Choosing Debt Relief Program

No matter what other people or even the media says, if you feel you need help with managing your debts, no one has the right to stop you from asking for help. No one understands your spending habits and the state of your finances better than you. So if you wish to enroll in a debt relief program, don’t feel guilty or foolish about it.

There are two choices you have to make when in search of debt relief: which company to work with and which debt relief program to enroll in.

Choosing the Right Debt Relief Company

Never do business with a debt relief company that’s less than one year old. The rules in the debt management industry are ever-changing and becoming more stringent every year. You need to work with a company that already knows its way in the world, and has built a solid network of contacts and a credible reputation.

Always check with the Better Business Bureau and other similar institutions to know the present status and rating of the company. If possible, transact only with a company that has successfully aided an individual you personally know and trust.

Choosing the Right Debt Relief Program

There are, strictly speaking, only two types of debt relief programs you can choose from: debt consolidation and debt settlement.

Debt Consolidation – With this type of debt relief program, all your loans are merged into just one loan. You’re then only required by the company to make one payment every month for all of your loans. Because debts are less troublesome and easier to manage that way, debt consolidation loans have also become known as debt management loans. If the stress of being in constant contact with your creditors is your most pressing worry, this type of debt relief program is the optimal solution for you.

Debt Settlement – This is trickier than its twin. Also known as debt negotiation and credit counseling, debt settlements require the debt relief company to work for an acceptable compromise between debtors – that’s you – and creditors (your so-called enemies). If you have a very large amount of debt, a debt settlement represents the wise choice because it significantly reduces the amount of your debt through lower rates and elimination of late fees and other similar charges.

In the end, both types of debt relief programs have their own pros and cons. The right choice will depend on your personal characteristics – are you easily pressured? – and how indebted you are at the moment.

How To Save Money And Get Out Off Debt

One of the things that people can’t live without is money. This is the only way that a person can buy stuff such as food, clothes or gas. It is also used to pay for certain amenities such as water, heat and electricity, which are vital for the home.

These things are perhaps the only things that are important for any household. Unfortunately, there are some who spend too much and in the end, have a huge debt to pay when the credit card bill comes at the end of the month.

Is there a way out for anyone in this predicament? The answer is yes and that means cutting down the budget only for the essentials so the excess can be used to pay off the debt.

The grown-ups in the household must first itemize these expenses. This will inform the owner where the money goes and how long this lasts. Some shop for groceries weekly while others do it every two weeks.

The same goes for gasoline used for the car, which really depends on where the person travels if it is work related, or for pleasure. This is very important these days since the price per gallon is up by more than $3 and isn’t expected to come down in the nearer future.

Car-pooling is one way those who work in the same company can save money together. Refueling done every seven days can probably become eight or nine maximizing the gas inside the vehicles compartment.

Do people really need to shop for clothes every week? Not really. A good pair of jeans could last a few years while a shirt or a blouse can last months before it fades due to wear and tear. This may mean sacrificing to be with the “in-crowd” but this can wait until the financial problem at home is settled.

The clothes will always be there. Instead of buying them at the regular price, why not wait till the store has a sale or a promotional event, which can save a few dollars that can also be used to buy other items.

Most homes have a telephone, cable and an Internet connection. In some cases, a service provider can provide all three. If the bill is too expensive, perhaps it is time to switch to another company that can give the same quality at a lower price.

There are many ways to save money and get out of debt. The people involved should work out a plan and stick to it so that this problem will soon be over.

Creation Of A Budget

No man is an island. We all need help once-in-a-while. We’re not only referring to personal matters. We’re talking about financial matters. We reach a point where we have to buy something out of necessity, but we can’t pay in full just yet. An example of this is a home.

Now the time has come for you to repay on what you own. You must have the discipline to plan out how much you should have saved so when your time is up and you have to shell out the money you owed there and then (plus interest), you wouldn’t have a hard time doing so.

Prioritize which of the debts must be paid first. Prioritize your bills. Make a list so it would be more organized because you could see it right in front of you.

This is what you call establishing goals. Establish first what must be prioritized over those you could schedule paying some other time.

The essential debts are debts that should be on top of your list. These are :

– Rent or mortgage. Of course, who in his right mind won’t pay up as soon as possible. Paying your rent or mortgage bills on time helps you have a roof over your head.

