Debt Reduction

Thinking of Getting Out of Debt?

Do you make your credit card payments every month while feeling as though you aren't making progress? Do you have so many loans that you cannot keep making payments on time? Have you seen your interest rates rising even when you have been making payments on time? These and many other such questions have been plaguing most Americans lately.

Managing your debt and finances can be a challenge in usual times, but it has become even more difficult in recent times of high unemployment and a constrained credit environment. Most people treat their credit card like a standard utility bill: pay the minimum on the due date, ignore the total balance owed, and forget about the debt until the next statement arrives. Eventually, they start to feel trapped, don't have a slightest dent in their total amounts owed, and don't see an end in sight.

Believe it or not, even in these tough times, it is possible to get on top of your debt and eventually pay it off. You will need some planning and organization, and you will need to be able to make a commitment to tracking progress on your plan. Follow the steps below, or use an innovative program from DebtGoal to create your plan and track progress. Try DebtGoal now for a FREE 7-day Trial!

Setting up Your Own Debt Plan

Most people who want to pay off debt do not create a plan. They do not set a target of how much they want to pay towards debt and do not know how they will track their progress.

Step 1: Get Organized- Most people do not know their total debt. They treat their credit card like a standard utility bill: pay the minimum on the due date, ignore the total balance owed, and forget about the debt until the next statement arrives. If this sounds like you, then the first step for you is to get organized.

Put all your debt accounts in a single place, and see how much debt you actually have: Collect your monthly payments, due dates, and interest rates for each of your accounts. Keep these numbers somewhere you can track them regularly: in a spreadsheet or journal. Then, make a file where you will keep all your statements going forward. You'll also need to figure out how you are going to make payments on time. Use your bank's bill paying service, or create your own reminders.

Step 2: Make a Commitment- Make concrete and tangible goals to reduce your debt every month. Make a decision to pay more than the minimum payment. Pick a value that you can afford: $100, $200, or $300. Pick a number that you know that you can meet, and be confident in your ability to make payments. Select SMART goals: specific, measurable, attainable, relevant, and time-bound.

Step 3: Track Your Progress- Here is where most people lose focus. You can set up a simple tracking sheet to monitor when you make payments and when new statements arrive. This method will help you ensure that you are making payments on time. Every statement will show you how much of your total balance remains.

Step 4: Accelerate Your Progress- If you follow the first three steps, you will already have made huge strides in reaching your goal. If you want to take additional steps to improve your payoffs, follow the steps below:

• Try debt-stacking: With this technique, you keep your monthly commitment constant and pay off your highest rate loan first. If you have between five and eight credit cards and loans, you may find it hard to follow this technique manually. DebtGoal gives you the tools and techniques to make your own debt stacking plan. The plan prioritizes your payments and tells you how much to pay for each account.
• Negotiate your interest rates: Almost everyone saw their rates increase last year. If you were not paying attention to the fine print, you would have missed that you could opt-out of the rate increase, and that the bank would let you pay off the balance at a lower rate. Your card would be closed after you've paid your balance. We recommend that you take that offer for as many of your cards as possible, except for your oldest card and the most frequently used card. A CALPRIG study had found that 56% of people who called to ask for interest rate decrease on their credit cards got one. Credit card companies may selectively offer lower rates to retain good customers. DebtGoal can help you go through the process of negotiating your rates.
• Find sources of cash: Being frugal is today's trend, even though most people are living with stretched budgets. Most people are already familiar with the usual tips: carry lunch from home, and have a homemade brew instead of an expensive latte. These ideas are great, but you can do even better by going a few steps further. Make a budget and follow it, sell excess stuff in your garage, and consider using your low interest rate savings to pay off that 30% rate card.

DebtGoal is an innovative program that brings you these tools and advice that you can follow online in the ease and comfort of your own home. It brings you closer to a community of people who have the same goals as yours and who are aspiring towards a debt free life. They share their stories, tips, and successes. Become a part of this growing community of people who are making progress towards becoming debt free.