Statistics are powerful.  Here are a few that tend to shatter some illusions that most Americans have regarding personal finance and money management.  Government statistics tell us:

• ·The average household in the United States has about $7,000 in credit card debt
• ·The average 50 year old in America has only $2,500 in savings
• ·Average credit card debt for 65 to 69 years old grew 217 percent over the last ten years to $5,844

Why do so few Americans live in true financial freedom?  A primary cause that leads to heavy personal debts is the American economy.  In the United States, we are encouraged to accumulate massive debts before the age of 30.  Let’s follow the financial path of Joe the average middle-class American from ages 18 to 30.  At age 18, Joe decides he is going to college.  At the end of 4 years, Joe has accumulated $25,000 in college loans.  This is about the average amount that a college student will incur in college loan debt through 4 years of study.

Joe also incurs an additional $5,000 in credit card debt.  Upon graduation, Joe buys a car for $10,000.  Joe’s total outstanding debt now stands at $40,000 and Joe is only 23 years old.  This is normal for Americans, and this huge hold of debt is how most Americans start their professional careers.  Within a few years, Joe will purchase his first home, and he will incur an additional $100,000+ of debt.  His debt total by age 30 will probably be close to $200,000.

Then, as most Americans begin earning more money in their late 20’s and 30’s, they simply increase their monthly spending, and never erase credit card debt or make any real headway toward building substantial net worth.

Net Worth

Net worth is defined as your assets minus your liabilities.  Most Americans are heavily indebted with liabilities—car payment, house payment, credit card debt, department store debt.  The key to winning the money management game and building substantial net worth is to accumulate assets and discard liabilities.

Emergency Savings Account

The first step to erasing credit card debt and building net worth is to eliminate bad debts, specifically all credit card debt.  However, the first step to erasing those debts is not to pay them off; instead, the first step is to build an emergency savings account of $1,000.  When most people incur an unexpected expense such as a random car repair, medical bill, or other expense, they pay for it by putting it on the credit card.  This simply extends the debt cycle and keeps one imprisoned financially.  By building an emergency savings account, you will be able to finance your own unexpected expenses.  When one does come up, simply use money from the emergency savings account, and then pay yourself back as quickly as possible by replenishing the balance to $1,000.

How to Erase Credit Card Debt

Once the emergency savings account has been built, the next challenge is to erase credit card debt.  Track all of your expenditures for one month.  Keep every receipt and write down every expense.  Then, at the end of the month, sit down and honestly review where you are spending your money.  List out all the expenses that could be cut—the movies, dinners, Starbucks, etc.  Commit to cut these expenses from your budget and then begin funneling all this extra cash toward paying down credit card debt each month.

This is much easier said than done, but it is essential.  The only way to practically get out of debt is to cut expenses and direct that increased cash flow into paying down debt.  It won’t be fun or exciting in the short-term, but it sure will feel great when your credit card balance is $0!

Bio: This article was provided by Forex Traders, an online resource currency trading and global market news.

Getting debt relief help these days may be a tough task if you don’t know where to look.  You may have considered debt negotiation but the average cost to be in those programs can range from 15% to 17% of the total amount of debt you have.

You may have also considered consolidating your credit cards and other debts into your home mortgage but in order to do that you first need to have good credit and second the refinance cost alone will be average around $3500.

Finally, you have considered bankruptcy, I don’t even really want to go there, but the cost again can be staggering.  In this article I’m going to cover 3 different options to help you get out of debt without spending much or even in some cases nothing at all.

National Foundation For Credit Counseling

The first option is the National Foundation For Credit Counseling.  The company is a non profit credit counseling business that specializes in working with people one on one to help them pay of their debt.

On top of that they have and extensive education system to help people break and change their financial habits.  They will work with anybody by mail, over the phone, online, and in person.

When getting started with the NFCC they will work with you to put a plan together customized to your specific needs.  On top of that they will work with you to help pay back 100% of what you owe.  Finally, they will work with you to help build your credit back up.  To get started check out the NFCC here.

American Consumer Credit Counseling

The next company that will help with debt relief is The ACCC.  This is a company that does a lot of the same things as the NFCC with a few exceptions.  First off their budget and credit counseling services are free.

Second, their debt management program is extremely inexpensive.  The cost to join is $39 for enrollment; they also have a maintenance fee of $4 per account with a minimum of $5 and a maximum payment of $35 a month.

On top of that, the offer a ton of education material from podcast, budgeting materials, and web seminars.  You could say they are the one stop place for helping you get out of  debt.  To get start check out the ACCC here.

