Dealing With Debt, Part 1, Debt Management

Does Debt Management really work?  Will I improve my credit score with Debt Management?  Will debt collectors start leaving me alone?

These are just a few of the Frequently Asked Questions about Debt Settlement.  We get them all the time, even though we have numerous blogs about all of the aspects of debt management.

Confused about credit card statement

The truth is, anytime someone gets into trouble having accumulated too much debt, fear of the unknown and misunderstanding about what debt collectors can, and can't do, takes over.

Almost everyone in America has some form of debt. Many people use debt wisely and are OK.  But many people (people just like you and me) have gone through, or are going through a very tough time, financially. 

  • How do you deal with to much debt?
  • What are your options?
  • What can debt collectors do to me?
  • Can they levy my bank account or garnish my wages?
  • Will I have to file for bankruptcy?
  • To be honest, I'm scared!

Over the next three series of blogs about Dealing With Debt, I hope I can answer most of your questions and help alleviate some of the fear and misunderstanding associated with having too much debt.

For this series, I will be addressing UNSECURED DEBT, such as:

  • Credit Cards
  • Store Credit Cards
  • Personal Bank Loans
  • Private (not Federally backed ) Student Loans
  • Repossessions (specifically "deficiency balance", which is the remaining balance after your car, boat, etc. was sold at auction)
  • Pay Day Loans

SECURED DEBT, such at your home, auto, Federal Student loan, etc. have to be dealt with differently.  I will address these in later blogs. 

There are really only a few options when it comes to dealing with too much unsecured debt:

  • Debt Management (or Credit Counseling) Program
  • "Debt Roll-Up" or "Debt Reduction Snowball Plan"
  • Debt Settlement Program
  • Bankruptcy

DEBT MANAGEMENT

In the "old-days", well, not really that long ago, when a consumer got behind on their credit card payments, A non-profit, credit counseling (a tax entity title...yes they do make a profit...a lot of profit!) program was created to help people get back on track.

Basically, in a Debt Management Program , instead of making minimum payments to each of your creditors with high or very high interest rates and fees, if you qualify, you will make ONE PAYMENT to a Debt Management Company.  They have established guidelines with all of the major creditors to usually:

  • Lower your interest rate
  • Re-Age or forgive late or over-the-limit fees
  • Stop creditors from calling
  • And, a Debt Management Program IS NOT A FACTOR when calculating your credit score.
  • Most Debt Management Programs last about 4-5 years, depending on how much debt you have, etc.

Although a Debt management Program can help reduce the total amount of interest and fees you will end up paying until these debts are paid off, your required monthly payment may be more than you are making now!

The Credit Card Industry realized several years ago that the worst thing that could happen to them, from a profit stand point, was to have their consumers actually pay off their credit cards.

In the early days of credit cards, the minimum payment could be as high as 4%-5%, depending on each company's policies.

Think about that... 

Let's say you had a balance of $10,000 on your XYZ Credit Card, with an Annual Percentage Rate of 19% and a minimum monthly payment of 4.5% of the balance.  

I know the credit card contracts are almost impossible to understand, so let's keep this simple:

On a balance of $10,000 at 19%, your annual interest charge would be about $1,900!

Divide the 19% interest rate by 12 (12 months in a year) and you get a Monthly Interest Rate of 1.5833%.  $10,000 multiplied by 1.5833% equals $158.33, but's let's round off to $158.

Add the $158 to the $10,000 and you have $10,158, which is the NEW BALANCE.

Multiply that by the Minimum Monthly Payment Percentage of 5%, and you get $507.90 or $508 as a minimum payment.

So, you send in the $508 payment.  Next month, you get your statement, and it shows $10,158 less your $508 payment leaves $9,650. 

But wait...there's that interest charge again!

$9,650 multiplied by 1.5833% equals $152.79 or $153.

Add $9650 plus $153 and you get $9803 as your New Balance (assuming you didn't make any more more charges!)  Multiply that by 5% and you get $490.15 as your minimum monthly payment. Wow!

