices.
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