Clear Debt Solutions

It's a lot of things that can set off your spiral into debt. A new baby, losing your job, even a simple one month spend spree can do the trick. Have you ever experienced receiving a monthly statement that shocked you to the bone? One where you could hardly believe you spent that much, until after you double-checked everything?

Well, have you ever thrown a statement on the cupboard or on a pile of letters and magazines, intending to open it later? Imagine doing this a couple times, and then finding out after a few months that you have created a massive credit card debt. A few stacks of unfortunate events such as the ones above and you're there. It could really happen to anyone.

If it's happened to you, do not panic! I will provide you with some very clear debt solutions, which we'll get to in a second. You just need to take responsibility for your actions, and don't let your debt control you. Instead take control of your debt. It can happen to everyone, so don't start blaming yourself or anyone else. Just accept the situation for what it is, and start finding solutions. Nobody's ever gotten any better from self-pity. Your feelings will rise the moment you start taking charge of the situation. I promise!

Don't fall into the trap of only paying off the minimum amount on your credit card or loan. This may seem like it´s saving you money each month which you can spend on other things, but it's basically throwing money away. The longer your debt exists, the more interest you'll have paid in the end.Creditors actually want you to just pay the minimums, as you'll stay in debt to them for the longest time, and they will get the most money out of you.

If you've got any savings stashed away, keep a little for emergencies, and use the rest to clear debts. It will save you money in the end as the interest rates of your savings are sure to be considerably lower than those on your debt. It's simple math from there.

You can see it as an investment in the future, as the sooner you clear your debt, the sooner you can start putting real amounts of money in your savings account. The moment you stop paying is the moment you start saving.

Before you can start with these clear debt solutions, you will need to asses the scope of your debt problems. Make a list of your (combined) income, essential expenses and debts. It's always useful to see the full scale of the problem in front of you, as shocking as it may be. Use the list to create a monthly budget for yourself, and stick to it.

Write down every income channel you have. Not just the income you get from your job; everything that make you money. If you rent out a room, put the income from that on this list.

Next come the expenses. List all the essential monthly expenses you have like food, water, electricity, car insurance, etc. In this list keep in mind that food you need is not expensive food you eat in a restaurant. It's food you get in the supermarket and you prepare yourself. See if you've written down anything that you might be able to save some money on.

Now look at the total money amount of expenses. That is your monthly budget from now on, until you're out of debt. If you subtract the expenses from the income, you'll see how much money you'll have left each month to clear debts. I will refer to this money as your debt-clearing money.

Now comes the hard part. You have to list all of your actual debts. Also write down the interest rates, so you can see which debts are costing the most money.

Take a look at your debts and find out which one is most expensive. People have a tendency to try and clear the smallest debt first, because they reason that this is the one that they can clear the fastest. It's not very bad logic, but looking at the long run, it's best to start with the debt that has the highest interest rate.

Take a look at the table above. For this example imagine those are our debts, interest rates and minimum monthly pay-offs. So in this example we will have to pay a minimum of $350 a month. Say that with all the minimum pay-offs subtracted from our debt-clearing money we have $100 dollars to spare.

Add this money to the minimum pay-off of the most expensive debt. So in this case we'll add the $100 to the $50 for debt A. So will pay debt A a total of $150. We'll continue doing this, until debt A is completely cleared.

Once debt A is cleared, we'll have $150 to spare each month, which we'll start adding to debt B's monthly minimum. So we'll be paying debt B $250 a month.

And you've probably guessed it by now, once debt B is cleared we can use $450 a month to pay off the final debt.

So with each debt you clear, your can pay-off a bigger amount to the next most expensive debt. This technique is known as snowballing.It's a very well known method and one of the best credit debt solutions.

You'll only create bad blood if you try to hide your debts from your creditors. They'll assume you're trying to sneak out of it. If you're the one that contacts them with your problems, you might be able to get some leeway. They might even be able to transfer your debts to a credit card with lower interest rates..

If you're not able to get a loan, or your debts transferred, make a proposal to pay them based on the list you made. Mail them a letter along with the list of your income and expenses. Point out your intention to pay off the debts, but there's no way you can pay their fees with what you make at the moment.

This may not go over smoothly as the people who work for your creditors only want what you owe them. If they threaten to sue, then simply tell them you will produce all occurred correspondence to the court. They will likely see reason then, as they know the court will likely respect your intentions, and approve your payment plan. So they will only lose money on the court proceedings.

Today there are a lot of debt relief companies offering their services. While these companies may seem alluring to most people, they often have a negative consequence for you. I will always advise people to try to clear debts by themselves and only approach a debt relief program as a last resort. When push comes to shove all these companies want to make money off of you.

When you do decide you need one of these companies, always check their reliability through the Better Business Bureau. There are a lot of scams out there. For an example of a truly reliable company, look into Freedom Debt Management Inc. They have the highest BBB rating that can be achieved. They won't cut any expenses though, they just provide you with great counseling and education, which is actually worth more in my opinion.

I will provide you with truthful information on companies like this, what they do, and what the consequences really are.

Debt settlement companies lure people in with the promise of a total debt reduction. I will not lie, they are able to do this for you. Sometimes they can even get a 75% reduction for you. Doesn't that seem magical?

How it works is as follows. You will pay this company a certain amount of money each month. Some of this goes into a savings account, and a large amount they will keep as their fee. In the meantime your creditors don't get paid. Eventually a debt settlement attorney will start negotiating with them, and they'll settle on a reduced debt.

The reason your creditors will go for this is they'll think you can't pay. They fear you're going to file for bankruptcy, and then they don't get a penny. Because they'd rather have some money off of you than nothing, they go for a settlement. This settlement money will be paid out of the savings account, and your debt is cleared.

Okay, that pretty awesome right? Here's the catch. Your creditors will have assessed you as a credit risk. This will significantly impede your ability to get a new credit card, loan or mortgage for the next several years. It will be nigh impossible. Nobody wants to loan money to someone that has a record of not paying back.

Settling credit card debt is something that can also be done by yourself. You don't even need these companies to help you negotiate credit card debt. In fact, if you were to decide on debt settlement it would probably be better if you did it yourself.

Don't fall into this trap. A bad credit rating will stick to you for a very long time. You really don't want to have it hanging over you. You never know when you're going to need a loan.

A lot of people go for a credit card debt consolidation as a means to pay off their debts. This can be a means to an end, but most people use it the wrong way, and thus it actually costs them money.

A debt consolidation company will transfer all your debts to them, so you only have a single creditor. They lure people in with promises of lower interest rates and lower minimums. Of course, this will sound awesome to anyone in debt. However, most of these people don't realize why you shouldn't just pay off minimums.

I've already covered this above, but I'll say it again. These companies want you to stay in debt as long as possible. This is how they make more money of you. If you just pay off the minimum payments to these companies, you'll actually end up paying more than you would the other creditors.

The only time I advise using this action is when you're unable to make your monthly minimums, even after cutting expenses. Always get a debt consolidation quote, if you do decide to take this route, but remember it should be a last resort action. Anyone else should just use the snowball method.

I wanted to say this one more time, because I can't stress this enough: If you do choose to hire a debt relief company, check them through the BBB!

I sincerely hope I have provided you with enough information to help you get out of debt. If it's not enough for you, try looking around online for more options. There's a ton of info out there.

If you have any solutions of your own, be sure to leave them in the comment section.