Is there really a way to reduce your debts? Yes, not only can you reduce them, but outright elimination is possible as well. It requires a good financial plan, some budgeting, and follow through to pay back the loans. This often entails some sacrifice on your part. Such sacrifices can mean turning in your membership to a favorite club, reduce spending when going out with friends, or even canceling cable TV. Any non-requirement may be up for consideration. Ongoing debt can prove to be a significant burden and mar your credit score. And no one wants to face the harassment of creditors who use various pressure tactics to intimidate you.
Whether credit cards or home operating bills, they arrive in the mail each month like clockwork. Resist the temptation to pay only the minimum charges on the statements; in fact, whenever possible pay the entire amount due. This way, you avoid incurring fresh debt and are simultaneously able to reduce those you already have. Credit cards companies typically charge a very high rate of interest on your outstanding amounts, and the interest is compounded on a monthly basis. So by paying only the monthly minimum, in the end you could conceivably wind up paying higher interest charges than the principal amount itself!
There are many debt consolidation agencies that will help you combine all your debts into one monthly payment. If you owe a significant amount of money from multiple debts and are unable to repay them, then let a financial agency do it for you. They cannot reduce your overall principal owed. However they can assist you in obtaining a lower overall rate of interest. That's because the debt consolidation agency will put together a loan package that has a lower rate of interest to pay back your existing debts. The result will be a single, rather than multiple, monthly payment.
Transfer Your Credit Cards
If the interest rates on your credit cards are high, seek a different credit card offering a lower rate than those you currently use. Transfer your existing debt to the new card and try to pay it off as quickly as possible. This approach would serve as another means of lowering your interest charges, resulting in smaller monthly checks to the credit card company and more for your savings.
Once you have repaid your debts, you should see improvement in your credit score over time. From that point forward, you need to be financially prudent, lest you fall back into the very same debt trap you just escaped.