Get Started with Debt Consolidation Now...

When is Debt Too Much?

The warning signs of too much debt are pretty simple and clear. There is not enough money left over at the end of the monthly bill paying activity for all of an individual’s or family’s needs; family discord results from arguments over expenses and debts; a debtor is losing sleep, become stressed and anxious, and suffering loss of productivity and happiness. The emotional toll of overwhelming debt can transfer to physical conditions of all types, to include high blood pressure, ulcers, stroke, etc. The only solution is to eliminate debt as quickly and as effectively as possible. Fortunately, there is expert advice on how to handle elimination of debts. The required changes in spending behaviors and the necessary self-discipline, if successful, will result in following the advice and achieving a debt-free lifestyle.

What the Experts Say

Americans have a whopping $690 billion in credit card debt and 70% of American families state that they are carrying too much credit card debt to be comfortable. So, the first thing you need to tell yourself is that you are not alone in your problems. You are, however, now responsible for the development of your personal solution to your individual ills, and there is plenty of help available. Here’s what the experts say.

Get A budget

You have to have a budget. There is no way to determine is you are truly over your head unless you have one; further, you can’t plan without one. If you have never had a budget, get some advice or put together a simple one which will do for the short-term. Add up all of the household net income. Add up all of the necessary expenses each month, to include rent/mortgage, utilities, car and insurance, gas, groceries, minimum payments on credit cards and other debt. If you do not have enough to meet these, you are obviously in serious straits and one of the suggestions that follow later may be for you. If you have money leftover, commit to spending it on one credit card debt, preferably the one with the smallest balance. This means that the spending behavior changes now. No more morning lattes, no more movies for a while unless they are rented, and certainly no more charging.

Cut Up Your Cards

If you don’t have a card you cannot charge. Cut up all cards but one, saving it only for emergencies. When renewal cards come in the mail, they get cut up as well. Do not cheat on this, or your plan will not work. If you truly have no self-control, then close the accounts you have except the one for emergencies. You cannot charge if you don’t have an account open.

Take Advantage of Teaser Interest Rates

If you receive credit card offers with teaser interest rates, especially those with 0% interest for transferred balances, read the fine print and be certain you will not be assessed additional fees. Transfer as much as you can to this new account, and then carefully watch for the end of the introductory rate. Mark it on a calendar so you won’t forget. If you get another offer close to the end of your current introductory rate, transfer the balance again and close the former account. You can do this as often as you continue to receive offers. It’s a great way for your payments to go completely toward reducing the actual loan balances.

Pay Early

Pay your credit cards as soon as you receive the bill to avoid additional interest. Every day that a balance is on your account means another day of high interest charges. Paying early reduced the principle upon which the interest is being charged.

Use Windfalls to Pay Debt

It would be nice to take a vacation with that tax refund, but that is not in your current plan. Use the refund to reduce debt, perhaps putting a small amount in savings against future emergencies.

Consider Debt Consolidation if You are Drowning

If you cannot make your monthly payments, you need to look at bill consolidation. This means that you secure one large loan to pay off all credit card debt, getting one smaller monthly payment. The idea here is that you don’t charge anything more, so cut up the cards or close the accounts. Make this payment early each month and put as much additional money on it as you can. If you are unable to secure a loan yourself, you may have to purchase the services of a debt consolidator. Do the research and find one with a good reputation.

If You Are Late and Creditors are Calling

Negotiate for a lower interest rate and/or a lower total debt amount. If you are 60 days or more late, creditors may be willing to reduce both if they think you are close to bankruptcy and they may get nothing at all. Do not give creditors false hopes of getting payments. Better to play the totally broke role to get them to negotiate.

Bankruptcy

You will need an attorney who can advise you on which type of bankruptcy to file. This is often an option when there is just no feasible way out of your financial mess. Bankruptcy will hurt your credit rating, but you can build that back gradually once the bankruptcy has been discharged.