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Debt Counseling – What It Can Do for You?
By Erin Brooks
When a person seeks out a loan, he aims for the minimum rate of interest. The rate of interest he decides on will be fixed for the entire duration of his payment plan, so he must choose wisely the first time.
By accelerating the payment structure on your loan, the life of the loan is reduced:
In a normal 30 year fixed rate loan situation, your monthly payment is applied towards principle and interest. It is amortized over the course of 30 years.
In national accounting debts are added according to those who are indebted. Household debt is the debt held by households. "National" or Public debt is the debt held by the various governmental institutions (federal government, states, cities ...). Business debt is the debt held by businesses.
On top of necessary expenses, many consumers dig their debt rut even deeper when they rely on credit cards to pay for necessary goods and services.
Debt Counseling – What It Can Do for You?
Statistical reports show that nearly 80% of consumer expenses in the United States are on credit and the most convenient way to shop is to use plastics, or more popularly known as credit cards. Moreover, the average debt is more than $8,000 with a typical interest rate of 18.9%.
No wonder so many people are now heavily buried in debt. Along with it came lots of debt relief programs aiming to provide consumers effective ways out of debt.
Among the many debt relief programs available today, debt counseling is one of the most well liked programs, helping more than the average consumers who seek debt consolidations.
Debt counseling is one way of teaching consumers how to administer their profits and expenditures. This program will also teach them how to avoid further accumulation of debts.
In essence, debt counseling should have been a preventive measure for accumulating debt, but the problem is that most people use this after they have already mounted lots of debts.
Credit card debts can mount up and get out of control quickly, you can reduce them today!
With debt counseling, you can learn the different ways on how to avoid debts. The main focus of debt counseling is to let the consumers be aware of their expenses, balances, and the credit score that they accumulate.
All of these things will put a great impact on the interest rates as well as the types of loans one can pursue. It is important for every consumer to seek debt counseling before they start charging their expenses.
Here is a list of things that your debt counselor can do for you:
1. Debt counselors can teach you the whole credit card process
One of the greatest problems why many people accumulate debts more than what they can afford to pay is that they aren't aware of the actual operation of their credit cards.
According to surveys, almost 75% of credit card holders aren't aware of their balances, not even the amount they are paying off monthly.
How is that? This happens when consumers only try to pay the minimum required balance stated on their credit card bill. They are only prolonging the process and accumulating bigger debts through interest rates.
Considering filing bankruptcy? If your finances are in ruins and you're considering filing bankruptcy, there's a few things you should know.
If you have debt and that debt includes two or more monthly payments to lenders at high interest rates, you do not need to be held hostage by burdensome repayment plans. Combine what you owe with a debt consolidation loan and watch your monthly payments and overall debt drop dramatically.
Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?
The first thing to do is prevent the situation from getting worse i.e. stop the debt from growing further. So exercise control and try and remain within 70% of your credit limit. You might also resort to spending cash instead of plastic, just as a control mechanism.
Some people have expressed skepticism that you can actually negotiate with creditors using our strategy or other creative methods of reducing debts.
The point here is that paying the minimum balance on your credit card won't get you any farther. It may lessen your actual balance but may only aggravate the situation because of the time it will take you to finish everything off.
With debt counseling, you are made aware of your payments and on how you should go about your balances so as not to accumulate more debts.
2. Money management is the ultimate tool that they can teach you
Debt counselors can give you complete details on money management. Here, consumers are taught on how to manage their expenses and their credit card bills.
Debt counseling programs will teach you how to be aware of your credit card billing statements every month. In this way, you get to be conscious of your expenses and on your available credit limit. The key is not to exceed your credit limit so as not to accumulate debts.
The problem with most consumers who are heavily buried in debt is that they are not aware of their monthly expenditures, thus, tending to cross over the specified credit limit.
Keep in mind that credit limit will most likely keep you in track. Once you have gone overboard, chances are you will find it hard to pay off your balances.
3. They will teach you how to use cash instead of plastics
Since the emergence of credit cards, consumers tend to neglect the real functions of credit cards. They don't understand that credit cards aren't extensions of their profits. Any amount used on credit cards is still payable.
So if you have been charging more than what you can pay in a month, you will definitely accumulate more debts.
Moreover, debt counseling will teach you not to use you credit cards when paying for your basic necessities like gasoline and groceries. These items are so basic that you should have included them in your monthly budget.
By any chance, acquiring them on credit will only entice you to get more than what your budget allows.
Indeed, debt counseling is a very effective way of managing debts. You should realize that debt counseling works better if they are used beforehand and not after the consumers have accumulated debts.
However you got into debt - unexpected financial difficulties, illness, loss of providing member of the family or overspending - you can turn to several organizations and charities for advice.
In a credit card debt consolidation, your average interest rate may be reduced. All your loans can also be transferred to one single card that has a lower interest rate than the ones you are currently paying.
Secured loans make your creditors feel more secure about loaning you money. When someone takes out a secured loan, that simply means there is collateral to back up the money they borrowed.
Debt Elimination tips shows how Millions of Americans are living on the edge of financial disaster surviving only on the hope of next week's paycheck. The average American is dying under a load of debt, with little or nothing building in the bank or in investments.
About the Author
Debt is a hard thing to live with, reduce debts today!
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