Debt Options - How to Deal with Debt
When folks think about debt, there is a variety of aspects of debt they are
considering. Below are the most common.
It's easy to get into, but how do you get out of it? Or better yet, avoid
having it get you in trouble.
- Debt Consolidation - no loan
- Loans - Debt Consolidation or other.
- Credit Card Debt
- Credit Problems
- Credit Reports
- Debt Management
- Debt Credit Services
- Debt Reduction
- Debt Counseling
- National Debt/Public Debt
- Debt Calculator
- Fair Debt Collection Act
- Debt to Income Ratios
- Debt Collection
- Good Debt/Bad Debt
- Best is avoiding debt. Keep an eye on your income and expenses
and save for large purchases like an auto or home. Avoid spending money you
don't have. Especially in this economy.
- Be aware of where you are. Don't ignore problems(this applies to more
than just debt!). Even seemingly minor problems like being a day or two
late paying a credit card bill can snowball on you. With the late fees,
increased interest rates, negative credit and having to pay additional
interest, you can easily double the cost of what you are buying.
- Talk to your banker and have overdraft protection.
Preferably before you need the money. But even if you don't,
if you think you'll be short of cash, let them know as soon as possible.
You may be able to get a temporary overdraft, sometimes for free if it is
rare and you are a good customer. While it is nice to avoid the overdraft,
it is usually cheaper than bouncing a check or paying a credit card late.
- Avoid negative surprises for your bank or credit card company.
Talk to your creditors as soon as possible. The earlier you talk to them,
the more sympathetic they will be toward you. If you make them chase you,
it will only irritate them. You may be able to change your payment
arrangements(e.g. pay a lower amount for longer), get a payment holiday,
etc. Usually you will pay more interest, but it is better than the extra
fees/penalities with interest on top! These folks can make your life very
unpleasant. Bankruptcy, foreclosure, repossession and formal
charges are all possibilites.
- Analyze any debt consolidation loan very carefully. While it may
simplify your life, if you pay too much in interest or just run up the
balances on the accounts you just consolidated, you could end up worse off.
And while you may be able to deduct the interest if you consolidate with a
home equity loan, you also run the risk of losing your home.
- List your debts in order of importance. The ones nagging you most may
be the ones in the weakest position(the secured creditors *know* they will
be paid, even if it means foreclosing on your home, repossessiong your
Also, mortgage, rent, property tax, and utility bills
can affect your living space. Credit cards,
while they can incur high interest and affect your credit, won't toss you
out on the street.
- Seek help if you need it. There are plenty of good credit counseling
agencies out there. They have lots of experience in solving problems
for folks. They also can negotiate with your creditors for you and save you
a lot of money.
- With extra cash, pay off your high interest rate accounts.
If you haven't damaged your credit too badly, you may even be able to
transfer your balances to a lower rate account. Make sure you close the old
high rate account.
- Have a little money put away so you have a cushion for the rough spots.
If you still have lots of debt, don't make it too much(pay off the high rate
accounts first), but a little will give you some peace of mind.