There are many reasons to want to pay off your debt, many of which are completely separate from the most important purpose---to save money! Especially with credit cards and personal loans, the interest, finance charges, and payments can be particularly outrageous. At the time of this writing, the average APR on credit cards is up to 14.41 percent. To give you a better idea of the sort of implications of an interest rate this high, consider the following: For a person with $30,000 of credit card debt it will take a monthly payment of $565 to get out of debt in 7 years. That’s a total of over $17,000 in interest alone!
Some other reasons to consider:
Debt has proven to be a bane from a health standpoint as well as a financial one. Many consumers with debt problems complain of sleep deprivation and persistent emotional anxiety. Worrying about paying your bills is the last thing you should be concerned with.
Debt has proven to be major cause of marital problems. Studies have shown that not only are financial problems the leading cause of divorce, but consumers who file personal bankruptcy are three times as likely to divorce.
Debt begets more debt. Studies show that consumers who use credit cards instead of cash are likely to spend 25-30% when they go shopping. From a psychological standpoint in other words, people don’t treat credit cards like real money, and when the credit card APR kicks in, this will cost them.
The Best Options For Dealing With Debt
There are several different ways to dealing with any unwanted credit card debt. Two of the most popular are credit counseling & debt settlement, also known as debt negotiation. They are very different in terms of how they approach debt management, so let me run down the key goals of each of your debt relief alternatives.
Credit counseling programs are generally handled by non-profit debt organizations who disburse your payments to the credit card companies. They are able to reduce your interest rates and the time frame until you can become debt free. Generally these types of programs last between 4 and 5 years.
Debt settlement services on the other hand can help to get you out of debt in as little as 12-30 months, depending on your circumstances. It is an aggressive approach to debt resolution that involves working with creditors to lower the amount that is owed on your principal balance, not just your interest and fees. Due to the risky nature of these types of programs, it really is a better option as a bankruptcy alternative when all other avenues have been exhausted. For consumers who are seeking the lowest payment possible without either bankruptcy, negotiation may be a suitable choice. It is also an excellent option for consumers with old or bad debt, and thus bad credit is preventing you from getting a loan.
To talk with a professional from one of these companies, simply fill out a form to get a confidential, no risk consultation from an expert. Start today!
Questions About Debt Reduction
My friend is a loan officer and she recommended that I take out a consolidation loan to help me reduce my monthly bills. Do you have any advice or tips?
Certainly your friend makes a worthy suggestion. After all, debt consolidation loans not only can lower your monthly payments, but you can also write off any interest charges on your income taxes as long as it is tied into your home. That said, there are a myriad of disadvantages to this route that must be considered beforehand. For starters, do you really want to tie your home into your credit card debt problem? If you miss a payment, that could mean the foreclosure of your home. Also, if your issue is from overspending, does this really address the root cause of the problem? And if not, will you end up in more credit card debt again down the road?
Where should I even begin to start reducing my credit card debts?
Right here at PayingPaul.Com – You can submit your contact information and then we’ll forward it to our debt management affiliate so you can get a free consultation! You can be on the road to financial freedom in as little as 24 hours!