My Debt Relief Options

Finally, if you made it here to my debt relief options you may have noticed how much free debt relief help we have available here.  If you’re looking for free information on how to set up your own debt elimination plan, negotiate with your creditors and collection agencies we have it.

You could say My Debt Relief Options is the totally free option when it comes to getting out of debt because we don’t charge one red cent to get the advice most debt companies will charge for.

Today I’m going to give you a couple of tips to look into for consolidating your debt.  Of all the options I am going to show you I will give you the ups and downs about doing these options.  Some may not be for you others will.  In the end it’s all up to you.

Mortgage Consolidation

Mortgage debt consolidation is the process were you refinance you mortgage and in the process stuff other debts like your car loans, credit card debt, and even personal loans inside this loan.  There are a couple of reasons this is a great option.  First off, it will create a higher loan amount which in turn will mean that you will pay more interest.

The benefit of this is that you don’t have to pay taxes on any interest you pay on your home loan, as result giving you more back at tax time.  Another benefit is you will have a lower interest rate in most cases.  Considering the rates that credit cards can have, mortgages will usually run in the 5% to 6% range.  To boot these rates are usually fixed and won’t flex on you like a credit card.

However there is also a negative issue with doing this as well.  The first is that it could result in you maxing out your home LTV (Loan To Value).  Meaning you would have no equity left in your home.  The reason this not so good is because it could result in you possibly ending up in debt all over again except this time you would have no place to consolidate the debt again.

Even worse some loans will allow you to add up to 125% of the home’s value.  The down side to this is if you would ever want to sell your home you would have to pay off the 25% portion you are over on your home loan before you could sell.

This can also be a bad idea considering your payment might jump up as well after refinancing.  In fact it may seem alright at first to accept a higher payment but if things would happen to get tight with money you may have to make some sacrifices or even worse your home could go into foreclosure.

Finally, the thing you need to realize with this option is that even though you would consolidate your debt into your home mortgage doesn’t mean you would have any less to owe.  You may be able to cut the interest rates at best but the principle amount would still be due.

Credit Card Consolidation

The next option is a credit card debt consolidation option.  This option is similar to the last option with some small differences.  First off, the debt is not consolidated to a secure debt like your home mortgage but rather an unsecured debt like your credit card.

However there are some good points to this though.  First, to do this there will be no refinance fees unlike the mortgage consolidation option I just talked about.  In the last option to refinance you’re looking at $3000 to $3500 in fees whereas with credit cards you will only have to pay a transfer fee.  This will depend on the credit card you have, in fact some cards won’t even have a transfer for the first 6 to 12 months allowing to transfer and pay off the debt before the interest kicks in.

On the flip side though, this could be disastrous if not done right.  If your cards would happen to get stacked full of debt you could be paying in the 10% to 15% range in interest and if you started missing payments you could be paying in the 28% to 33% range or higher.

To throw another log on the fire if things got really bad you could even end up transferring balances between cards just to make your payments and basically ending up robbing Peter to pay off Paul to get by.  I’ve known people in this kind of situation personally and it can get pretty ugly.

However if this is done properly and you can stay focused  on the real goal to pay off the debt before the interest kicks in you could save yourself tons of time and interest payments.

Debt Settlement Consolidation

Finally, the last debt consolidation option is to consolidate with a debt negotiation company.  In this situation theirs usually two options here.  The first one is a debt counseling option were someone will work with you by combining your debts all into one payment and help you pay it all including interest.

The second option is to enter a debt settlement option were someone will work with you to cut down debts by negotiating you a lower balance and combine those debts into one single payment.  The benefits to this are that you end up paying less back than what you really owed in the first place.  This will also in most cases cut down the interest owed as well.

However these companies are not perfect one thing I’ve noticed as a big down side to using these types of companies is that once you give them control of your money they can decide how they want to pay off your debt.  Doing this also can put some serious negative marks on your credit score as well.

You’re Turn

Now it’s your turn, are any of these debt consolidation options something you would like to try?  If so make sure you look at all the options and risk before you decide.  Also before do anything call some of these companies and talk to them about your situation.

For example, let’s say you want to consolidate debt into your home mortgage.  Talk to several different lenders and see what kind of rates they would charge and what kind of payment you would end up with.

Finally, feel free to leave a comment and share how your situation turned out by trying one of these options.

Today their are many debt relief programs around and a lot of them are claiming that you can get out of debt in no time and all, and they will knock off  up to 90% of your debt owed by creditors.

