Friday, January 30, 2009
Debt Relief Options
Are you in debt? Millions of other people have debt too. How Deep in Debt are You? Debt Consolidation is an option for those who are in deep debt and cutting back on expenses is not enough. Be aware that debt consolidation is just one of several debt relief programs; it’s certainly not for everyone.
Debt Management Solutions
It is really important to be aware of the consequences of getting into debt. Unfavorable credit scores lower your chances of getting hired for some jobs and can decrease the probability of getting approved for housing or automotive loans. It can even affect your love life, making you a less desirable mate. Financial problems are not really one of the characteristics people look in a potential "love of their life". If you want to avoid these types of setbacks, learning how to manage debt is crucial. If you experiencing monetary problems, you need to come up with a debt management solution fast, for example by attending debt relief programs and similar solutions. Formulating your debt management solution is usually the easy part. Implementing the solution may require lifestyle changes that many people find extremely challenging.
Goal: Paying Your Debts
When you're forming a debt management solution, you'll need to start by calculating the amount of your debt. You want to know exactly how much money you owe so get the most recent copies of your credit card billing statements. Once you know how much you owe, your goal is to be able to make your payments for those debts on time.
Take a look at how much money you have each month after you deduct the taxes. This is your income, which can come from a number of sources: your job, any side jobs or work that brings in additional money, alimony and child support. The money you have in your savings account is included in this. Now from your income, deduct all your expenditures: groceries, utility bills, subscriptions, any savings you set aside each month, the money you spend for eating out, etc. After you've deducted the monthly expenditures from your income, the amount left is your disposable income. This is where you'll get the money for your debt management solution.
Increase the Amount
To find out how many months it will take you to pay off your debts using your disposable income, divide your debt by the amount of money you will have to pay off every month. However, this amount does not take interest into account. Computing for interest can be a complicated process, but this allows you to come up with an approximate time frame for payment. If you feel like the time you've come up with is too long, try recalculating your expenses.
Coming Up With More Money
Coming up with the money for your debt management solution is the part that requires you to make changes to your lifestyle. Some ways to do this are: getting a raise, reducing your monthly bills, cutting down on unnecessary monthly expenses like dining out. Ideally, you will be able to do all of these. However, if the thought of asking your boss for a raise, getting another job or scrimping on your cell phone plan and cable package doesn't appeal to you, your best option will be to cut back on your extra spending. You can do this by limiting your outings, buying lesser-known brand names, and riding a bike or the bus instead of driving your car. These changes will go a long way towards your debt management solution even if they are not so easy to do at first.
Goal: Paying Your Debts
When you're forming a debt management solution, you'll need to start by calculating the amount of your debt. You want to know exactly how much money you owe so get the most recent copies of your credit card billing statements. Once you know how much you owe, your goal is to be able to make your payments for those debts on time.
Take a look at how much money you have each month after you deduct the taxes. This is your income, which can come from a number of sources: your job, any side jobs or work that brings in additional money, alimony and child support. The money you have in your savings account is included in this. Now from your income, deduct all your expenditures: groceries, utility bills, subscriptions, any savings you set aside each month, the money you spend for eating out, etc. After you've deducted the monthly expenditures from your income, the amount left is your disposable income. This is where you'll get the money for your debt management solution.
Increase the Amount
To find out how many months it will take you to pay off your debts using your disposable income, divide your debt by the amount of money you will have to pay off every month. However, this amount does not take interest into account. Computing for interest can be a complicated process, but this allows you to come up with an approximate time frame for payment. If you feel like the time you've come up with is too long, try recalculating your expenses.
Coming Up With More Money
Coming up with the money for your debt management solution is the part that requires you to make changes to your lifestyle. Some ways to do this are: getting a raise, reducing your monthly bills, cutting down on unnecessary monthly expenses like dining out. Ideally, you will be able to do all of these. However, if the thought of asking your boss for a raise, getting another job or scrimping on your cell phone plan and cable package doesn't appeal to you, your best option will be to cut back on your extra spending. You can do this by limiting your outings, buying lesser-known brand names, and riding a bike or the bus instead of driving your car. These changes will go a long way towards your debt management solution even if they are not so easy to do at first.
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