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Tips on how to make debt reduction successful with or without
a debt consolidator program
Debt reduction programs can drastically lower your monthly payment.
That's because as part of a debt reduction program your credit counselor
negotiates with creditors to lower your interest rates and reduce
your debt. There are many debt consolidator programs that offer
this type of debt reduction program.
You can use debt reduction for one or all of your bills, depending
on what type of debt consolidator program you enroll in. If you
already have outstanding debt, but the interest is lower than the
debt consolidator program can give you, then it's best to stay with
your current interest rate. Debt reduction is easy and can by far
be one of the most rewarding programs around. To find out more about
debt reduction talk to a credit counselor by getting your free
debt consolidation help .
Debt Reduction
If you ever wanted to get financially ahead, if you've ever had
an argument in your home over money, if you ever thought you were
drowning in a sea of debt, take this "3-step" life preserver
and use it... and don't feel like you're alone in a sinking boat.
In a recent site survey, 37% of the respondents asked for more
information on debt reduction to break out of their credit nightmare.
This article not only consolidates many of the resources written
at this site concerning debt reduction, but offers link resources
as well as more new information not seen here before. Here the are
some steps necessary for debt reduction.
Step 1: Where Do You
Stand Now?
The following two tables offer a good indication as to where you
fit into the debt hopper compared to other consumers. Knowing where
you stand among your peers (or "keeping up with the Jones's")
may be what got you into debt in the first place, but sometimes
it helps to know your standing for that extra motivational shove
all of us need from time to time.
The first table represents the percent of income used within various
expense categories. All Homes (income average = $39,926) is presented
with both dollars and percent of income. Affluent Home (income average
= $96,397) is reported in percent of total income only.
| Expense Category |
$ All Homes |
% All Incomes |
% Affluent Income |
Housing
|
$12,323 |
30.9%
|
23.8% |
| Transportation |
$6,457 |
16.2% |
12.2% |
| Food |
$4,801 |
12.0% |
8.2% |
Income Taxes
|
$3,241 |
8.1% |
10.3% |
| Soc. Sec. & Pension |
$2,844 |
7.1% |
9.7% |
Health Care
|
$1,841 |
4.6% |
2.7% |
| Entertainment |
$1,813 |
4.5% |
4.1% |
| Wearing Apparel |
$1,729 |
4.3% |
3.5% |
| Gifts & Contributions |
$2,060 |
5.2% |
4.6% |
| All Other |
$3,062 |
7.7% |
5.7% |
The next table attempts to answer "Who borrows?"
and "How much?" It displays the % of all households having
each debt item as well as the average balance on that item.
| Debt Item |
% That Have |
Avg. Balance |
Credit Card
|
65% |
$2,811 |
| 1st Mortgage |
39% |
$76,018 |
| Car Loan/Lease |
36% |
$11,206 |
| Personal Loan |
22% |
$13,657 |
| Student Loan |
10% |
$11,887 |
| Installments |
9% |
$10,682 |
Step 2: Budgeting
It all starts with a budget. How could you
possibly get to your destination unless you know exactly where you
are on the map now? Finding occasionally wasted $100's is easy.
It's the consistent $10 or $20 dribble that eventually drowns you
because you never see it build into the $100 bills. If you really
want to reduce your debt, making
out and sticking to a budget is vital!
Related Articles
Debt Consolidator
Debt Reduction Settlement
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