In this article I am going to give you the reasons why you don’t want to get involved with companies like this and why some debt relief programs are even considered a scam.

Why You Don’t Want To Join

• They take your money.  Once signed up a debt negotiation company will contact all of your creditors and arrange  a deal to pay back a certain amount back.  They will usually require then that you pay them one check every month to cover all of your bills.  The problem with this is that most companies will neglect to pay some of your bills in order to collect their fees.

• They don’t solve the problem.  On of the biggest problems with these kinds of programs are they have no prevention methods to stop you from falling back into debt.  In fact many companies will keep you in their program up to 48 months or longer to get you to keep paying the fees.

• They report negatively on your credit report.  Debt negotiation companies can have a huge effect on your credit score.  When a creditor deals with a debt relief company a lot of times once the debt is paid off it will read either, paid as agreed, or, pay for delete.  This will have a huge negative effect on your credit score.  In order to have this not count against you is should read, paid in full.

• Watch out for the fees.  Finally, the fees are the worse part of the whole program.  The typical fees inside these programs will run around 15% of your total debt you place with the program.  For example, if you placed $10,000 into this program you could expect to pay around $1500 to the debt relief program.

The Reality Of Debt Relief Programs

The reality is that if you did have an extra $100 or $200 a month you wouldn’t need a program like this.  However it’s usually those that are the most desperate who get stuck in a program like this and fall even more in debt once they find out that have just been ripped off.

If you are looking for real help this website is the best place to start, here we have all kinds of informative how to articles to help you out and get started but if that is not an option you may be able to try The National Foundation For Credit Counseling.

This company is the real deal and is also a non profit organization working with individuals to help them get out of debt once and for all.

This post was recently featured in the Carnival of Personal Finance by The Wisdom Journal.

So you’re looking at getting out of debt once and for all.  The question is how do I do it and what options do you have.  In this article I’m going to give the five options available to you.  A long with that I will give the good points about each option as well as the bad points.

By doing this you will be able to easily see which option might be the one for you.  Also feel free to print this out and share it with others to help inform them of their options as well.

Bankruptcy

Bankruptcy is the process of declaring yourself unable to pay off your debts.  This does not mean it will get rid of all of your debt but most of it.  The typical bankruptcy for consumers is Chapter 13.  This is where lawyers will negotiate with your creditors and collection agencies to pay back less than what are owed.

The Good Points Of Bankruptcy

• You pay less than what you owe.  The typical amount you will pay back on any certain debt will be anywhere from 30 to 80 cents on the dollar.
• They work a payment plan out for you.  This will allow you to creditors back over period of time.

The Bad Points Of Bankruptcy

• Hurts your credit for the next 7 years from the point of discharge.  You will not be able to get a loan of any kind.
• Costly.  Bankruptcy can cost a lot of money.  If you’re already in a lot of debt it may be tough for you to come up with the money to even go through this process.
• Bankruptcy is also very time consuming.  Don’t expect the process to go very fast.  In most cases it will take several years to pay back all of your debts.

Debt Negotiation

Debt negotiation is kind of like the little brother to bankruptcy.  However, instead of having lawyers negotiate with your creditors you will have debt negotiation specialist.  They also only deal with unsecured debt like credit cards, and unpaid bills like medical bills.

Good Points On Debt Negotiation

• Like bankruptcy you won’t have to pay all of what you owe and in some cases will get the interest and penalties waved.
• You only have to make one simple payment to the debt negotiation company.  Once accepted into the program they will take care of things from that point.
• Finally, this will improve your credit over time much faster than going through bankruptcy.

Bad Points On Debt Negotiation

• May hurt your credit score depending on how your creditors report you.  If they report you as “pay for delete,” or as “paid as agreed,” this will count as a negative on your credit report.
• Debt negotiation companies will usually deduct their fees from your monthly payment first before they pay all of your creditors back causing some of debts to fall into the hands of collection agencies.
• These companies also usually charge big fees and don’t usually disclose them very well.  A lot of them will charge anywhere from 15% to 20% of the total amount of debt accepted into the program.
• Finally, if your looking to settle tax debt, debt negotiation companies will be of no use to you since most companies won’t deal with it.

Debt Consolidation

Debt consolidation is the process of combining debt into one bigger debt.  For example let’s say you have some credit cards chalk full of debt and high interest rates and you decided to refinance your home and combine the debt of your credit cards to your mortgage to get a lower rate and clear your cards.

