How to pay off debt and consolidate your finances

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When most individuals grow up, they are never taught how to manage finances. This is one of the last things on our list to study. All our life we think about education, job, family but we never think about finances, investing and taxes. This leads us into boat loads of debt. We charge all we can to our credit cards and the credit card debt keeps on bloating until it is too late and you need to take some serious action on your debt. Make every effort to pay off your debt. As a tip and common sense, pay off high interest loans before you consider paying off low interest loans. In general pay off your credit card debt followed by your personal loans and auto loans and then your home mortgage. If you are unable to work out a debt solution, consult a debt consolidation advisor who can eliminate debt for you.



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How to pay off debt and consolidate your finances
In our world of dizzying change, nothing is more true than the time honored statement that circumstances always change.

No where is this more true than with financial issues.

Have you ever borrowed money, or charged up the VISA card at Christmas, all the while telling yourself that you would pay everything off with a coming tax refund or bonus?

Sound familiar. And then what happens when the bonus money arrives?

Let me guess...circumstances changed, the car needed brakes (or the kids needed braces, etc), and the VISA debt and interest charges keeps piling up.

Unless you have a plan, you will always be caught in the unpredictable grip of "changing circumstances."

This is a slippery slope that can very quickly become serious financial stress. Consider the fact that Americans are declaring bankruptcy at record rates. One in every 100 families is affected by a bankruptcy.

I was on this slope 10 years ago. Declaring personal bankruptcy and filing for divorce went hand in hand.

One of the most insightful moments of the process was preparing a written log for the trustee of all of our spending for the 5 years leading up to bankruptcy.

While all of the individual decisions made sense in the moments that they were made, they looked totally foolish in the context of the "bigger picture"

In other words, constantly changing circumstances drove us off our financial roadmap.

Consider this five step plan for getting on, and staying with, your financial roadmap.

Step No. 1: Make a list of what you owe & prioritize: Put all your bills in a pile. Then list your debts in order, starting with the largest balance first. Then prioritize your repayments (ie paying down the highest interest rate first).

Step No. 2: Eliminate credit cards and don't roll over balances. Once paid off, notify the company that you want to close the account.

Step No. 3: Make a spending plan. Change your free-spending ways. Track the money that's coming in and going out. Use a debit card instead of your credit card. Download your bank transactions into a computer program for easy categorizing.

Step No. 4: Be careful about the equity in your home. Billions of dollars worth of equity has been withdrawn from millions of homes in the last few years. But many people pay down credit cards only to charge them up again - and then you don't have the safety net of the equity in your home.

Step No. 5: Get help. For some people, the problem of overspending is a psychological one. Spending can become a habit that's as difficult to kick as alcohol, drugs or gambling. Sometimes, it's due to circumstances they truly could not avoid: medical bills or divorce or loss of a job.

You can talk with a credit counselor on a private basis. It only appears on your credit report if you enter their debt repayment program.

During this holiday season, as you consider your finances, remember that Americans are now carrying $683 billion in revolving credit card debt. 47% of the people who paid less than the full amount on their credit card bills in a recent month, made only the minimum payment due.

The good news is that planning and professional help will definitely help you turn things around.

Case in point: I went from bankrupt with zero assets living in a boarding house, to gainfully employed, running my own home based business, with 2 houses and excellent re-established credit.

In other words, it can be done.

Debt-eliminationsite.com is run by Drew Harris and is a one-stop-shop web portal for those facing crushing debt issues. Multiple pages of resources, referrals and tools. Expert advice on credit cards, loans and avoiding bankruptcy. http://debt-eliminationsite.com

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How to reduce credit card debt

One of the easiest "things" that can happen in life is the ratcheting up of a large credit card debt. For whatever reason, making purchases with credit cards seems easier than spending cash to obtain a product or service.

Maintaining high levels of credit card debt is not prudent. The interest rates associated with most credit cards is high. In fact, many people have managed to rack their card balances up so high that only the minimum payment is made each month. As a result, these people are taking years if not decades to pay down their credit card balances, all the while wasting an incredible sum of money in interest payments alone.

In this article, a number of strategies to reduce credit card debt are presented. These tips are general in nature but will provide a person with credit card debt a solid plan for reining in credit card balances.

A good overall strategy is to target the highest rates of interest. If you can, transfer the balance to another credit card, where you will achieve a zero or low interest rate for a set period. While this balance is not costing interest you can target other debts that are. Make sure you are prepared for when the offer period runs out and have another balance transfer offer ready to take over. You should look to have your credit card application a few weeks before your current offer period runs out. If you cannot transfer the balance then pay off as much as you can afford, so the balance reduces as quickly as possible.

Credit card companies are very competitive and as such there are some very good 0% balance transfers and purchase offers available. Look to take advantage of these, but make sure you have a plan in place on how to deal with the balance when the offer finishes. Remember that the debt has not gone away.

As mentioned previously in this article, credit card accounts usually have high interest rates. The combination of high interest rates and free spending patterns can result in the rapid escalation of credit card debt.

A debt consolidation loan can be an excellent tool to assist in the reduction of credit card debt. Consolidation loans carry interests rates far below those of credit cards. In the long run, a great deal of money can be conserved through the use of a debt consolidation loan.

While in many segments of society, the word "self restraint" is passe', out of style like last year's fashions. But, in reality, the very best way of reducing credit card debt is through self restraint.

Of course, it is easy to bandy around the words "self restraint" and much, much harder to practice personal control.

Although it might seem comical on the surface, cutting up credit cards is a perfect first step to reducing credit card debt. No cards, no charging, less debt.

Many people leave the payment of their credit card accounts at the bottom of the monthly bill pile. Other primary accounts -- rent, electricity, phone, and the like -- understandably take a higher priority over credit card bills. But, oftentimes a person will spend money on incidental purchases before taking on credit card balances. In the end, the credit card account may not be paid on at all or, if so, after the deadline.

One way to ensure that credit card payments are made and one way to ensure that credit card debt is kept under some degree of control is via an automatic payment system on credit card accounts. A person's bank can arrange for the credit card account to be paid automatically each and every month.

By ensuring that at least a base payment is made on credit card accounts each and every month, accelerated interest rates and late fee penalties will be avoided.

In this article, three strategies for reducing credit card debt have been presented :- debt consolidation, self restraint, automatic payments.

By following one or all of these strategies, a person will work towards a more solid and satisfactory financial position.

Neil Brown is a freelance writer who makes regular contributions to online insurance and business finance


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How to pay off debt and consolidate your finances
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