Yes, in the "old days", your were forced to pay off your credit cards sooner (if you could afford the minimum monthly payment) and therefore saved more money in the long run.

But, the Credit Card Industry got wise and decided to only charge 2% or maybe 2.5% as a minimum monthly payment. 

Without taking a lot of time repeat the above process, you should be able to see that on a balance of $10,158 if you only had to make a 2% minimum monthly payment, your payment would only be $203 instead of $508!  That's $305 less!  Good deal, right?

Well, here's what happened:

For the credit card industry, it was a very, very good deal! But, for those of us who didn't think the process through, we thought, "Wow, I could barely afford the $508 miniumum monthly payment, but at $203, I can CHARGE UP ALMOST TWICE AS MUCH  and still make the payment!" 

So, charge, charge, charge!!!  And we know what happens.  Now you have $20,000 of total unsecured debt at an average annual interest rate of say, 19%.  But, you only have to pay 2% of your "new monthly balance" each month.

OK, $20,000 multiplied by that annual interest rate of 19% divided by 12 or 1.5833% equals $317 of interest.  Add that to the $20,000 and now you have $20,317.  At 2%, that's a minimum monthly payment of $406.  Cool!  Your monthly payment on $20,000 is actually less than it would have been (back then) on $10,000.

Watch out! We all know where this is heading! 

All kinds of calculations are out there on the web that show that if you only make the small minimum payments on your credit cards until they are paid off, you will end up spending 3-4 times as much as you originally borrowed! On $20,000, you could end up paying back $60,000 - $80,000 over many years!

Good deal?  Only for the Credit Card Industry!

So, you call a Debt Management Company.  They go through all the financial consultation (free and if not, hang up!) and determine that your Debt Management Program will be approximately $550/month, which includes their montly fee as well as an enrollment or set up fee to get started!  

But,  if you have an extra $150 (that you could use to qualify for the Debt Management Program), you would be debt free in about 48 months and save thousands of dollars in interst and fees.

Not bad at all, but there is another option.

Debt Roll-Up or Snowball Plan

If you have the extra money, and the self discipline to set up and follow a Debt Roll Up/Snowball Plan, then you should consider doing this instead of using a Debt Management Company.

Why?  Well, of that $550 required in this hypothetical Debt Management Program, $50 (or maybe a little more) may be going to the Debt Management Company to administer the plan.  Now, that's not outrageous, and if the program ends up not only saving you a lot of money in the long run and giving you peace of mind, then go for it.

But, if you are like me, I like to do things myself if at all possible and, I don't like spending a dime more than I have too!

I've written an entire blog about a Roll Up/Snowball Debt Program. Click here.

But what if you are in deep financial trouble?

Maybe you have:
  • Lost your job
  • Went through nasty divorce
  • Lost a spouse, loved one or partner
  • Been Disabled and are permanently Disabled and only receive Disablility Income
  • Are retired and the fixed income from your Social Security and/or Retirement Plan is just not enough to keep up!

Then you should check out a Debt Settlement Program.

I will be writing about that in Part 2, but if you'd like to know more now, click below:

FREE EBook Debt Settlement  Basics

Is a Debt Management Program for you?  It depends on many factors.


 


Photo credit:

Jason Rogers

 

 

Tags: credit card debt, debt snowball, debt, credit counseling, debt management, credit cards, credit card debt help portland or, snowball plan

What Would it Feel Like if You Were DEBT FREE?

If you are living with the stress of too much debt, I have a question...what would you feel like if you were DEBT FREE?.  Regardless of your financial circumstances, you can be DEBT FREE...     How would that feel?

If you were to do a search about the average family debt in America, you would get statistics all over the board.  But, if you were to average them out, here is a basic picture of the average American family's debt:

  • Total debt per family                       $ 17,500
  • Credit card debt                              $   7,500

Now let's think about that for a minute.  If these are the averages, that means that some households have much lower over-all debt and therefore lower credit card debt. 

