The internet is full of ads for credit relief companies, do-it-yourself-bankruptcy plans and debt consolidation programs.
How do you know which program is going to be the right one for your situation? What will the impact be on your credit score and your chances of obtaining future loans at a reasonable interest rate? In most cases, I would suggest that the best choice is none of the above! The best option for you is to pay the debt you created in full.
Stop spending more than you earn.
According to a Federal Reserve study, 43% of Americans spend more than they earn.
And on average, Americans spend $1.
22 for every dollar they earn, according to Myvesta.
org.
It just makes sense that if you spend more than you earn on a consistent basis, you will have a debt problem in your future.
Interest and fees to service that debt compound the problem.
The first step in reversing this trend is to reduce your spending.
You can choose to cut out unnecessary expenses now, or be forced to at a later date to save your home Get serious about cutting your expenses to a minimum.
I'm sure you have seen the Feed the Pig ads on TV showing you how much money you can save each year by packing your lunch for work rather than eating out and brewing your own coffee instead of stopping at Starbucks.
These are excellent suggestions, but if you are the typical American with a mortgage, car payments, and over $8,000 in credit card debt, you will need to make much deeper cuts to have any impact on reducing your debt.
Do you need 300+ channels on TV or can you survive with basic cable, or no cable at all? If you have 3 cars, can you make it work with only two, or can you reduce your 2 cars to just one? Can you live in a smaller house or apartment? Instead of spending thousands on a summer trip across the country, can you spend your summer vacation closer to home and still have a good time? The more you sacrifice now, the sooner you will be out of debt.
Once you are out of debt, you will have the financial freedom we all desire.
Sell your way to freedom from debt.
If you are like most Americans, you have a basement, garage or storage area crammed full of items you no longer use or need.
Take a tour through your storage area and see how many items you are storing that you have not used for 6 months, or even for years.
Could you sell those items on eBay or Craigslist, or have a yard sale? Probably every closet in your house, every cabinet in you kitchen and bath, and every drawer in your dresser has items that you no longer use.
There are most likely things you have bought or received as a gift that you haven't even taken out of the box.
These items can be sold, or re-gifted and the proceeds used to pay down your debt.
Can you find $2,000 of items to sell to pay on that credit card debt, or maybe $4,000 or even pay off all $8,000? An added advantage to selling your unused stuff is that you unclutter your home.
the space-saving can make that move to a less-expensive place possible.
While you are looking for the items to sell, it is also a good time to get rid of the broken items you've been meaning to repair for 5 years, but know you aren't ever going to fix.
If you find items that are not worth much to sell, then consider giving them away to family or friends, or donating to a non-profit organization.
Freedom from debt equals freedom to buy and do what you want.
You may find that you really did not miss the TV while you were working on reducing your debt, and that you got along just fine with one less car.
When you finish paying on your debt, the money you used to make in payments will now be available for you to use for the things you want.
You will want to save for the future and set up an emergency fund to cover surprise car repairs and such without having to use credit.
But, you will also have money to pursue your hobbies, pay cash for that trip across the country, or maybe be able to get rid of that second job so you can spend more time with your family.
Keeping your house and life simple and clutter free will give the higher quality of life that credit cards promise, but never deliver.
How do you know which program is going to be the right one for your situation? What will the impact be on your credit score and your chances of obtaining future loans at a reasonable interest rate? In most cases, I would suggest that the best choice is none of the above! The best option for you is to pay the debt you created in full.
Stop spending more than you earn.
According to a Federal Reserve study, 43% of Americans spend more than they earn.
And on average, Americans spend $1.
22 for every dollar they earn, according to Myvesta.
org.
It just makes sense that if you spend more than you earn on a consistent basis, you will have a debt problem in your future.
Interest and fees to service that debt compound the problem.
The first step in reversing this trend is to reduce your spending.
You can choose to cut out unnecessary expenses now, or be forced to at a later date to save your home Get serious about cutting your expenses to a minimum.
I'm sure you have seen the Feed the Pig ads on TV showing you how much money you can save each year by packing your lunch for work rather than eating out and brewing your own coffee instead of stopping at Starbucks.
These are excellent suggestions, but if you are the typical American with a mortgage, car payments, and over $8,000 in credit card debt, you will need to make much deeper cuts to have any impact on reducing your debt.
Do you need 300+ channels on TV or can you survive with basic cable, or no cable at all? If you have 3 cars, can you make it work with only two, or can you reduce your 2 cars to just one? Can you live in a smaller house or apartment? Instead of spending thousands on a summer trip across the country, can you spend your summer vacation closer to home and still have a good time? The more you sacrifice now, the sooner you will be out of debt.
Once you are out of debt, you will have the financial freedom we all desire.
Sell your way to freedom from debt.
If you are like most Americans, you have a basement, garage or storage area crammed full of items you no longer use or need.
Take a tour through your storage area and see how many items you are storing that you have not used for 6 months, or even for years.
Could you sell those items on eBay or Craigslist, or have a yard sale? Probably every closet in your house, every cabinet in you kitchen and bath, and every drawer in your dresser has items that you no longer use.
There are most likely things you have bought or received as a gift that you haven't even taken out of the box.
These items can be sold, or re-gifted and the proceeds used to pay down your debt.
Can you find $2,000 of items to sell to pay on that credit card debt, or maybe $4,000 or even pay off all $8,000? An added advantage to selling your unused stuff is that you unclutter your home.
the space-saving can make that move to a less-expensive place possible.
While you are looking for the items to sell, it is also a good time to get rid of the broken items you've been meaning to repair for 5 years, but know you aren't ever going to fix.
If you find items that are not worth much to sell, then consider giving them away to family or friends, or donating to a non-profit organization.
Freedom from debt equals freedom to buy and do what you want.
You may find that you really did not miss the TV while you were working on reducing your debt, and that you got along just fine with one less car.
When you finish paying on your debt, the money you used to make in payments will now be available for you to use for the things you want.
You will want to save for the future and set up an emergency fund to cover surprise car repairs and such without having to use credit.
But, you will also have money to pursue your hobbies, pay cash for that trip across the country, or maybe be able to get rid of that second job so you can spend more time with your family.
Keeping your house and life simple and clutter free will give the higher quality of life that credit cards promise, but never deliver.
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