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New Year's Resolution Involve Debt? Get Some Helpful Tips

New Year's Resolution Involve Debt? Get Some Helpful Tips

Is managing debt on your list of New Year’s Resolutions? If so, you are in good company. According to Time Magazine, reducing debt is one of the top ten resolutions made every year. Why is it such a popular goal? Probably, because dealing with debt can feel frustrating and overwhelming, which may make it harder to successfully eliminate or make progress on the bills.

So, how do you productively manage and eliminate your debt? There are several options and they all involve some of the same, initial steps.

Know what you have and where it goes (budget)

For many people the word budget makes them cringe. However, it is the biggest, most important aspect in debt repayment. Compare your expenses to your income and determine how much money you have available to pay towards your debts each month. Be sure to include money for building an emergency fund.  Then make a commitment to keep your budgeted debt repayments the same each month.

Choose a debt repayment method that works

Personal repayment plan

  1. Complete a review of your budget to determine how much money you have to put towards paying down debt (See, it always comes back to the budget).
  2. Determine which creditor has the highest rate of interest or has the lowest balance.
  3. Send minimum payments to all creditors except the creditor with the highest interest/lowest balance; that creditor should receive a higher than minimum payment.
  4. The amount of money you send each month should never vary until all of the debts are paid off.

Debt Management Plan

  1. Credit counselors work with you to review your monthly bills and expenses.
  2. Repayment options are discussed and compared against your budget before you make a decision.
  3. A structured repayment plan is created to help get you on track to repay your debts in approximately five years or less.
    • One monthly payment
    • Creditors may reduce interest
    • Creditors may stop fees
    • Stop collection calls
  4. Counselor support and financial tools are provided every step of the way.

Other options

  1. Assessing whether a personal consolidation loan would be a cost effective, viable way to have one monthly payment and repay debt.
  2. Checking into debt settlement and learning about all of the possible ramifications of paying back less than what you owe.

Deciding the best method for repaying your debts can be stressful and make it hard to follow through with your plan for paying off debt. We offer free tools at our online Resource Center, to help you find and make the right decision. You can also contact one of our certified credit counselors for free. Counselors can answer your personal questions about debt and help you create a plan to eliminate it. Call today –1-888-864-8659.

Published Dec 14, 2011.