The first thing that a person has to understand when it comes to getting debt reductions is the fact that it is very different from debt counseling. There are people who readily assume that if they were to partake in debt counseling, it would automatically have an effect on lessening their debt. This is certainly not the case. For some people, there are only two different options towards the road to reducing their debt.
Most of the blogs on the subject of debt reduction provide an objective review of the many debt reduction programs now available to people wanting relief from the ever increasing debt burden. Many writers share personal insights based on their own or other people's experiences on the various debt reduction programs which may include financial education, debt counseling, debt elimination, credit card debts solutions, debt settlement, debt consolidation, debt management, consumer credit, tools on personal finance and related issues. Many of the writers also provide helpful information based on extensive research and study.
Timely and on Target
Many people who are in debt are in the dark and most of the time paralyzed into inaction and do not know what to do to rid them of this burden and desperately need help. Help (and Hope) is what Debt Reduction Programs Review sites want to provide. Help will come in the form of practical insights, examples, financial education, principles, tools, programs and solutions, and where to find them. Recent statistics show that people have credit card debts and more have debts in other forms. The current recession makes it even worse for many people, especially those who have lost their jobs or had their income reduced. Too many of these people, these are hopeless times, and hope is the worst thing to be without. These websites could not have come in a better time.
Differences between Credit Counseling and Debt Reduction
- When it comes to a credit counseling program, you would be required to close down all of your existing credit accounts with the exception of those that you need for business or those with very small to zero balances. On the other hand, a debt reduction program would not require you to do so. Now, do keep in mind that it is good to have a few credit cards handy just in case you run into emergencies. If you are not comfortable with closing down your accounts, then perhaps the reduction programs would be better for you.
- Completion Period: Credit Counseling services do tend to take longer when it comes to reaching completion when compared to debt reduction programs. In fact, the typical time it takes to liquidate your debt through credit counseling would take around 5 years to complete whereas the reduction programs would only take less than a year. Now, depending on your needs, you can opt for the lengthier one or choose the option that completes quicker.
- Cost Saving: Now, it is no secret that one of the advantages of using a reduction program instead of a credit counseling service would be the cost of savings that you'll be able to get. In a reduction program, you are only required to pay a settlement amount of about 20% to 60% of the amount you owe. On the other hand, a credit counseling service would have you repay the full amount with some discount and with the interest waived.
Debt Reduction Programs
- Debt Management Program: This is a plan that is administered by a software program or a professional firm, which takes a look at all of your multiple debts, the total amounts you owe, the interest rates, and calculates the most efficient payment plan for paying them down and paying them off as quickly as is possible.
A debt management program requires top notch discipline levels. It only works if you stick with the plan without wavering. For this reason, these plans are often set up to make electronic withdrawals from your bank account that go directly to your creditors on a periodic basis.
- Credit Counseling: Credit counseling programs also exist for individuals chronically swamped by their debts. Credit counselor programs involve paying fees to the counselors as they negotiate with your creditors to get you lower payments, lower interest rates or less total payments.
It should be noted that while these types of programs usually don't lower your credit score, they do show up as notations by many creditors on your credit reports. This can possibly put off some lenders and you may run the risk of harming your relationship with your current creditors. You should also be aware that you will not be in control of your own finances and may have to even agree to inflexible bi-weekly payments.
- Debt Settlement: Debt settlement is truly one of the most stressful debt reduction programs out there. Debt settlement companies lure desperate people in with a very tempting claim similar to this one: Negotiate Away 40-60% of your debt! For a person who is desperate and needs a quick solution this sounds great.
Unfortunately, it can take several months to save up the money necessary to reach a successful debt settlement with a creditor. The larger your outstanding balances, the longer it will take to raise the money so in turn the interest charges, late fees, and over limit fees are making the debt grow faster than ever!
Sadly, these debt settlement companies fail to tell you that it can potentially damage your credit score and the savings that was stipulated is less than what was initially advertised. Debt settlement is NOT the solution most assume when they sign-up which is why the failure rate is so high!
- The Money Merge Account Program: The Ultimate Debt Reduction Solution: It can literally take years before some debt reduction programs start yielding tangible results. One of the most highly recommended debt reduction programs to hit North America is the Money Merge Account program and it meets all 4 criteria listed above.
The Money Merge Account is one of the most highly recommended debt reduction programs on the market today because it works from the very first month until your final payoff date. The Money Merge Account is truly the most advanced and effective debt reduction program on the market today and can eliminate all debts in 1/3-1/2 the time!
Debt Reduction Criteria for Debt Elimination
Unfortunately, most programs of debt reductions simply do not work as advertised and end up leaving you worse off beyond when you started. All programs of debt reduction ought to fulfil 4 things:
- Diminish the time it takes to pay off debts
- Diminishes the monetary amount requisite by you to pay off debts
- Vocation with the current income
- Production of REAL outcomes REAL fast
Debt Reduction Strategies
- Stop Creating New Debt: Prior to your beginning to eliminate your existing debts, you ought to make a serious effort to avoid the formation of new debt. The last thing that you want to do is to dig your hole deeper than it is before. You can try to operate on a cash basis for day-to-day expenses. Leave your credit cards, home or cut them up so that you are not tempted to purchase more than you can afford. You may wish to keep one of your cards to be used just in an emergency.
- Creating a Budget: The next step in the diminishment of your debt ought to be comprehension of where all of your money is being spent each month so that you can form a budget. You will be in the requisition of expending a month or so tracking every expense irrespective of how small it is.
All of your household living expenditures logged during that period must be reviewed. Your expenses ought to be grouped into categories like fast food, rent/mortgage, entertainment, power, phone, TV/cable, internet, gas, car maintenance, etc. The expenditures must be evaluated to determine if any of them can be eliminated or reduced. All of the “nice to have” type of expenses must be eliminated. The other expenses must be reduced in any way you can. This should be followed by the formation of a budget on the basis of the remaining expenses, and the budget should be adhered to as if your life is dependent upon it.
- Disbursing Down Your Existing Debt: Once you have a budget in place for your household living expenses, you can turn your attention to paying down your existing periodical debts. This can be commenced if you start stocking all of your existing loans. Make a note of the balance owed, interest rate, and minimum monthly payment for each debt.
Once you are ready with the information around your monthly debts, a debt reduction strategy must be selected. Many such strategies are around that are used to help people diminish their debt. The two most popular are:
- Paying off debts with the highest rate first
- Paying off debts with the lowest balance first.