Debt Reduction

Most of us are aware of the dangers of being too reliant on our credit cards as a source of money. In terms of credit card debt, one of the realities we're faced with is paying a very high price for most of the money we owe.
If you're paying only the minimum on any credit line you have, most of your payment is going for interest with your principal decreasing v-e-r-y slowly. Here are some suggestions regarding credit cards:

Cut them up and throw them away. Keeping perhaps one for emergencies only.

Look for credit cards with lower interest rates. Utilize them to pay off higher interest cards. (Be careful, because a number of credit card companies will "seduce" you by offering a low interest rate for a period of time, but after that time, the interest rate will go high again).

Look for credit cards with permanent lower interest rates. They are not easy to come by. Look in Money Magazine each month for a listing.

Focus on paying off the higher interest debt first. It really will save you money in the long run.

Pay more than the monthly minimum due, if at all possible. Remember, only in doing this will you begin to significantly reduce the principal.

Investigate refinancing. If you are a homeowner, you may be able to refinance your home at a lower interest rate than you currently have. Since you would be refinancing a higher loan amount (assuming your home has appreciated and depending on how long you've lived there and how much you've improved the property), you could end up with a "chunk" of money to pay off credit card debt.
Note: Also, depending on your age and financial situation, you might want to refinance your home for 15 years, rather than 30. Your interest ratewill be even lower.

Consider consolidation. Combine several high interest rate loans into one with a lower rate.

Negotiate with lenders. Most lenders would rather keep you as a customer than have you file bankruptcy or simply renege on what you owe them. Be direct in stating your financial situation and your hopes for finding a solution. A lender may reduce your rate or lower your monthly payment to keep you.


Suggestions For Reducing Your Debt

Don't carry credit cards when shopping.

Keep a log of everything purchased. Note when, where, how much and what the feelings were at the time.

Make a plan of action. Determine how and when each debt will be eliminated. Review the plan every month.

Involve other family members. Enlist them in getting a hold on spending and indebtedness.

Develop a budget. Work with it every month.

Learn to save for something really important. And learn how good it feels to bring it home ALREADY PAID FOR.

If, after you've reviewed your financial situation, mapped out a plan of action, investigated all the options that seem appropriate to you and you still find you're overwhelmed and unclear, consider contacting Consumer Credit Counseling Services. It is a nonprofit organization offering free or minimum-cost counseling through 1,200
locations nationwide. If you feel that you can't do it alone, you may need the assistance of professionals who can guide you. But, don't hesitate to take that action .

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