Good Points On Debt Consolidation

• Helps cut high interest debt into lower interest debt.  This can go a long way to paying a lot less interest.
• Cuts down your monthly payments.  Instead of having several different payments you may be able to group them down to one single payment.
• Can give you a bigger tax break.  If you combine debts with your home mortgage you will get a bigger tax break since the interest you pay on a mortgage is tax deductible.

Bad Points On Debt Consolidation

• Can become a bad debt cycle by constantly refinance and combining your debt to the point you won’t have enough equity in your home.  In the worst case scenario you may have to file bankruptcy if you neglect it enough.
• Consolidating debts does not get rid of your debt it only combines it to one bigger debt.
• Consolidation can be very expensive.  The average refinancing cost of your home mortgage can range from $3000 to $3500 in closing cost every time.

Consumer Credit Counseling

Consumer credit counseling is the process of hiring someone to help you get out of debt and coach you back to financial health.  They will usually work with you on a one on one basis and help you establish a budget and a plan to get out of debt.

Good Points On Consumer Credit Counseling

• May be able to cut interest rates on some of your credit cards.  A lot of times credit counselors will be able to get your interest cut down long enough for you to get ahead.
• A lot of times credit counselors will be able to also get you on the right path and stop collection agencies from calling you all the time.

Bad Points On Consumer Credit Counseling

• Going through a credit counselor can however put a black mark on your credit history.  In fact some creditors will treat this like a bankruptcy.
• These companies will usually require you to pay the full amount back to the creditors.
• Consumer credit counseling will take around five to ten years to complete.

Do It Yourself Debt Settlement

In the final debt relief option you have the do it yourself method.  This is where you basically take matters into your own hands and do everything from setting up your own budget, build a debt plan, and negotiate with your creditors.  Out of all of the options this is the cheapest option and where I suggest most people start first.

Good Points On Do It Yourself Debt Settlement

• The do it yourself option is far cheaper than all the other options, and can go a long way to paying back your creditors faster.
• You also have the most control with this option because you will be able to decide which debts you would like to pay off first.
• Finally, a lot of the tools you need to help you get out of debt can be found on the net at no cost.

Bad Points On Do It Yourself Debt Settlement

• With no coach or counselor you won’t have anybody to hold you accountable to your goals.
• If you have a mountain of debt it make be hard for you to even get started sorting out everything.
• Finally, if not done properly you could experience a constant cycle of going in and out of debt if you can’t stay disciplined enough to stop spending.

Which Debt Relief Options Are Right For You

With these option comes good and bad points.  By now things might becoming a little bit clearer to you to which method is going to work best for you.

If not feel free to leave a comment and let me know what I can do help you through the process of deciding.  No debt relief option is perfect here but the most important thing is that you pick one and take action because doing nothing at all isn’t an option.

Get started now before it’s too late.

Today there are hundreds if not thousands of debt relief companies available on the internet.  Just type debt relief into Google you’ll see what I mean.  The question is how do you know which one to pick?

In this article I’m going to give all the advice you will need to pick a company that will help you get out of debt once and for all.

What Are The Fee’s

The first thing you should consider is the fees.  Many debt relief programs won’t show their fees on their website or they’ll make them hard to find.  However, the typical rate most companies charge is right around 15% t0 17% of the total amount of debt owed.  This will a lot of times be part of a monthly fee.

The second fee you might also pay is a onetime fee to have a company negotiate your debt for you.  Beware of high fees and charges.  Just because someone is over charging for a service like this doesn’t mean it is worth what they say it is.

How Will The Debts Show Up On Your Credit Reports

Next, you need to consider how the debt will look on your credit report once it is paid off.  This means a great deal to your credit status if you don’t do this right.

Once the debt is paid you don’t want it show up on your credit report as, “Pay for Delete,” or “Paid as Agreed.”  This will show your creditors that you didn’t pay the full debt.

Instead request that your debt read as, “Paid In Full.”  This will show the creditors that you paid the entire balance as required.  Also if they agree to do this make sure you get it in writing before you pay them one iota.

What Will Your Combined Payment Be

When you sign up with a debt negotiation program they will combine your payments of all the debts that get accepted into the program and merge them all as one big payment that you will pay every month.  The question is what will that payment be?

This will be different from company to company.  The best thing do when you’re shopping around is to talk to several companies and have them give you an estimate.

You will also want to ask them how much of the payment you are paying to them each month will go to them.  While every company does this different a lot of them will put their fee’s up front when you’re in the program that way if you bale out later on and don’t finish the program they will have at least got their money.

