Get Out of Debt Plan: Talk to Your Creditors
If you feel that your debt has piled too high to gain control over them, do not despair just yet. A lot people have this misconception that once their debts have gone beyond their control, they can never regain financial health again. This is not true. Talking to your creditors is one of the best ways to fix the problem. Sure, it may be a little scary, at first, but creditors are actually very open to negotiations, so you really have no reason to fear.
Here are seven tips to dealing with your debt with creditors:
Give your creditors a heads-up on your situation instead of just not paying or being late in your payments. Cutting off communication with your creditor is one of the worst things you can do. Many creditors are willing to work with you in a manner that will help them get their money without having to resort to debt collectors.
Be clear with others about what you owe them and when you can pay. Have clean financial arrangements. Most of the time, they will understand especially if you were responsible enough to face them.
2. Pay off the balance with the highest interest rate first.
Pay as much as you can each month while making only minimum payments on your other cards. Never be late with your payments: it is the cardinal sin of debt management.
You get slapped with hefty late fees and penalty rates that run as high as 30 per cent. After you've paid off the credit-card debt with the highest interest, get rid of the credit card. Next month, do the same with the card that has the next highest interest rate. Continue until you reach the credit card with the most favorable terms and keep that one only.
3. Consider balance transferring.
Look for another credit card offering balance-transfer schemes. Get one with the lowest interest payments or fixed interest rates, and transfer your other credit card's outstanding balance there.
4. Pay extra on top of the minimum.
This is the single biggest thing you can do to get out of debt. You must optimize your payments for your own benefit. The simple way to do this is to add a consistent extra amount to your monthly minimum payment on one debt at a time. Consider adding 10 to 20 per cent to your minimum monthly due and you'll be out of debt in no time.
5. Work out repayment plans.
Often, creditors will work with you on waiving the extra fees – but you will have to ask.
6. Go the extra mile.
If your budget is still not enough, and your peace of mind means more to you than material things, consider looking for extra income to pay off your debts. There are many ways to bring in extra money, from part-time work to taking in a boarder. Sometimes, you have to make big choices to get out of debt. Consider selling some of your assets: household items, electronic gadgets, car, and clothing items you bought but never used.
Sell stuff to your relatives and friends, at Ebay, or at a garage sale. You will not only be free of stuff you don't need, but will clear your mind of psychological garbage. Just be sure to apply all these extra funds to the debt payment, and pay yourself first by saving.
7. Pray and dream again.
Believe that nothing is impossible with the support of your family and friends. Be accountable to someone other than your creditors. They will give you the love and encouragement you need to get out of your financial bills.
Start dreaming again of the time when you were free of worries and, in time, you will be. Know that all these changes will ultimately give you total financial peace of mind, which will be so much more satisfying than a piece of furniture.