Many consumers across the country have run into financial difficulties over the last few years as the economy got worse. As a result, they may have seen their debt levels increase considerably and be struggling to keep up with their bills. It is more important than ever for individuals to reduce debt more quickly, and many are looking for sensible ways to do it. Unfortunately there is no quick and easy fix, and most methods to reduce debt take a long time and require total commitment to the process.
The most straightforward method for consumers to reduce debt is to simply pay more towards their debts each month. While this option may not seem possible for some, those who are truly committed to reducing debt may be able to work out a monthly budget that allows them to pay more towards their debt than they were before. This will not only reduce the principal balances more rapidly, but it will significantly cut down what they would otherwise pay in interest. It is usually best to focus on paying down the creditors with the highest interest rates first, while leaving those with the lowest interest rates for payoff last.
Another way to reduce debt, or at least pay the debt off more quickly, is to simply contact one’s lenders and ask for a lower APR. While this method does not always work, it never hurts to try. Some consumers who have been able to stay current with their monthly payments might be able to talk their way into a more favorable rate. If a creditor knows that you have the opportunity to transfer your balance to another lender, they are likely to try and keep your business. A reduced interest rate enables the debtor to pay down the balance more quickly, especially if they set aside additional funds to apply towards the principal balance.
Consumers might also opt to speak to a credit counselor, who can suggest a debt management plan that could help them pay off their debt within four to seven years. Many counselors will make consumers devote considerable time to a financial education process that will also help draw up a sound financial budget and eliminate unnecessary expenditures to further chip away at their debt. In a credit counseling program, consumers will pay back every dollar of the principal they owe, albeit it at a lower interest rate.
Debt settlement, also known as debt negotiation, is another option that has become much more commonplace in recent years. Debt settlement is the process of negotiating with creditors to achieve a payoff amount that is a substantial reduction to the current balances that are owed. Creditors are very willing to negotiate on debt balances that are in arrears, because if a consumer were to file bankruptcy, they stand to get nothing. In order to succeed in such a program, consumers need to diligently save the funds that are required to make settlements, which typically run between 40 and 60 percent of the total current balances. Consumers can try to negotiate with their lenders on their own or they can hire the help of a professional Company. There are pros and cons to both – but a good debt settlement Company can achieve results for consumers that are more favorable than what they could otherwise arrange on their own.
When consumers look for the best way to reduce debt quickly, they should explore all of their options and make sure to do their due diligence on the Companies offering the various solutions. While no reduction process is going to be easy, there are great companies offering successful solutions that are worthwhile and have lasting benefits.