The down side is this could put your credit score at a huge risk.  Once the debt negotiation company is control they can pay your debts any way they want and if they want to neglect a couple of your payment they will.  Instead ask them how they will subtract their fees and pay your debts once the program starts.  Knowing this beforehand will eliminate some of the headaches like a bad credit report or worse getting calls from collection agencies.

Which Bills And Debts Will Be Included

Whatever companies you choose you need to realize that not all of your debts will be included.  Debts like mortgages, home equity lines of credit and other secured loans are usually never accepted into the program.

It will also vary from company to company to what debts will be included as well.  Some debt negotiation programs won’t be able to negotiate a deal with your creditors while others will.

How Long Will It Take Me To Complete The Program

Next you need to consider how long it will take you to complete the program.  A good debt negotiation company will have you in and out in 48 months or less.

This will obviously be different from company to company but it wouldn’t be a bad idea once you’ve discussed your financial situation with them that you get an estimate of how long it will take you to go through the program.  Then once you’ve decided on a company make sure you get in writing the length of the program.

What Are Their Accreditation’s And Reputation Like

Finally, what are the debt relief programs accreditations?  They should be registered with the Better Business Bureau and D&B listed (Dun & Bradstreet).  Both of these companies can be a great resource to learn more about a company.

They will have detailed info of any complaints they may have received and will also be able to tell you what kind of credit history they have had as well.

You should also take some time to read reviews around the net of the debt company you are considering.  However the web is a free speech environment so be careful of what you consider as true or false.

Articles that run the company into the ground and give no valid reasoning or details should be ignored.  Instead look for articles that give creditable points and ideas.  Also look for reviews from people that have actually used the product, this will give you the best insight.

It’s Time To Choose

OK, are you ready to choose?  I’ve probably left you with more questions than answer, especially if you new to this.  If you’re still looking for more answers or would like to leave some of your own insights feel free to leave a comment.

Last week I discussed what you needed to do to negotiate a deal with your creditors, this week I’m going to dive into the do it yourself debt settlement tactics you are going to need to contact a collection agency.

You might also be wondering what the difference between calling your creditors versus calling a collection agency, and in two words, a lot.  Collection agencies will at times not be afraid to use more hard core and at times illegal tactics to get you to pay up on your debts.

So, can you handle the truth, if so lets get started?

How Collection Agencies Work

Collection companies are used by creditors when a debt has been deemed unpaid for a certain period of time at which time the debt is handed over to a collection agency.  The debt is still owned by the creditor but the CA is in charge of collecting the debt now.

If you are getting calls from a collection agency you should know your rights when it comes to them contacting you.  Anything from using threats, false claims, to calling you at inappropriate hours can qualify as harassment.  If you would like to know more about your rights check out the FTC’s website.

How To Deal With The Collection Agencies

If you owe a debt you should first talk to the CA and discuss the situation with them.  Talking to them in a rational tone will make things go a lot smoother rather than avoiding them.  This will only make things worse and could lead to unnecessary lawsuits.

However don’t give into them by giving up your financial information.  Request that all debt be validated.  To do this you need to send them a letter that ask for proof that you still owe on the debt.  You can check out a sample letter here.

Once you know that the debt is yours ask them to give you some time to pay off your debt.  Discuss a payment plan that is fair and equal.  Don’t let them talk you into something that you cannot do.  This will only strain the situation.  Don’t be afraid to have some thick skin here and demand some time to pay the debts.

If you do agree on a plan ask them to send you a statement in writing to back you up just in case they don’t hold to their promise.  I would also consider recording the call with them to ensure the proper communication between both parties.

Recording the call holds the collection agent to a hire standard.  If they would happen to threaten you in any way you would have all the evidence you need to push a lawsuit on them.

Also let the collection agent know that you are recording them even if you don’t. It’s just one simple trick you can use to keep the CA in line.

However, their may be a case were you have already paid off the debt and collection agency is requesting payment.  In this case you can ask for a cease and desist.

To do this you have to dispute the debt owed within 30 days of receiving notice and send a dispute letter along with proof of the debt already being paid off.

The same would also hold true if collection agency contacted you about a debt that was discharged through bankruptcy.  In this case though you will have to send a cease and desist order along with a copy of your discharge statement from your bankruptcy showing the debt had already been cleared off.

Finally, if a collection agency calls you several years after the fact and claims that you have not paid a debt yet they may not be able to take any legal action against you.  This all depends your states expiration period also know as your statue of limitations, were a CA will not have the right to take action against you after a certain period of time but each states SOL is different.