But on the other hand, that means that some households have much higher over-all debt and therefore much higher credit card debt!  After helping people solve their debt issues for over 10 years, I have found that our average client has credit card debt that totals about $25,000!

Big question...

debt freeHOW WOULD YOU FEEL IF YOU WERE DEBT FREE ? ? ?

Have you ever thought about it?

I'm not talking about dreaming about winning the   lottery, but finally paying off everything and everybody you owe!

No debt...zero...nada !

 

 

  • No more waking up in the middle of the night worrying about the bills!
  • No more standing at the check out counter and praying the card is not declined!
  • No more making excuses because you really can't afford to go with your friends!
  • No more dreading the end of the month,knowing there is not enough to pay all the bills!
  • Get the idea???  NO MORE ! ! !

I was talking to a good friend of mine about this and he said that to him, being DEBT FREE is better than about anything you could imagine!  I think he's right!

When you under the burden, pressure and stress of DEBT, you really can't enjoy life

I mean, what good is driving a new car if you know you really can't afford it?  Sure, you have a nice big home, but the truth is, you can barely keep up with the payments, much less pay for any maintenance or additional "trimmings". 

OK...I think I've made my point.  Are you ready be Debt Free?

Or...are you ready to...FEEL WHAT IT'S LIKE TO BE

DEBT FREE?

 

DEBT FREE SHACKLES

 

STEP ONE

It's time to get down to business...financial responsibility.  (Really...has it come to that?)  Financial responsibility starts with an honest accounting for every dollar that comes in, but most important, that goes out.

Yep, the old BASIC HOUSEHOLD BUDGET.

List everything you are spending money on.  Not just the big items like rent or mortgage, car payment, groceries and utilities... I said you have to be honest!

What about:

  • Daily latte at Starbucks?  Really?  At $4 -$5 per day?
  • Health club membership you rarely use?  Seriously?
  • Buying lunch out instead of making a sandwich?
  • OK...I know I may be over stepping, but what about that smoking habit?  At $5/pack?
  • And yes, you better address all the other little "things" that can really add up!

It's time...and you know it.  Budget Worksheet FREE Download here!

STEP TWO

Now that you've found a few (or several) extra dollars from getting rid of some, if not all, of your "wasteful spending habits", you can start down the road to financial freedom!

Depending on your individual financial circumstances, you most likely will be a candidate for one of the following programs:

  • Debt "Roll-Up" or Snowball Plan
  • Debt Settlement
  • and if none of the above works...Bankruptcy

A DEBT "ROLL-UP" OR Snowball Plan

If you have found an extra $100 or more from making cuts from you "out-go" in the budget and, you have the self discipline to follow through with the program, this might just work for you.

Basically, you are going to list all of your unsecured debt (you can do all debts, but for now let's just tackle the unsecured ones).

List from the smallest balance to the largest balance.  Don't worry about interest rates now.

Le't say the smallest balance requires a $50/month minimum payment and you have an extra $200 (from all of the $ you were wasting).  You are going to pay $250 towards this balance until it is paid off.

After it is paid off, you are going to start on the next balance.  Let's say you have been making $100/month as a minimum payment on this one.  Now, you are going to add the $250 from paying off the first balance to the normal $100 for a total of $350 going after this second balance.

Once it's paid off, you're going to add $350 to whatever the minimum payment is on the next balance...and so on...and so on.

Guess what?  You're going to have all of these unsecured debts paid off before you know it!

HOW'S THAT GONNA FEEL???

Oh yeah, baby!!!

And since this worked so well on the unsecured debts, what about adding the extra money you now have from paying all of them off to your mortgage or student loans?  Wow!

Need some help with this?

 

If you don't have any extra money or if it seems a little "overwhelming", then you should consider a DEBT SETTLEMENT PLAN.

