It seems as if nobody is immune to credit problems these days. While there is some disagreement as to whether the economy is growing or shrinking at any given moment, everybody agrees it’s not growing fast enough. Let’s face it, the economy could be doing much better than it is. Unfortunately with the current global pandemic and lackluster economy, the same sluggish economy is taking its toll on decent, hardworking people. Even if they have previously had stellar credit, and made all of their monthly payments on time, and in full; they are now falling behind. Sadly, it’s not even their fault. If this sounds like you, then you have probably been trying to come up with ways to get out of your current situation. That’s a good thing because it shows that you care about doing the right thing.
Debt Reduction Worksheet – Your Guide To Stay On Track
Using a debt reduction worksheet to help get rid of your debts and get your finances back under your control will give you the best possible chance of success. No matter what type of worksheet you use, be sure you keep it somewhere you can see it so you can keep track of your progress. You also need to remember to update it each time you make some progress.
Things to Put on your Debt Reduction Worksheet
If you intend to create your own debt reduction worksheet your starting point should be to enter your total income after tax. This gives you a clear idea of how much you have to pay your expenses, bills and repayments each pay period.
List your current living expenses in a separate column beside your income amount. Include rent or mortgage payments, utilities bills, insurances, fuel costs, grocery bills, school fees, day-care costs, phone bills, internet costs, cable charges, how much you spend buying take-out and any other expenses you have.
In a separate column, write down all your consumer debt repayments. This means figuring out the payments you make on credit cards, store cards, payday loans, personal loans, auto loans, medical expenses and any other debts. All up the totals and take a good look at how much you spend each month repaying these debts.
Building Your Debt Reduction Plan
Far too many people assume they should sell the family home in an effort to pay off all their consumer debts. It’s strange how many people don’t think to sell off all the unnecessary things within their homes that got them into financial trouble in the first place. Will you really need a big screen TV if you lose your home? Will that expensive car still impress your friends if you’re living in it? Is having an expensive, fashionable wardrobe worth the stress of financial hardship?
Go back to your debt reduction worksheet and take a good, hard look at your consumer debt repayments. These are what eat into your income each month, so it makes sense to get rid of these and free up your income.
When people think about cutting costs, they assume that cutting back on take-out coffee or switching off the electrical appliances in their homes is all they can do. These tiny changes won’t make any difference.
Once again, take a good hard look at your debt reduction worksheet and take careful note of the amount you have to pay each month on consumer debts. Not only are they eating much of your income each pay period, but they’re being charged interest that costs you far more than you receive. So it makes sense to find ways to find ways to reduce these first.
Negotiating with your lender for reduced interest charges or comparing other lenders and transferring your balances to lower interest options could be a good way to get your interest costs down and reduce your repayments. You might even consider a debt consolidation loan to help reduce your costs even further.
With every change you make to your expenses or repayments, remember to add your progress to your debt reduction worksheet. When you can see measurable changes happening and you see your debt balances falling with each week that passes, you’ll find it much easier to stay motivated and keep working towards debt reduction.
Debt Reduction Companies Can Help But Be Careful
Debt reduction companies are willing to offer a helping hand to anyone wanting to get out of debt. There are plenty of different companies available and while they all advertise debt reduction services, not all of their services are exactly the same.
Debt Counseling Companies
Some debt reduction companies focus on credit counseling and financial education. Their objective is to teach you how to take back control of your own finances and teach you how to take responsibility for your financial destiny.
If you’re serious about learning to get out of the cycle of debt for good and learn how to avoid falling into the same trap again in future, then this could be a good option for you.
Debt Consolidation Companies
Some debt reduction companies may prefer to use debt consolidation in an attempt to help you lower your monthly repayments. The object of this tactic is to roll your credit card balances into one convenient consolidation loan.
This effectively gets rid of all those annoying credit card repayments and replaces them with one monthly repayment. Your new payment is often lower than the amount you were paying on your old accounts. You should also find that the interest charged is also lower, so you’ll be paying a lot less in interest charges over the long run.
The biggest benefit of trying this method of debt reduction is that your repayments are calculated to contain a portion of interest payment and a portion of principal payment. By contrast, the minimum payment you make on credit cards is often just covering the interest, so with a principal and interest repayment, you’re chipping away at your balance with every payment you make.
