How to Reduce Your Debt?
If you are finding it hard to pay your monthly bills on time, then it is high time to lower the amount of debt you have. For this you can enroll in a debt reduction plan.
Reduction Plan for Debt
Often settlement organizations offer debt lowering plans to people who are in the clutches of debt. The companies negotiate with the collection agencies as well as creditors so as to lower your debt related expenses. These reduction plans are same as the settlement plans designed for debt relief. You can also attend the counseling sessions offered by these companies. The best part about these companies is that they don't charge any money for these counseling sessions. Instead they aim at finding out whether the debt lowering plans are appropriate for you or not.
Features of A Debt Lowering Plan
- The consolidation company will evaluate your monetary status and then find out the amount that you can afford to pay so as to lower your debt.
- You don't need to make payments to the collection agencies and creditors directly.
- The settlement organization creates an account on your behalf where you can save some amount every month. Once you have sufficient amount in the account, the settlement company will talk to the collection institutions and creditors on your part.
Strategies for Lowering Debt
- Snowball Strategy: In this method, you can clear your debt from the least possible pending balance to the maximum possible. For this you need to prepare a list mentioning how many debt accounts you have. Once you have created one, clear the debt of the account which has the minimum outstanding balance and then start moving towards the accounts having more outstanding balances.
- Debt Avalanche Strategy: This is just the opposite of the snowball strategy. Here, you need to clear the debt accounts that have the maximum outstanding balances and then clear the accounts that have the minimum outstanding balance.
Both these strategies are of ample help when it comes to making payments for clearing your debts on credit cards. But then, the latter option is believed to be more popular to lower your debt.
Useful Tips to Lower Debt on Credit Cards
- Try paying some extra amount every month so that your credit card bill gradually becomes lower.
- If you are finding it hard to make an extra amount other than the minimum amount, then you pay the extra amount in two halves, i.e. pay the extra amount at an interval of 15 days.
- It would be best to pay a bit above the minimum amount so as to lower the outstanding balance as much as possible and lower the debt in the process.
- You may transfer the pending amount from credit card having an increased interest rate to a credit card having a reduced interest rate.
With debt lowering plans you can settle your debts in a comfortable manner. For lowering the all total payable amount consider going in for a debt consolidation plan.