Debt Settlement is for people who, because of circumstances beyond their control, find themsleves in serious debt.  If you can't afford the minimum payments on all of your unsecured debts and/or some have been turned over to a debt collector, you would profit from a Debt Settlement Plan.

Debt collectors are usually willing to accept less than the balance due because of your financial hardship.  This can be 50% or more, again, depending on several factors.

Once the balance has been negotiated and the debt settlement agreement is paid per the debt settlement agreemenet, this account will be noted on your credit report as "paid-in-full" or "paid-as-agreed" or even "settled at less than the balance due". Regardless, the balance is ZERO....$0.

Recent Settlements See what we have  done for our clients!

Let me ask you again...

HOW'S IT GONNA FEEL TO BE DEBT FREE!!!

OK, let's say that things are so bad you can't take advantage of the Debt "Roll-UP" Plan or even the Debt Settlement Plan, then you should consider Bankruptcy.

You will need to find a compentent bankruptcy attorney, but be careful!  You should interview two or three in your area and get some references.

You should not have to pay too much up-front for their services and you should not have to pay anything for the initial consultation.

But even if you have no choice but to file for bankruptcy, life is not over!  The bankruptcy process is not as bad as you imagine.  In fact, once it is completed, not only will you be DEBT FREE once again, you will be able to rebuild your credit a lot quicker than you think.

Sit back, close your eyes...one more time, let me ask you...

HOW WOULD YOU FEEL IF YOU WERE DEBT FREE?

Then do something about it...

 

Photos by eric731

 

 

 

 

 

Tags: credit card debt, debt snowball, debt settlement, Bankruptcy, debt, debt free, debt and stress

5 Steps to a Better Financial Future

financial future

 

 

Follow this 5 step plan to make your personal finances healthier and build a better Financial Future for you and your family.

 

Step #1: Set Your Money Goals

In this first step, it is tim to sit down and really think about where you want to be financially in the future.  Think about the following questions to get you started on setting your money goals:

  • What part of your financial life was disappointing last year and what can you change so it is better next year?
  • What part of you financial life worries causes you the me the most stress, and what safety nets can you put in place to help relieve this stress?
  • What would you be proud to accomplish in the next 5 years of you financial life?

Step #2: Check Your Credit Report

Your credit report plays a huge role in your personal finances and financial future.  Each year you can pull your credit report for free from each of the three major credit reporting bureaus.  Simply go to AnnualCreditReport.com to get your Free Credit Report. 

Instead of pulling all three reprots at once, try spreading them throughout the year.  For example, pull your Equifax credit report today, then mark your calendar to pull your Experian credit report in 4 months and your Trans Union credit report in 8 months.  By doing this you will be keeping a close eye on your credit without breaking the bank!

If you want to check your credit score for free, go to CreditKarma.com

Setp #3: Research your Debt Elimination Options

If you have credit card debt, retail store cards, medical bills or other unsecured debts, you have several options available to you to help eliminate that debt once and for all while saving you time and money.

  • If you plan to pay off your debt on your own, consider adjusting how you make your payments.  The Debt Snowball is a popular method to help you pay down your debts fast. 
  • If you are able to keep up with your payments, but your high interest rates are keeping you from eliminating your debt, a Debt Consolidation Program may be a great option for you. 
  • If you are struggling to keep up with your minimum payments or you have already fallen behind, you should consider enrolling in a Debt Settlement Program which can reduce your monthy payments and eliminate your debt for much less than what you owe!

Step #4: Create a Budget

If you are like so many others out there living paycheck to paycheck, creating a budget can help you to start saving for your retirement and start building an emergency fund.

Start by writing down everything you spend for an entire month.  Once you have done this, take a look at how you’ve been spending your money, and see where you can cut back in order to put some money into savings or pay down your debt.

Step #5: Set up Automatic Retirement Contributions

Participating in a retirement plan at work is a great way to make sure you’re consistently investing for your future. If you don’t have a workplace plan you can invest in an IRA as long as you have some amount of earned income.

