Relieving yourself of debt not only frees up your income for things like retirement, but it also removes a lot of anxiety and stress from your life, not to mention stops the harassment from debt collectors. The government has passed laws about how collection agencies go about recouping their funds, but starting debt reduction plan eliminates their calls altogether. The arbitrator working on your reduction plan will route all collection calls to their office as well as deal directly with your creditors so you don’t have to.
Often, people with a lot of debt are also saddled with numerous high payments. The interest rates on the outstanding balances compound which pushes monthly payments even higher. Starting a debt reduction program will allow you to cut not only the balance and stop the hassling phone calls, but also the interest rate. Lower balances and lower interest rates directly relate to your ability to have lower payments. Pairing manageable payments with a modest monthly budget, you will be able to more effectively handle your household expenses as well as your debt until such time as it’s paid off.
Working with a debt reduction company is usually a mid to long-term process that can last anywhere from one to three years. During this time, your arbitrator will help you learn to pay your bills in a timely fashion along with teaching you advanced money management skills so you stay debt free after you complete your program. An additional benefit is that they will deal with creditors directly to stop them from harassing you by phone and mail.
There are a few popular methods to reduce your debt independently to get some relief from collection harassment. The most popular method is called snowballing. This is a very simple form of debt management in which you pay off your outstanding bills in the order from the least to the greatest. Following this debt free method is simple:
Another popular way to reduce debt is by transferring balances from higher interest accounts to lower interest accounts. If you have several credit card or lines of credit that have a very high APR, chances are the payments are doing very little to bring down the principal. Most credit card providers allow you to transfer your balance to a lower interest or no interest card for a nominal fee. In most cases the rates offered are introductory and only last for a limited time frame. The key to benefiting from a balance transfer is to pay off the balance before the grace period expires.
An avalanche strategy is another popular choice; this is similar to the snowball strategy except instead of eliminating the lower bills first, the bills with the highest rates are eliminated regardless of the balance amount. This is also a very easy method to follow:
These are a few bits of advice you can follow to help remove debt and stress, as well as collection agents from your life; however in the long good spending habits and proper money management is the only way to make sure that you stay free from debt.