You read it right. The answer that you have been looking for is nothing else but YOU! It all begins with you. You need to acknowledge that you are in trouble; you have to acknowledge your debts. Then, you need to decide if you really want to get out of debt, you need to commit yourself. The word “commit’ is used to emphasize you will need to change a lot about your attitude and way of thinking. By the time comes when you are already out of debt you may even want to consider yourself a new “you”!

Your commitment can be a roller coaster ride. At first, you feel good about yourself; you are positive and focus to get out of debt. Then, your friends or colleagues decided to spend summer on a tropical resort and you don’t want to be left out and decided to swipe the plastic again. You passed by your favorite car store and just can’t resist the new car model and realized your sales commission plus a car loan is the perfect match. And the bills start to pile again.

The list below is guide that you can use every now and then to check on “you”. (+) Attitude indicates signs that you are moving forward. On the other hand, (-) Attitude signifies you are doing badly. If you found yourself carrying out more (+) Attitudes than (-) Attitude then it only means you are on the right track and it won’t be long before you finally get out of debt. Otherwise, it is either you are still the same person before you committed yourself or worse, you are falling deeper and deeper on debts.

(+) Positive Attitude

• You are focus and feel excited about your commitment to get out debt.
• You have set your priorities.
• You have a positive and healthy outlook on money.
• Your monthly expenses have been planned.
• You are starting to use credit wisely.
• You have maximized your income.
• You have a part-time job, looking for one or considering having one.
• Your debts are prioritized. Monthly payments are settled and paid regularly.
• You have finally keep track of your spending.
• You have talked to your credit companies and have discussed some options.
• You and your partner are already discussing money issues.
• You keep on trying even if you experienced some failures and disappointments.

(-) Negative Attitude

• You are disregarding your debts and spend as if everything is normal.
• You are scared to ask for help. Worst case, you don’t even regard yourself as someone who needs help.
• You are ashamed about your financial condition and you are hiding it from your family, friends or colleagues.
• Worries about your financial condition are starting to affect your health and lifestyle.
• You are spending significant amount on gambling, alcohol, drugs, excessive shopping.
• You realized that moving out of your parents’ house is too soon.
• You are afraid to use some of your savings instead of credit.
• The reality of having additional child finally kicks in and you don’t know where to get the additional finances.

All the debts and the terrible feeling of hopelessness makes you cringe like there is no other options at all. Well let me inform you that there are various financial programs and services designed for people like you. The first thing to do is assess your current financial status and evaluate the pros and cons of each alternative discussed below. Then, you will be smarter to decide which one is best for you.

Debt Settlement

Also referred to as “Debt Negotiation”. An aggressive technique in reducing debts. It is an alternative for people who are considering bankruptcy or those with a severe amount of debt.

Advantages:

• Gives lower monthly payment since total debt is lowered.


• Credit counseling companies will do all the negotiating to all your creditors.


• Provides shortest time to get out of debt without filing for bankruptcy.

• Payment of taxes as IRS considers the forgiven debt as taxable income.


• Can pose harm on the debtor’s credit rating.

Bankruptcy

Recommended as the last resort since its effects are long-term and extensive. The most common personal bankruptcy is Chapter 7 and Chapter 13.

Advantages:

• Possible to exercise even if you have no assets.


• Offers a fresh beginning to people who can’t fulfill their debts.


• Grants debtors to keep some assets.


• After completing bankruptcy plan and receiving a discharge, debtors do not have to pay certain liabilities.

• Put a negative effect on your credit score for 10 years.


• Can seriously affect future credit applications.

Consolidation

Debts are combined together into a single amount. The lender pays your debt and you make the monthly payments to him. The monthly payment is probably 32 percent lower than preceding payments.

Advantages:

• Offers lower monthly payments.


• Provides additional time to pay debts.


• May grant lower interest.


• Managing of debts is easier compared to multiple payments.

• Total amount of debt upon consolidations is not reduced.


• Commitment to discontinue using credit cards.

Credit Counseling

It is making use of the services of counseling organizations, most of it are nonprofit, to assist you with your financial dilemma. Some credit counseling institution can even help you exercise payment arrangements with your creditors.

Advantages:

• Provides assistance on how to manage your finances.


• Offers free educational resources and seminars.


• Certified credit counselors can assist you in outlining a personalized plan to get you out of debt.

• Some credit counseling organizations charge high fees for enrolling in their credit counseling programs.


• Disclosure of personal financial details such as credit card numbers and balances.

Home Equity Loan

This approach requires you to acquire a loan or mortgage on your home equity. It could minimize your credit cost by consolidating all your debts through a home equity credit plan.

Advantages:

• May provide some tax advantages not available with other credit programs.


• Majority of home equity loans provide encouraging interest rate.


• All outstanding debts are paid off.

• The debtor should have a home.


• Your home serves as collateral.


• Failure to make regular payments could make you lose your home.

There is no rule of thumb in choosing what payment strategy to employ. It will greatly depend on your current financial situation, plan and priorities. One approach has its own advantages and disadvantages compare to another. Try to evaluate each strategy and see for yourself which one makes sense.

There are credit card companies that will raise interest rate for just one late payment of bills. It is better to avoid any additional fees or charges that will apparently add to your total debt payments. Try your best to meet up the minimum payments on all your debts and you will be surprised how little by little your debts start dropping. It will also motivate you to keep on going with your payment strategy until the time you get out of debt.

For people with enormous total debts, high interest rates make it more difficult to get out of it. You can talk to your credit companies and discuss some options to lower the interest rate. One of the most frequent used rate reduction programs is loan consolidation. Reduced interest rates means increased in payments on credits’ balances with no increase in total payments.