Set up a direct deposit so a percentage of your paycheck is automatically invested in your IRA. Or set up an automatic transfer from your bank account to your IRA once a month or every payday. Automating your financial goals is the best way to make sure you accomplish them.

financial future

 


Tags: debt snowball, debt settlement, debt consolidation program, budget, financial future

Credit Card Debt Elimination: 3 Great Options

credit card debt eliminationWhen you are facing a mountain of credit card debt, many people get confused and overwhelmed with all of the information that is out there to "help".  Over the last year or so, we added many posts to this blog about various options for Credit Card Debt Elimination. 

I thought it might be helpful to pull together what I find to be the most helpful posts on your best 3 Credit Card Debt Elimination Options:

#1 If you can keep up with your current payments, you should try to eliminate your debt with a Debt Snowball.  Click on the link below to read a post about what a Debt Snowball is and how to use it.

What is a Debt Snowball?

#2 If you have fallen behind on your debts, but would be able to keep up with your payments if you could just get caught up, Debt Consolidation may be your best Deb Elimination option!  A Debt Consolidation program can help reduce your monthly payments, lower the interest rate your credit card companies are charging, and put you on a "level payment plan" to get you out of debt FAST!  Click on the link below to read a post all about what a Debt Consolidation program can do for you.

Debt Consolidation Program vs Debt Consolidation Loan

#3 If you have had a drastic change to your monthly finances (loss of job, divorce, illness...) or if you are behind on your credit card or other unsecured debt payments by more than a couple of months, Debt Settlement is probably going to be your best option. Click on the link below to learn about Debt settlement and how it can help you reduce your monthly payment, get rid of interest and fees altogether, and eliminate your debt for HALF of what you owe!

Debt Relief Options: Why Debt Settlement May Be Your Best Choice

If you still have questions about the options available to you, or if you want to find out how to get started with these programs, our Debt Solution Specialists can help.  Feel free to ask a question in the comment thread below, call our toll-free number, or click on the button at the bottom of the page for a FREE DEBT ANALYSIS!  We are here to help find the right solution for your situation.

1-877-492-4109

credit card debt elimination

 

Tags: debt consolidation program vs debt consolidation l, debt snowball, debt relief options, credit card debt elimination

It's Time to Make a DEBT PAYOFF PLAN

debt payoff planWorrying about your debt won't make it go away, but for millions of Americans the stress from deepening debt is becoming a major pain in the neck - and back and head and stomach! But stressing about your debt won't make it go away. 

You MUST make a Debt Payoff Plan! 

With so many different debt elimination methods available these days, it can seem like a tough task getting started and following through with a plan that will actually get you out of debt.

The answer is simple.  You just have to take one step at a time.  In this post I’m going to cover a simple debt elimination plan that will have you on your way to getting debt free in no time at all!

Clean Up Your Budget

The first thing you need to do is clean up you budget or if you don’t have one get started now.  A budget will help you get things in order and let you know how much money you are spending each and every month and how much you are saving.

What you are really looking for is how much money you actually have left over at the end of the month.  Having an extra $100 set aside for your debt elimination plans is all you need to get started.  If you don’t have any extra money left, you may have to eliminate some things from your budget, get a part time job to help out, or find a way to reduce your monthly minimum payments while still eliminating your debt. (such as Debt Consolidation or Debt Settlement: see below)

debt payoff plan

Get Your Debt Together

Next you need to get all of your debts in order.  To do this grab all of your creditor statements.  And put all of your debts in order, so pull out a blank sheet of paper and list all you debts from the lowest balance to the highest balance.

When you have this done your mortgage should be listed as the last debt to be paid off and something like a credit card should be the first thing you pay off.  The reason for this is because I want you to see results quickly by paying of the debt with the lowest balance.

