Getting Out of Debt Tips - by Debt Freedom Tips

Below is a collection of debt tips and facts that you may find useful. We regularly add and update our debt tips, to help you find innovative ways to reduce debt.
 

Credit Card Debt Tips and Facts

When trying to pay down multiple credit cards, concentrate overpayment on the card with the lowest balance, while making near-minimum payments on the remaining cards. As cards are paid-off, do not lower your overall monthly debt payment until all cards are paid-off.

Never pay just the minimum balance on any credit card. Even an extra $10 per month over the minimum makes a significant difference over time. If you have multiple credit cards, and you are trying to pay one card down at a time (recommended), still pay a little more than the minimum even on the cards you are not currently focusing on.

Despite popular belief, the Debt Settlement industry has fewer complaints per-person than Credit Counseling. This is remarkable as Credit Counseling services have existed for many decades, while Debt Settlement has existed for only 1 decade. Generally, more mature industries have had more time to 'get it right.' Lobbying by the Credit Card and Credit Counseling industries unfairly represent Debt Settlement, as it is a competiting industry.

Use a debit card or pre-paid credit card rather than a traditional credit card. This will prevent you from spending more money than you can afford. It is okay to have a credit card, but they are best used for emergency situations only. If you do use your credit card, be sure to pay the balance in full each month. If you get to the point where you can no longer pay your credit card balance in full, it's time to tighten up your budget.

While saving money is great, if the interest rate of your savings account is lower than your credit card interest rate, then you are better off paying off your credit cards. Many people will save hundreds of dollars per month at 2% interest while letting their credit card balance gain 18% interest from month to month. Paying off your credit card balance is typically the best savings plan when you look at the bigger picture.

Create a savings account, or a second savings account if you already have one. Transfer funds on a monthly basis, for example $200/month, to pay for upcoming activities such as vacations, a new washing machine, an emergency, etc. Just get out of the habit of putting one-time large expenses on your credit card. You can do the same things and buy the same things, but by using your credit card everything becomes much more expensive in the long run.

Too Much Debt Tips and Facts

Despite popular belief, the Government DOES NOT offer a grant or bailout program for unsecured debts such as credit cards, personal loans, store/gas cards, medical bills, or judgments. This information is publicly displayed at Grants.Gov. Unsecured debts are best resolved through Debt Settlement, Credit Counseling and Bankruptcy.

If you cannot pay your bills, you should contact your creditors immediately or seek professional assistance. Not paying your bills, while not communicating with your creditors generally is a worse-case scenario.

Bankruptcy should be your last option when resolving your debts. It is the only debt resolution solution that is tracked long-term (10 years), may cost you a job, and is a lose-lose situation. Please consider Debt Settlement, Credit Counseling, and Loan Modification first; you can always file for bankruptcy later if needed.

If you find that you cannot pay all of your bills, don't panic! Financial stress can impact your family and marriage, but don't succumb to the pressure. Make a family game-plan and as a family decide where to cut your budget. Your family will need to work together constructively and positively. Remain proactive, seeking ways to lower your cost of living, and resolving your debts. Seek professional help if your own efforts are not enough.

If you cannot pay all of your bills, you must prioritize! Think this through and use common sense: Do not pay your cable TV bill, rather than feeding your family. Food, your home and utilities are generally a priority. Credit cards, personal loans, taxes, subscriptions, memberships, etc., usually have more flexibility if they go unpaid. You should inform your creditors when you cannot pay, or seek professional assistance.