Assuming you owe $2,000 on each 3 debt accounts. The interest rates are 10%, 14% and 20%. Paying the debt with the highest rate will save you more in interest payments over the succeeding years than paying the debts with lower rates. This strategy is simply keeping your total interest payments to the least amount as possible.

There are people who just can’t stand the sight and effect of various monthly payments coming in and it keeps them more upset. If this is your case, you may want to try this strategy. Pay the debt with the lowest balance. In this way, it will trim down the number of payments in an instant. For example, if you have outstanding balances of 5 debts accounts with amounts of $300, $500, $3000, and $4000, pay up the $300 and $500 debts and you are instantly rid of 2 payments. To some people, it means they just have to worry 2 more debts instead of 4.

You may ask “Why pay $500 if I am only required to pay $300?” the answer is simple. The less you pay on your debt payments the longer it will take you to get out it. Some credit companies even lower their interest rates and claim that this would help their debtors with their financial crisis. But on the other side this is also another way to encourage people to pay just the minimum amount knowing that their interest rate is “lowered”. This will result to more income for credit companies and longer debt maze on your part.

Internet payday loans are easy to locate using any kind of search engine. Payday lenders have their ads placed in many other sites and they obtain people’s emails to send their advertising pitch to numerous inboxes. Internet payday loans are hyped as the convenient and fast solution to a financial shortage. But this is the exact opposite. Payday loans lead to a worse financial situation. This can be immediately seen if attention is paid to the contracts that internet payday lenders give to their borrowers. Here are typical features of a payday loan contract.

One feature of a payday loan contract is called the arbitration clause. It is a legalistic term but it simply means that if there are disputes between the two parties making the contract, this dispute must be settled outside the court, in a pre-chosen state or nation, and before a pre-chosen group of people who will make a decision. This means that if the borrower wants to challenge the actions of the payday lender, this will be discussed and decided upon in a place that could be hundreds of miles away from the location of the borrower. The laws of the state where the payday company wants to hold the arbitration would be different from the laws of the borrower’s state. Worse, the arbitration could be held in another country. The expenses alone would deter the borrower from pursuing his issues against the payday lender.

Then, the arbitration procedure can be held in front of an organization or a group which could be biased in favor of the payday lender. A dispute is usually best settled in court where the chances of a fair decision are high. But with the arbitration clause, it could be held before people who may have already decided to protect the interests of the payday lender.

Another feature of a payday loan contract is a statement, which refers to the borrower’s agreement to never be involved in a class action suit against the payday lender. Many borrowers often disregard this statement believing that there will be no reason to file charges against the payday loan company. Tragically, there are many possible reasons. For example, some internet payday loans are automatically renewed every two weeks even without communication with the client. This means that the payday lender immediately withdraws the finance charge from the borrower’s bank account. To give a stranger such easy access to a personal checking account should be disturbing enough.

And still another feature of a payday loan contract is the agreement on the part of the borrower to never proclaim bankruptcy. In many respects, claiming bankruptcy is bad news because the borrower’s credit history is smeared and the borrower will have difficulty obtaining loans. But bankruptcy is also a financial move that an honest person can take when he finds himself unable to meet all his financial obligations. In the payday loan contract, bankruptcy does not become an option. This means that the payday lender can still make electronic withdrawals for the finance charges because the borrower’s account is obligated to remain open. With insufficient funds, both the bank and the payday lender can charge penalties.

Clearly, the contracts of internet payday loans are one-sided and always in favor of the lender. The borrower must realize that he faces many financial, security, and legal risks each time he obtains a payday loan and signs that dubious contract.

Sometimes we do not have to look far to search for answers. The answers we are seeking out might be just in front of us or within us. Your greatest competitor is yourself. If you are having a hard time getting out of debt maybe because it is you that is keeping it tough. Below are simple yet very effective approaches to finally realizing that priceless feeling of being debt free:

Strategy 1: Know thy credit card

Even before you apply for that magical credit card that you have always wanted you should have known the important details. Such information includes maximum credit, interest rate, minimum payments, monthly fees, charges for special services, and other fees. Whether you like it or not these numbers have a significant impact on your billing statement. That is the reason it pays to know. The more you know, the more aware you are with its effects and consequences. When your head is already six feet under because of debts, you can have better alternatives if you are familiar with various debt reduction programs, assuming that your credit card company offers one. Recognizing your credit card’s capacity and limitations is identifying your own with regards to financial capabilities.

Strategy 2: Spend wisely

It is not how much you earn. It is how much you save! Cut down unnecessary expenses. It may seem impossible and unbearable to live without your mobile phone, weekly dinners, cable subscription, latest designer clothes, vacations escapade, etc. Consequently, you will be able pay more than the minimum payment and save additional cash if you learn to control this extra spending. Learn to deal with temptations.

Start saying no when family or friends ask you to swipe that magical card for not so important wishes. Saving also means cash on hand that you can use for unexpected expenses. Regardless of the amount, the money you save now can save you from future and serious problems.

Strategy 3: Look for extra jobs

In very rare cases, it is impossible to cut down some expenses because of its necessity or urgency. It is also sometimes difficult to predict and minimize unexpected expenditures. The next best thing to do is find additional source of income. It could be part-time and contractual jobs or any professional service you could offer. This is the time to take your job and other skills or talents seriously. Additional money means additional capacity to pay more debts and chance to get out of it but this not an assurance. There are people who splurge more knowing they have more money to spend which means added debts and longer time to recover from financial crisis.

The strategies discussed above apply mostly to general cases. There are instances when other options or strategies are better, that will depend on your personal circumstances. The main key point here is your commitment. Your determination to get out of debt will be the major driving force that will motivate and guide you in continuing all your efforts.