Eliminate The Debt

There are several ways of going about eliminating your debt.  However, what you must stop doing is only paying the minimum payments.  If you don't, you will end up paying back at least three times what you originally owed and will spend decades paying back the debt.  Here are three of the best debt elimination options available to you:

  • Debt Consolidation or Debt Manegment - In this program, your Debt Consolidation or Debt Management company will work with your creditors to reduce your interest rate, eliminate fees, and lower your monthly payment.  Another plus to this type of program is that your payment will stay the same over the course of the program which will get you out of debt in just 3-5 years on average.
  • Debt Snowball Method - This method basically involves listing your debts from smallest balance to highest and paying them off in that order.  You will always make the minimum payment on each debt, but will also contribute any extra money you found in your budget to the smallest debt.  Once that debt is gone, you use the money you were paying on it to pay in addition to the minimum payment on the next debt.  If you can find a little extra in your budget, this is a great plan.  You might also consider the "Debt Avalanche" which uses the same principle. However, instead of paying off the smallest balance first, you pay off the debt with the highest interest rate. 
  • Debt Settlement - This is a great plan for anyone who needs to drastically reduce their monthly payments or for someone who is already significantly behind on their payments.  Your Debt Settlement company will negotiate with your creditors and settle your accounts for usually 50% of what you owe.  (sometimes even less)

If your looking more info on creating your Debt Payoff Plan, one of our Debt Solutions Specialist would be happy to anwser any and all of your questions.  Please feel free to email info@debtreliefnw.com or call us at 877-492-4109.

photo by: BLW Photography

Tags: debt snowball, debt settlement, debt consolidation, budget, debt payoff plan

Tips to Get Out of Debt FAST: part 2

 

Yesterday I discussed the first step of how to Get Out of Debt FAST: Get to Know Your Debt. Now you are ready for part 2:

tips to get out of debt fastCreate a Plan to Pay Off Your Debt

Having written down all your debts, it’s now time to determine how you will go about paying off these bills. A solid plan should not be complicated. It’s simply your approach to tackling your debt. There are, however, some important considerations and tools that can help you develop an effective debt repayment plan:

  1. Debt Repayment Calculator: As a starting point, it’s helpful (and sometimes painful) to see how long it will take you to pay off your debt if you make just the minimum payments. And there is a free debt repayment calculator that is very easy to use. While the plan will involve making extra payments, the starting point is to understand what you are up against making just the minimum payments on your debt, and this calculator will help you do just that.
  2. Prepare a Budget: For many, the word “budget” is the dreaded “B” word. But the fact is that you need a budget to control your spending and better manage your money. Remember that it’s the money you don’t spend each month that will go toward paying down your debt.

tips to get out of debt fast  

3.  Be Aggressive About Paying Off Debt: Dave Ramsey talks about tackling debt with “gazelle” intensity. It’s about being aggressive in paying off your debt. As you work through your budget, recognize that every dollar counts, and that the more you throw at your debt, the less interest you’ll pay and the faster you’ll get out of debt.  

4.  Be Realistic About Paying Off Debt: Paying off debt is a lot like going on a diet. You can commit to never eating foods that are bad for you, but is that realistic? The same is true with debt. Yes, sacrifices will have to be made to meet your financial goals, but you need balance.  

5.  Order Your Debt: With your budget in place and an understanding of how much extra money you can put towards debt, it’s now time to map out a specific plan. The question is this–which debt will you put your extra money toward first? That said, here are the top three approaches to deciding how to tackle your debt:

