Debt Reduction Strategies that Work

If you are reading this, you are probably looking for credit card debt reduction strategies that will actually get you out of debt.  Unfortunately, it can be extremely difficult to find good advice that you can trust on this topic.

Many websites and/or commercials that you come across have an agenda, and it is not to simply help you reduce debt.  Instead, their goal is to make money for themselves, whether or not they actually help you with your finances.

In fact, many of these so-called debt reduction programs can actually ruin your credit and even leave you in MORE debt.  Obviously, you will want to avoid any service or company that has the potential to harm you rather than help you financially.

You should almost always steer clear of debt negotiators and debt negotiation services (for more information on what to avoid, check out this article on debt settlement pros and cons).

Strategies You Can Do on Your Own

A lot of times, you don’t actually need help from any outside company to get out of debt quickly.  In fact, the first thing you should do is determine whether or not it is possible for you to handle your finances on your own.  Of course, it does take a lot of willpower and discipline to come up with and stick to your own debt reduction plans.

One of the most popular do it yourself strategies these days is the “debt snowball” method.  With this plan, you basically pay off your lowest balance first, while making near minimum payments to your other debts.  Once you pay off the lowest balance, you take the money you were sending to that account every month and apply it to your next lowest balance.

This method works because it gives you a psychological edge over the traditional method of paying off high interest debt first.  However, if you have the discipline to stick with it, the best method for you may be to pay off higher interest debt first rather than using the snowball method.

Loans and Balance Transfers

One very popular debt repayment strategy is to consolidate with balance transfers to another credit card or through some type of loan.  This can be a smart method if you have the discipline to pay off and not rack up more debt, and if you have the good credit needed to obtain loans at a favorable interest rate.

Many people take out home equity loans or refinance their mortgages to pay off unsecured debt.  While this can give you lower interest rates and a lower monthly payment, this is not always the best option.

As the recent troubles in the housing market and economy have shown us, when you roll your unsecured credit card debt into a new debt secured by your home, you are at risk of losing your home.  Most of the time, this is simply not worth the risk.

When You Need Debt Help

If you determine that you do need debt help, it is important to know where to look.  As I said earlier, you should avoid debt settlement companies at all costs.

The best help you can find is usually through a non profit credit counselor.  A legitimate counselor should be knowledgeable and accredited.  You should also check with the Better Business Bureau before working with any type of company to help you with your debt.

This entry was postedon Monday, August 2nd, 2010 at 3:10 pmand is filed under Tags: debt help, debt negotiation, debt reduction, debt reduction plan, debt reduction services.You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

« Debt Negotiators: Scam or Solution?Choosing Between Debt Consolidation Options »One Response to “” 1Anne Says:

Hi – I did have an hour session on the phone with a non-profit counselor. He suggested many of the things you have listed here. It was a sobering experience! I had mixed results when I contacted my creditors directly – Chase did give me the option to reduce my interest rate to 2% and pay off the balances in 5 years. (At the same time as closing the account.) I enrolled, and it is reducing my debt.

This is a very important topic, and one that I am really trying hard to incorporate into my day-to-day decision making.

August 13th, 2010 at 1:03 am Leave a Reply

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