One problem for American families is having a large debt load. Owing too much money can cause stress and depression. It can even break up marriages. But there is hope for getting family or individual finances under control. People who are serious about reducing their debt load can follow one of several five-step plans or contact their local non-profit debt counseling service for advice and help.
Acknowledging There Is A Debt Problem
Before any real debt reduction program can be started and work, the individual or family must acknowledge they have a problem. Debt reduction takes hard work so spending habits are corrected and needed sacrifices will be made to reduce the debt. Some people think there are ways for easily consolidating your debt. No serious program for reducing debt is easy. They all take work and sacrifice.
If there are a lot of small debts with high interest rates, some people can benefit from a debt consolidation loan from a reputable lender. But, even with this type of loan, the payments must be conscientiously made on time and, to do that, spending must be cut in other areas.
Many individuals and families have a hard time recognizing the signs of a financial emergency until the collectors start calling. There is a problem if it is hard to make monthly payments and if payments are being made late or not at all.
How to Get Out Of Debt Step By Step
There are several step programs for debt reduction online. They are helpful when followed. All step plans have certain strategies in common:
Step 1. Admit there is a debt problem and make a debt reduction goal. Make a list of all current debts including unsecured loans from family and friends, payday lenders, or other sources.
Step 2. Research different debt repayment information. Consider contacting the local non-profit consumer credit counselling services. These counsellors help individuals and families make plans to improve their financial picture. They might have a debt management plan service.
Step 3. Make a payment plan on your own or with help and stick to it. Even very small payments help if they are made every month. Some debtors will negotiate repayment plans. Consider setting up automatic payments or deductions from the checking account each month. In this plan, the person must carefully monitor their checking account.
Step 4. Any debt reduction plan must include cutting costs. Cutting costs free up money to pay down debts. Even if the budget is already quite limited, there will be ways to cut costs. Look at monthly spending and determine ways to reduce it. Reduce eating out. Eliminate visits to bars and nightclubs. Quit smoking. Exercise at home rather than at the gym.
Step 5. The individual or family must change their spending habits to avoid future debt problems. If a family’s house payment is too big to afford, it may be necessary to downsize to a more affordable home.
Keep cars for longer before trading in. Cut down on impulse spending. Concentrate on paying debt down rather than accruing additional debt. Reduce the use of charge cards.
Living with Less Debt
Once a person or family has their debt under control, there will be less stress. Some people have more debt than they can pay off on their own and consider bankruptcy, a debt consolidation loan, or family help. The goal should be to get out of debt and to change spending habits to stay out of debt.