  • Highest Interest Rate First: With this approach, you put all the extra cash you have on the debt that has the highest interest rate. This approach will result in the lowest interest charges and the fastest debt repayment possible.
  • Smallest Balance First: This is the Debt Snowball approach. He suggests targeting the debt with the smallest balance first. While that debt may not have the highest interest rate, the theory is to get one debt paid off as fast as possible. The rationale is twofold. First, paying off a debt gives you a feeling of accomplishment, which may be just the motivation you need to keep on track. Second, by paying of a debt completely, you free up the cash that was needed to make monthly payments to that bill. While you are likely to put that cash to the next debt, in an emergency, you could use it for other purposes. In other words, by paying the smallest debt first, you free up cashflow.
  • Non-Revolving Debt First: While many talk about the two approaches above, few look at the type of debt when deciding which one to pay first. Recall that revolving debt, like credit cards, allows you to borrow again after you’ve paid down the debt. Non-revolving debt, like a car or school loan, does not permit you to borrow again as you pay down the debt. With a car loan, once the debt is paid, the loan is gone. With a credit card, once the debt is paid, the card is still there to use again if you so chose. For this reason, I’ll often focus on non-revolving debt first. Why? Because I can’t go out and charge up the debt again once it’s paid. This is purely a pyschological issue, but an important one, particularly if you fear you may lack some discipline once some of your debt is paid off.

6.  Don’t Forget Your Emergency Fund: An emergency fund is a really important part of a debt elimination program. While you may be tempted to put 100% of your extra cash toward debt, keeping at least some of it aside for emergencies will help break the reliance many have on credit.  

Check back in tomorrow for Tips to Get Out of Debt FAST: part 3

tips to get out of debt fast

Tags: tips to get out of debt fast, debt snowball, create a budget, how to pay off credit card debt

What is a Debt Snowball?

 

I've heard a lot of buzz lately about the Debt Snowball method of paying off your debt.  Curiosity finally got the better of me and I decided to do a bit of research.  Here is what I discovered:

debt snowballWhat is debt snowball?

Debt snowball is a process by which you list all your debts from lowest to highest and attack the lowest debt first. You need to pay minimums on each bill except for the lowest one. Pay as much as you can towards the lowest debt so that you can get rid of it as soon as possible. Next, you move on to the second lowest debt and the process continues till you are free from debt.

What are the advantages of debt snowball?

According to personal finance guru Dave Ramsey, “Personal finance is 20% head knowledge and 80% behavior”. Debt snowfall is based on this view. It rightly assumes that paying off smaller debts gives a sense of victory which motivates people to pay off all other debts.

It is relatively easy to pay off bigger debts using debt snowball method. Here you clear the smaller debts first. So by the time you reach the bigger debts, the extra amount that you can pay towards them increases. Consequently, it is possible to eliminate them quicker.

Another advantage of debt snowball method is the reduction of the total amount owed to creditors in a single month. This can save your neck in case you encounter an unforeseen situation like loss of job or medical emergency.

Is debt snowball the right choice for you?

Debt snowball is a simple debt reduction method which is suitable for people who have a wide range of balances. It gives you tangible results and motivation which is missing from other similar approaches. While is it most effective for people who need some encouragement in the form of quick results, individuals with a lot of patience will benefit more with avalanche approach because it is cheaper.

Debt snowball can certainly help you to climb up from the trenches. However, you should remember that it cannot make you debt free with the wave of a wand. But if you stick to it till the end then your patience will be certainly rewarded.

What if you can't even keep up with the minimum payments?

The debt snowball method sounds like a great idea, and for a lot of people it would make sense.  But what do you do if you can't even keep up with the minimum payments? 

If you need to get your minimum payments reduced, you should consider a Debt Consolidation program.  A Debt Consolidation program works along the same premise, but it also reduces your interest rates and monthly minimum payments!

If the payments of a Debt Consolidation program are still too high, then it's time to consider Debt Settlement.  A Debt Settlement program will significantly lower your monthly payment and eliminate your debt for less than what you owe. 

It's hard to decide which approach is your best option.  If you would like a free analysis of your current financial situation and some guidance in determining which option is right for you, our trained Solutions Specialists are here to help! 

Get answers TODAY 877-492-4109

What are your thoughts on the Debt Snowball?  Have you tried this method or are you considering it?  I'd love to hear from you.  Please post your thoughts or questions in the comment form below!

photo by: House Of Sims'

Tags: debt snowball, best way to eliminate credit card debt, how to pay off credit card debt