Debt reduction services can assist any individual in their financial problems. They will help you come up with a plan that will eventually eliminate your debt. Different companies have various processes to make this happen but most of them involve a plan that will guide you through the whole process.
Do not be deluded into thinking that these companies will pay for your debt. They will do so but with the money that you will enter into a secure account. The program or plan that you will get yourself into is something that both you and a debt relief expert arrived at. You will start with a counseling session wherein you will discuss your financial status. You have to be honest in laying out your finances because that is the only way you will get help.
It is important to remember that this part is usually for free. However, after the initial consultation, you will be given a quotation so the company can work on your debts. Be wise in selecting the debt reduction service that you will avail. No upfront fees should be charged and there should be evidence of guaranteed results before you pay for any service. In fact, there are government agencies that offer free counseling services.
Creating a Debt Reduction Plan
Once you have selected the company you will allow to work on your debt, you should be able to discuss the details of your debt reduction plan.
During the initial consultation, you studied your finances to find out just how much you can afford to pay your creditors. This includes determining the amount that you need to put aside for your basic necessities.
You will begin by getting your free credit report from the AnnualCreditReport.com. You need to rank your debt by placing it on a spreadsheet. Indicate all your debts and place details like their balance, minimum payment, interest rate and the number of payments left in your original term. By listing them down, you can identify the fixed amount that you can pay every month. Remember that this amount should be higher than the combined minimum payments of all your debts. Also, it should leave you enough of your income to pay for basic necessity expenses like rent, food, etc.
If you have more than enough to pay for the minimum, choose target debts that you can increase payments. Ideally, these should be the high interest credit cards that you owe but a lot of experts will suggest that you work on those with the lowest balance first. It will encourage you to pay off the rest once you complete one or two of them. When you have finished off some of your debts, only then can you work on the high interest rate cards.
In case you cannot afford to pay for the minimum payments, you can go back to your basic necessity expenses and looking at where you can save further. This can be little things like packing lunch for work instead of dining out.
If you have exhausted your finances and you are still left unable to reach the minimum payments, you can opt to transfer the balance of the high interest debts into the lower ones. This could lower your monthly minimum payments. If that does not work, you can opt for the debt settlement plan.
Your Follow Through Plan
Unfortunately, not all debt relief companies offering this service really help. But that is because they fail to address the source of the problem – the bad spending behaviour. While it is important to pay off what you owe, it is equally important to learn how to curb your spending. Some people tend to backslide to their overspending ways after a debt or two are paid for. This is a big no-no and could get you back in the same situation you started from. Any extra cash should be saved and if you can, stop using your credit cards!
There are various ways to save: clip coupons, abstaining from eating out and working on your tax refunds. These will not drastically deviate you from your usual lifestyle. Until you get your finances on track, you need to discipline yourself and your spending behavior.
NationalDebtRelief.com is a debt relief company that can help you come up with a debt reduction plan. Give us a call so we can guide you through the process. Our experts are standing by and ready to assist in every way possible.