– Child support. If you don’t pay on time, there’s a possibility you can be held behind bars.

– Utility bills. As much as possible, set aside a budget on gas, heating, water, electricity or telephone when you get your paycheck. In doing so, when the bill comes, then you have something prepared.

– Car payments. This also includes car maintenance.

– Other secured loans. If you don’t repay collaterals, the creditor takes the property even without court interference.

The non-essential debts can be set aside because when these aren’t paid, they don’t have that much of a side effect. It’s a desired goal but not really a priority. The only concern that can be considered when you don’t pay non-essentials debts for a long period of time is the negative image it could project on your credit report.

– Department store and gasoline charges. Failure to pay these charges may result in losing credit card privileges. If it’s too large, you might be sued.

– Loans from friends and relatives. Morally speaking, there is an obligation to pay but sometimes since they’re family, we think that they will understand if we can’t. Check with them if you can delay the payment and ask them for how long.

– Newspaper and magazine subscriptions. Little by little, if you haven’t paid, they’ll amount to so much.

– Legal and accounting bills. If these remain unpaid after a long period of time, then that’s when you might be sued.

Control High Interest Debt

Your net worth is your assets minus your liabilities. Liabilities are debts. The more debts you owe, the lower your net worth will be. Plus whenever you have debts, you also pay for the interest, that’s why you lose more.

For practical reasons, it’s understandable why people sign up for loans. Take for example, buying a car or a home, it’s hard to shell out cash here and there. That’s why debt is a tool that when used wisely can benefit the borrower. However, the borrower must comprehend that a debt is still a debt and must be paid in due time – with interest.

When people don’t manage their money well, they get in financial trouble. It’s a cycle. They run short of cash, that’s why they borrow. Then they’re not able to stick to a budget so they can’t pay the debt.

Reasons why people get into serious debt are:

– Unemployment

– High cause of medical bills

– Settling divorce finances

– Spend-aholic or could not control spending

– Wasn’t able to save

– Not in the know on financial and credit matters

When talking about health, prevention is always better than cure. That’s the same with your money, better to save for a rainy day.

Here are some tips:

– Make a budget and do your best to stick to it. When it’s payday, have an amount allotted for the bills that have to be paid as soon as possible. This includes setting aside some for credit card debts.

– Save 10% of your salary for emergency. You don’t know what could happen the next day, next week or next month.

– When you have a choice of buying a purchase for a lower and practical price, then go for that one. Think, think, think before investing on something.

– If you have to borrow, research on the loan. Study the interest rate and the penalty fees. Then after borrowing, make a budget of how much you can save so that you can pay when called for.

It is common understanding that when you take out a loan, you repay the principal. The principal is the amount that you borrowed plus the interest.

You can control your credit card debt by looking at the interest rates of any loan you’re considering to sign up for before doing so. Interest rates vary and it is practical that you get one where you wouldn’t lose as much.

As much as possible, have at least one or two credit cards. Too much credit cards in your wallet can indulge you in buying something you don’t really need. You just buy it because you know you can. However, you’re not sure if you can pay off your debt when the occasion arises.


If you want to cut down on high credit card bills, you can:

– Pay cash instead

– Limit yourself on charging. Record it and do your best to not exceed that amount. You must always, always keep track.

– Choose the credit card which offers the lowest interest rate and has no annual fee.

– Just because you’re getting a free gift or a discount on a purchase, you’ll sign up for that credit card. This is their marketing strategy for possible customers.

– Most importantly, pay bills on time. This is for you to avoid late charges, plus additional interests.

Just bear this in mind: if you don’t pay on time then it would be reflected on your credit history. This could result to you having a hard time borrowing the next time. Banks and other credit lenders check your credit history before they grant your loan. Creditors look at the recent two-year history and those who have credit record that contains a lot of late payments, delinquencies or defaults may not be able to get the loan.

To put it simply, in order for you to invest, the best advice we could give is to choose the right loan.

Look for the lowest interest rate. The interest that you save can be spent on other investments.

Studies show that by increasing your monthly payments, it can shorten the payment term on your loan. The longer you wait, the higher the interest you’re paying. Besides, signing up for a shorter payment term equals less agony when it comes to coming up with the money to pay the debt.

The key is maximizing your net worth by minimizing your liabilities and maximizing your assets. Know how much you have and strategize on how you can increase it without losing much of it just to pay for debts.