Debt Solution – The 7 most important steps you can take.

by Philip McClarence

Debt is an ever growing problem for our society. Huge numbers of people are declaring bankruptcy every month and far more are struggling to meet their minimum payments.

The effects of bankruptcy can be far reaching and can impact people’s lives long after the bankruptcy has actually ended, making it difficult to obtain credit and even spoiling many employment opportunities when companies credit check potential employees.

Many people who have become trapped with large debts will find that bankruptcy is their only option and if that is the case, you should face it head on. For most though, options may still exist. If this is the case for you, it is important that you take action as soon as possible.

Consumers in general now carry a huge amount of revolving debt on credit cards and 47% of people who don’t pay off the full balance each month pay only the minimum balance, a terrible strategy for paying off your credit cards and a very expensive one.

If this applies to you, you are not alone. It is constantly hammered into us through T.V. and advertising that it is ok to spend money before you have earned it and many of us have been fooled. The problem is that this way only traps you into a life of working hard for someone else. That doesn’t sound good to me!

All is not lost though, for most people, if you take action now, you can probably still fix the problem and start living a debt free life!

Tip 1. Put it all down on paper. Make a list off all of your debts. It sounds like an easy task and it is. You need to write down your creditors names, total amounts outstanding and monthly payments. Be prepared as it can be a bit scary especially if you haven’t listed them all before. But don’t worry; you’ll get on top of it.

Tip 2. Work out which debts to focus on. One good strategy is to only pay the minimum payments on all of your debts except one which you deem to be the most pressing. (Normally the one with the highest interest but it could also be pressing for other reasons.) You pay as much as you can to that one until it is paid off then you add the payments for that one to the next most pressing debt. This can significantly shorten the amount of time it takes to get out of debt.

Tip 3. Cut up those credit cards! Don’t just put your credit cards away somewhere and defiantly not in your wallet. Cut them up so that you won’t be tempted to use them. When you pay each one off, contact the company and cancel the account. Don’t fall back into the same trap!

Tip 4. Check out your credit report. It’s worth making sure that no companies have put black marks on your report. If they have and it’s a mistake then you should contact them and get it fixed. If it is not a mistake, you should still contact them, try to pay the debt off and see if they will remove the mark. It is worth it down the line to have a clean credit report.

Tip 5. Work out a spending plan. Spendig plan or budget, they are both the same and the benefits of working out a realistic plan can be huge. Apart from the benefits of knowing exactly where you stand, you will know how much you can spend without feeling guilty.

Tip 6. Never swap unsecured debt for secured debt. Companies will throw offers at you once they learn that you are in debt trouble and you are a home owner, but they will reposes your home at the first opportunity if you start missing payments so don’t do this unless you have no other option and always seek impartial advice first.

Tip 7. Help is available, take advantage of it. Don’t face this problem alone. There are debt charities and non-profit organizations that can offer you advice and an understanding ear so before you take any drastic action or sign up for anything drastic, take the time to hear what they have to say. You may be surprised.

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