Take it away Connie...
"If you’re feeling the financial strain of carrying too much
credit card debt for your budget to handle, you need to find a solution as
quickly as possible. Otherwise, your unsecured debt issue can become a big
financial problem. So the real question is can you reduce your debt on your own
or do you need to seek help from a debt professional?
The first step in determining if you can find a solution to
your debt on your own is to get an accurate picture of where you are
financially. The following questions can help get you started:
1 . How much total unsecured debt do you owe?
2 .
What are the interest rates being charged on
your various accounts?
3 .
What is your credit rating?
4 .
How much additional money could you allocate
each month to apply to paying off your debts as
quickly as possible?
Having a formal household budget in place can be a big
advantage in helping you plan out how to pay off your debts. If you don’t
already have a budget established, you should take time to get all of the
numbers written down in one place. This will make it easier to see how much
additional money you could allocate by showing where your money actually goes
each month.
In some cases, streamlining your budget to free up as much
money as possible can provide a means to pay off debt on your own using a debt
reduction strategy. You pay all of your bills as requested, but focus all of
your extra money to paying off one debt at a time until you are debt-free. You can
start with your highest interest rate debt if you want to pay back your debt in
the most efficient way possible, because these debts grow the fastest with
interest. However, if your highest interest rate debt is also your biggest
debt, you may feel like it’s simply too big to start with; in this case, start
with your lowest balance first and work your way up to help gain momentum.
If streamlining your budget won’t work, there are still a
few options to reduce your debt on your own if you have a strong enough credit
rating. Balance transfers or a personal debt consolidation loan both allow you
to roll multiple unsecured debts into a single monthly payment at a much lower
interest rate. Since the interest is less, you pay off your debts faster even
though you pay less each month. You pay your debts back in a way that’s more
affordable within the limitations of your budget and avoid any long-term credit
penalties because you pay back what you owe in-full.
These two options however, are only beneficial for improving
your situation if you have strong credit. In both cases, you need to qualify
for an interest rate that’s low enough to provide a benefit for your finances.
You will need to do some calculations to make sure these options actually
provide relief, as they can make your situation worse if you are not careful.
Even if you want to reduce your debt on your own, it’s always advisable to
speak with a trained credit counsellor before you choose a debt relief option
to make sure it’s the right choice for you. Find a not-for-profit credit
counselling agency to get an assessment of your situation and the advice you
need for free; and without any obligation to sign up for a program.
Connie Solidad
has been writing about finances and debt consolidation for years. She's an
expert in the industry and writes about debt management solutions and credit counseling. When Connie is not
working, she loves playing with her two dogs in Tampa, Florida. To learn more
about debt management refer to ConsolidatedCredit.ca."
Thanks Connie. And may your (hopefully) smart lives remain (mostly...kind of) debt free (this is America after all).
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