Having debts is a tough situation many people face at one point or another in their lives. Until these arrears are settled, your financial liberties may be limited for several things you wish to do for yourself, your business, or your family. In a 2019 report by Dave Ramsey, it was revealed that 80% of Americans have chains of debts to deal with. Are you interested in knowing some tried and tested ways to reduce your debt? Please read on.
- Reduce the number of credit cards you own
Credit cards work on the concept of borrowing funds to pay for goods by use of an electronic card. The more cards you own, the higher the propensity to buy more things you’re not in a position to pay for now. That adds to your mounting debt, which ultimately puts you in the worst situation.
According to the American Banker, borrowers’ debts have continued to rise since 1994, and this statistic doesn’t seem to be going down. The financial expert website also stated that about 60% of the American population live off their credit cards, making this battle a downhill struggle. However, they recommend canceling multiple credit card usage and limiting it to only one. The psychology behind this move is to prevent cardholders from splurging on unnecessary purchases.
- Seek professional help
In many cases, seeking professional help to resolve debt issues is the best way to go. Although some debtors will seek expert financial help, others prefer to go the legal way. Finding an establishment such as the Boulder Legal Group presents an opportunity to consider other lawful options you can explore.
For instance, your attorneys may recommend declaring bankruptcy to reduce some hefty debts depending on your peculiar situation. Remember that you must prove beyond all doubts that you can’t fulfill your financial obligations before this option can be granted.
- Consolidate all existing debts
Debt consolidation is the process of putting all your debts into a single loan. This allows a debtor to begin to repay their existing debts on a monthly basis. The excellent thing about debt consolidation is that it tends to offer lower monthly repayment rates. Moreover, many borrowers seem to like the option this gives them. For instance, you get to decide and settle on how much you’re comfortable paying back monthly.
If you’re unable to do this calculation on your own, a debt consolidation calculator works well in this regard. Depending on the payment plan arrived at, the chances of repaying over a longer period are high. Although this, in other words, means an extended payment plan, it presents an opportunity to commence paying off debts in a timely and more organized manner.
How does this strategy impact your short to long-term financial plan? This question may be difficult to answer because of the variables involved. However, most people (debtors) prefer to increase their income streams to avoid creating the financial vacuum associated with debt consolidations.
Applying these practical tips will help you reduce your debts and get back on track financially.