Debt is synonymous to a vicious cycle, once you are caught in debt it continues to grow, with each month, with each purchase and eventually debt becomes a self-sustaining machine that feeds on your monthly salary. When you are in debt it takes either intervention or strong determination to get out of it. The best way to avoid debt and the debt collectors that come with it is to manage you money wisely from the start. However, the truth of the matter is that there are just some cases that we can’t avoid to take a loan and create debt such as large purchases like home and car financing.
On that topic, do you ever wonder who the debt collectors are? In some cases, they are people who work at the office of the creditors who are tasked only with recovering past due and overdue amounts. In other cases, they are independent companies who work for your creditors that also chase you for monies owed. The sole purpose of a debt collector is to get back money from consumers that are owed to a creditor. They are not tasked with keeping your best interest in mind, or with any finical difficulties you may be facing at the time. Debt collectors use various means to contact consumers, they may call, write, email or even visit a persons house to collect past due amounts. This can be very stressful if the debt collectors are overly aggressive, or even if they are not aggressive but you have several overdue amounts.
When you’re faced with a list of debts that you owe, the first plan of action is to analyze all of your debt, restructure and prioritize your payments. Make a list of all of your current debt, including the interest rate and the amount of months left to pay. Then you can prioritize your debt in a way that you pay the ones that will costs you the most money in the long run first. Try to prioritize your payments for the debt that has the highest interest rates first, and then secondly focus on the loans that you can pay off the earliest and check off your list.
Another approach is to consolidate all of your debt into one consolidation loan, this can restructure your debt into a fixed monthly rate and more importantly it will offer you one fixed interest rate. Calculate the average interest rates of all your loans and then look for a loan with a lower interest rate, this can substantially help you manage your debt and save you some money in the long run. However, you need to examine the new loan carefully and determine if their low interest rates aren’t in fact a product of extended payment periods.
Lastly if you are feeling overwhelmed by the amount of debt that you owe then you might want to consider signing up for credit counseling, most of these companies are non-profit organizations and offer their services for free. They can teach you how to manage your money more effectively, help you set up a monthly budget and negotiate interest rates and monthly fees with your creditors which will help you reduce your debt.