Getting yourself out of debt or trying to repair bad credit can be a long, tedious process. Too many people have spent years wrestling with financial or bad credit issues and know the solution will not happen overnight. It can take months, sometimes years to unravel a financial crisis and repair bad credit but it still is do able. There are many options that can help get you started in the right direction; lets take a peak at them now..
Make List of Your Debts
First and foremost, you need to pay attention to how deep in debt you actually are. Often people have no clue how much they owe or to who. People typically avoid this subject because they just dont want to know. They think that by avoiding the truth it will somehow magically go away on it’s own. The fact is however, you need to list your debts and amounts. Organize your information and document the lender name, date the debt was incurred, interest rate and finally the total amount to be paid. Then calculate the totals. You may want to list in order of highest interest first so you can prioritize which debts need to be paid first.
Pay Credit Cards and Debts with Highest Interest Rate
Focus on paying highest rate credit cards and debts first. Always pay more than minimum amount. If you are stuck in the minimum payment trap then you will never be free of debt. Banks have devised the minimum payment system primarily for their benefit. Loans take many additional years to be paid off while earning them more interest. I Always pay more than minimum. These small extra payments can take years off the loan and a ton of money as well.
Debt Consolidation Loan.
Replace your high interest credit cards with a single low interest rate credit card. You could approach your lending institution for a debt consolidation loan. However, there are often application fees with this type of loan, whereas credit card applications carry no upfront fees.
Home Refinancing or Home Equity Loan
Refinancing your mortgage to a lower interest rate may make sense and With the monies you save pay down and pay off your other debt. You may even have enough equity in your home to take out with a home equity loan and pay off your debt. Credit card debt is not tax deductible but a home equity loan is. This option reduces your debt and will give you a tax break as well.
Hoards of credit counseling companies are waiting to assist you. This can be a both good and bad as you will quickly learn many of these companies will charge outrageous fees to do work that quite simply you can do yourself. There are also government agencies and nonprofit firms that provide credit counseling services for little or no money but you have to do your research and see what each has to offer. As with anything..buyer beware and do your due diligence when choosing a company to help you out of your dilemma.
Stop Living Like The Rich and Famous
For as long as you are in debt, you will need to make some lifestyle choices. Cut down on impulse spending but eliminating credit cards. Try to save precious pennies everywhere you go. That means eliminating trips to the mall, dinners out, entertainment etc. You can save on everyday necessities such as groceries and toiletries by doing things like cutting coupons and searching for discounts on purchases so you get overwhelmed giving up what seems like everything.
You now have some very good suggestions to help you reduce your debt and repair bad credit . Again, financial messes typically don’t go away overnight and they definitely won’t resolve themselves but you can take smalls steps to significantly ease the strain and at least get moving in the right direction…that equates to being debt free and without a bad credit score . Investigate each option fully and select the best course of action for you.