Debt Settlement Companies
Some debt reduction companies work on negotiating with your creditors to accept a payment amount that is lower than the amount you owe in total. If you’ve fallen behind on your repayments then credit card lenders may be willing to work out a settlement agreement with you.
The reason lenders are willing to accept a reduced amount as settlement for payment in full for your debt is that they know they won’t get anything at all if you file bankruptcy. At least accepting a lower amount means they’re getting something out of you.
Before you accept the services of debt reduction companies wanting to negotiate for a settlement on your behalf, take some time to check how they’ll be charging their fees. Some companies expect you to pay them a lump sum payment up front, while others may opt for a percentage of the amount they’ve saved.
You should also be aware that a settlement may be listed on your credit report and may negatively affect your credit score, so if this is an issue for you perhaps try alternative options first before attempting debt settlement.
No matter which option you choose, always check the qualifications and credentials of the debt reduction companies you’re thinking of using. Ask plenty of questions and be sure they’re answered in a way you understand and agree upon.
A debt consolidation for bad credit may be the answer you’re looking for. You may be concerned nobody will give you a loan, but with a little know-how, it can be done. Without question, being in a bad credit situation can be quite stressful. Unfortunately, there are a lot of questionable lenders out there who will male all kinds of false promises in the hopes of separating you from your money. There are also plenty of decent lenders out there that are willing and able to help you get through this rough patch. The good news is there are some things you can do to minimize your chances of being taken advantage of.
Be informed. First and foremost, you have to know exactly where you stand financially. No guessing. No shortcuts. Write down every bit of money you have, all of your income, and all of your expenses. Next, write down how much you owe each creditor, the interest rate, how much you should be paying them, and how much you are actually paying them. Once you know your bottom line, it will be much harder for a crooked lender to force you into an even worse situation. Knowing your true financial situation will also prevent you from getting more of a loan than you really need.
Read the small print. the law says that the terms of a loan need to be fully disclosed. However, the law doesn’t say how big the print has to be. Yet, it’s still your responsibility to read all of the terms of any loan you are considering and to fully understand them before you sign anything. If you don’t understand it, don’t sign it.
Shop around. As mentioned, there are many different lenders out there. Invest the time and effort now to have a better financial life later. Bad lenders will do everything they can to pressure you into signing a loan agreement on the spot. Good lenders will let you shop around. Either way, from this point forward you are 100% responsible for your financial future.
Being armed with these few things will give you the best possible terms for debt consolidation loans for bad credit. Know your stuff, understand the terms of any and all offers you’re considering, and shop around until you get a deal that works for you.
Bill Consolidation Loans
Bill consolidation loans can seem like the answer to your prayers if you are struggling with making your monthly repayments. But if you take one out what is the total cost of the bill? Consolidations loans are the same as any other loan when it comes to making a decision whether or not they are right for you. It sounds great the way the banks and loan companies promote bill consolidation loans doesn’t it? Just one small monthly repayment covers all your outstanding debts. Well in some cases that is very true but every case is different and you have to do you own checking to make sure you will be better off.
It is important to remember that you are taking the existing balances of your bills and spreading them over the term of the new loan. Obviously you need to sit down with pen and paper and work out just how much that will add up to in interest. Will it be a worth while saving that you make each month on your existing repayments over how much you pay in the long term.
Of course if you are consolidating bills from credit cards you will probably find that the lower interest rate will make a huge saving in both the monthly repayment and the overall cost of the loan. Just don’t make assumption though. Check it out carefully. It’s your cash that we are talking about here and no one will take care of it better than you.
Another thing for you to keep in mind is that you should shop around for the best deal. And don’t hesitate to haggle a bit with the banks and loan companies. Play them off against each other. No matter how good their offer sounds always tell them that you will need to think about it. That not only does that make you sound financially responsible but it allows you to go back to other lenders and say hey I’ve been offered this by ABC Bank can you beat it? Of course if they do tell them you will get back to them and go back to ABC Bank and say I’ve been offered this by XYZ Bank can you beat it?
