Do It Yourself Debt Settlement With These Step By Step Guidelines
With a little dedication it is possible to reduce your balances on your own. There is no need to meet a counselor or opt for a debt consolidation program if you follow some general guidelines for debt reduction.
Step 1: Evaluate your debts Collect all your financial paperwork and print out a copy of your credit reports. You need to know what is actually listed there so you don't attempt to repay balances that are beyond the statute of limitations. Attempting to do so will revive these debts! This crucial step towards debt reduction is one that most consumers are often afraid to take. Record the balances, interest rates, and monthly amount due for each of your debts. Also make a note of any annual fees on each of your credit cards.
Step 2: Reviewing your budget should be the next step for debt reduction. After you have recorded all of the info about your creditors, take a look at your monthly budget. Record your monthly income after taxes and subtract your rent/mortgage payment and any other monthly expenses such as childcare, student loan payments, insurance, utilities, and groceries. Once you have subtracted all of your expenses, calculate how much you have left over to pay towards what you owe. If this amount is inadequate, look for a way to reduce your monthly spending. The more money you can pay towards the principle each month, the sooner you will be debt-free. You should understand that the minimum payment usually covers only the monthly interest, and this is how the creditors make most of their money. They would be very happy if you only made minimum payments. In this way the debt remains active indefinitely and they can continue to make money on your account, for many more years. By making large payments above and beyond the minimum payment, you can actually start to put a dent in the principle of the balance.
Step 3: Plan of Action Now that you have become re-acquainted with your financial situation, you will want to create a plan. Subtract your minimum payments (Step 1) and monthly expenses (Step 2) from your monthly income after taxes. The remaining amount should be used to pay off the debt with the highest interest rate and the highest balance. Continue this cycle each month until that balance is paid off and then move on to the next highest rate/balance account. This may seem like an odd process, but it is the quickest path to getting out of debt. During this time, you should try to not add any new charges to your credit cards. Paying down the principle quickly is crucial to success.
Step 4: Start negotiations While you are repaying your debts (Step 3), you should also contact your creditors and lenders to see if you can improve the terms of your agreement with them. You may be able to lower your interest rates or even negotiate a reduced settlement on some of your debts by talking to the customer service department. It is easiest to negotiate the terms on balances that are "charged off" (dismissed) by the creditor or already in collections. Also think about moving some of your credit card balances to a new account with a lower interest rate. Moving a balance to a credit card with a 0% introductory rate for 6-12 months can help you save a lot on interest. Be sure to keep each of your individual credit card balances below 35% of the limit to help avoid any further damage to your credit score.
With Dedication You Can Achieve Management and Reduction On Your Own
Step 5: Follow-through Meet your payment goals every month. It's alright if the amount you put toward your most expensive account each month varies. Just try to consistently put as much as possible towards your reduction strategies.Superior Debt Relief is a Debt Relief agency. Our Debt Settlement Company works on your behalf to secure debt-free living with a number of services, including: Credit Card Debt Relief, Debt Consolidation Program, Debt Negotiation, Debt Management Benefits and Consumer Credit Counseling Service.