Many people are currently struggling to pay off the large amount of debt which they have accumulated over time.
The recent downturn in the economy caught most by surprise, leaving them without a steady income to make even the minimum required payments on their credit cards, and other financial obligations.
And, unfortunately for most, the end is not on the horizon.
Years of excess spending have now built a mountain of debt that will take time to pay.
Yes, it takes time, but if time is what you have, use that time to your advantage.
There are different credit debt reduction strategies that you can employ that will lead to a road of financial freedom.
Debts accumulate when we borrow money that is for short-term use, or for an emergency expense.
Your debts will also accumulate when your debt to income ratio increases, delaying your ability to make timely payments.
The interest rate piles up and your credit score goes down.
The first thing that you need to do in a credit debt reduction strategy is establish a plan.
You will need to gather all related information of what you owe, and to whom.
You can never begin tackling debt if you do not know how much you owe.
It may surprise you that most of your credit accounts and bills can be eliminated simply by cutting back on unnecessary expenses.
A common practice among many people overloaded with debt is to use a debt consolidation strategy for credit debt reduction.
Having different credit cards with varying interest rates can often make it difficult to keep track of payments.
Missed payments come back the next month with added interest and a late payment charge.
Debt consolidation helps you to avoid this situation.
Multiple loans and credit cards are consolidated into a single, affordable monthly payment.
If you own your home, you might be able to get a home equity loan or line of credit, if your house has not lost too much of its value during the mortgage crisis.
Keep in mind that you could lose your home if you do not repay the loan on time.
A debt settlement program may be worth looking at if you have more than $10,000.
00 in debt.
In this type of program, a person working for a debt settlement company will negotiate a pay off amount much less than the actual balance of the debt.
Sometimes they can negotiate 40% to 50% of the loan balance to write off the debt and leave you free and clear after paying the obligation.
The downside to debt settlement is that you will have to come up with a lump some in a shorter amount of time.
If you are too far in debt anyway, that can be rather hard.
You also may be responsible for paying taxes on the written off amount as income.