Think they won’t go for it? Don’t be so sure. There’s still plenty of room for negotiation in bill consolidation loans.
How To Find Reliable Getting Out of Debt Info.
You need to figure out how to find reliable getting out of debt info. The debt is mounting (so is your stress level) and you need a way out, fast. There are many, many, many reliable sources out there you can access for information on debt relief.
First and foremost there is the internet, with its wealth of information just a click away you should be able to find what you are looking for without too much trouble. There are numerous sites offering articles, blogs, and even videos on the subject. You don’t even have to be very good at using a computer.
Your local library is another excellent source for reliable information. Search the card catalog for books by reputable authors with credentials you can trust. If you don’t have a library card just go in and get one, they are free. Talk to someone who has been in your shoes like a trusted family member or friend. They should be able to steer you in the right direction because they’ve already been through what you are going through now. Magazines and newspapers can offer informative articles on debt in today’s society and how to get rid of it so you can learn how to live debt-free. Especially during the current Covid-19 pandemic, you are not alone in your search for reliable getting out of debt info.
When making the decision to talk to a debt consolidation company there are guidelines you can go by to make sure the company is reliable.
Non-reliable debt consolidation company:
- If they ask for payment up front before they have even done anything, you need to keep searching. Don’t get caught up in a scam. It will end up costing you more than money.
- Be wary of companies that promise you everything under the sun. Most of the time they forget what they’ve promised a can’t deliver the goods.
- Never sign anything before you’ve been told just exactly what the company will do for you and how they will do it.
Reliable debt consolidation company:
- If you get a favorable report you’re one step closer to finding the company you can work with.
- The company gives you clear, concise reports on where your payments are going each month so there is no confusion.
- Do they provide counseling services to assist you in learning better money management skills?
Doing thorough research before deciding on a debt relief company can and will save you a lot more than money, it can save your sanity. Too many of these companies prey on your fears with exaggerated scare tactics that lure you in and ultimately saddle you with even more debt. You cannot make an informed decision without receiving all of the company’s getting out of debt info.
Non Profit Debt Consolidation
You should also know that there are both for profit, and non profit debt consolidation agencies.
It’s vital that you understand this form of debt consolidation is not the same as a traditional debt consolidation loan. Whether it’s for profit or non profit, a consolidation agency (also known as credit counseling agencies) do not give out loans of any kind. So, you will not be getting a large loan from them to pay off each of your creditors. But that’s okay, because debt consolidations can sometimes make your financial situation even worse. For one thing, they still count as an additional loan which can have a negative impact on your credit score. How do they help you then? Let’s take a look.
As mentioned, they don’t give you a loan. However, they will negotiate directly with the companies you owe money to. They will try to get lower interest rates, forgiveness of fees, or even a reduction in the total amount you owe. Once they have taken care of this step, they calculate how much a single monthly payment you need. You will send this payment to the non profit debt consolidation agency and they will then distribute it based in the individual arrangements they have made on your behalf. And, because you are not getting a loan, using an agency may leave your credit score unscathed.
A lot of people choose these agencies to get their debt back under control. While they do a lot for you, and make things more convenient, you still need to understand what they’re doing with your payment. Also, both for profit and non profit agencies will collect a fee of some kind for their services. In general, the non profit debt consolidation agencies will charge less than the for profit ones. However, this is almost always added into the monthly payment so you still have one payment.
Once you choose a consolidation company, you will get a full explanation of how they will allocate your payment. If they don’t do so, ask for one. In fact, ask ahead of time if they will provide you with such an explanation, if they say no then move on; even if it’s a non profit debt consolidation agency. You should also expect to get some sort of basic financial plan and budget. That’s where the “counseling” comes in. They are not only there to help you get out of a sticky financial situation, but also to prevent you from getting into a similar situation in the future.
Debt Management Program for Malaysian
If you are a Malaysian reader, you may opt to apply for the 6 month loan moratorium to ease your burden, at least for a temporary measure. To read possible scenarios on how it works, do read on the article Malaysia’s new six-month loan ‘moratorium’: All you need to know before you say ‘yes’. Alternatively, you may join the AKPK’s Debt Management Program (DMP) in order to regain control of your life and your debts.