However, I have one word of caution to tell you, what ever you do don’t pay the collection agency anything.  If you do this the collection agency will have the full right to pursue you for the payment.

To stop the collection calls send the CA a letter that the Statue of limitation has expired and that they are no longer legally allowed calling you to pursue the debt.  Here is a sample letter to help you out.

Questions???

Nobody said the do it yourself debt settlement route was going to be easy.  If so feel free to ask any questions you need in the comments area below.

In my last post I talked about how to set up a debt elimination plan but sometimes doing this just isn’t going to help if you have more debt than income in a month.  If this is your situation then maybe you ought to consider this free do it yourself debt settlement solution.

However, before I begin I must stress one important point.  You should only consider this option if setting your own debt plan up doesn’t work.  What I mean is if you can’t scrounge up enough money every month to pay off all of your normal bills then you may want to give this option a shot.

This article is also going to be broken up into a 2 part series, this week we are going to talk about how to negotiate with your creditors, next week I’m going to show you how to negotiate with collection agencies.  Contacting either one requires different tactics to make them work.

Alright, so here we go.

First Things First

First we need calculate how much debt we have and only certain debts will work.  Unsecured debts will be your best bet to negotiate a deal with since they are not back by any asset.  Secured debts like your mortgage will have no chance at all to be negotiated since it is back by an asset, your home.  This is why I would consider this more of a do it yourself credit card debt settlement plan, since they are not a secured debt.

Now that we know how much unsecured debt we have you may also want to look into getting your credit report.  This will show you if any of your accounts have been turned over to your creditors.  If you’re not sure check your credit reports first.

How To Negotiate With Your Creditors

• Write Up A Budget. Having a budget in place will allow you to show creditors that you are more serious about solving your debt issues.  When you call them you will be able to fax it to them or mail it to show them your exact situation.

• Align Your Debts From Lowest To Highest. When you go to negotiate your debts with your creditors you should start with debt that has the lowest payoff amount.  This will allow you to pick momentum much faster since you will be able to free up cash flow right away.

• Create A Plan. Next, you need to create a plan so you can negotiate with your creditors.  There are three ways you can do this, the first way I suggest is a onetime pay off.  If you have cash in hand right now you may be able to negotiate up to 50% to 60% off.  If this isn’t an option you may be able to do a short term payoff.  This is where you negotiate a deal that you will be able to pay them back in 3 to 6 months, however you may likely have to pay back in full if you can’t come up with the cash up front.  Then there is a long term payoff plan which you can pay back your creditors in 1 to 5 years however like the last option you may have to pay it back in full but at least they may extend the payoff periods for you.

• Call Your Creditors. At this point you should have a budget and a plan written down and in place so when you go to call your first creditor you are ready to go.  When you go to make an offer remember to be polite with them.  Getting angry and upset will only may things worse.   Also remember to give them the benefits of your plan and let them know you are willing to fax them or send them a copy of your budget and plan.  Also explain your situation with them and let them know you have made the same offers with other creditors.  Don’t give your creditors your bank account info or anything they shouldn’t need. Finally, know that it is up to them to accept the offer.

• Get An Agreement In Writing. If your plan does get accepted make sure they send you the agreement in writing before you make any payments what so ever.  If you don’t do this it makes it real easy for creditors to go back on their word and you will have no proof of it at all.  I also suggest you get the full name of the representative you talk to and their phone number since you may be calling them back.  You may also want to look into recording your call with them as well, not all states allow this but it’s defiantly will help if they go back on their word.  Finally, any form of communication they send you should be kept even after the debt is paid.

• How To Request Your Payoff? Once your debt is paid off you need to consider how this will reflect on your credit report.  If they’re reported the wrong way they can have a damaging effect to your credit history.  If done right they can improve your credit.  If your debt is paid off you do not want to have them report it as, “Paid as Agreed,” or “Settled,” since this will have a negative effect, you want them to be reported as,” Paid in Full,” or, ” Pay for Delete.”  This will give you better marks on your credit score.  Finally, make sure you get this writing otherwise you may not get it at all.

• Rinse And Repeat. Once the first debt is paid in full rinse and repeat, call the creditor with the next highest amount of debt and start all over.  I should also mention some creditors will not want to budge and inch if this is the case call them back tomorrow.   The chances of you likely reaching the same person you talked to yesterday are slim to none.  Credit card companies hire hundreds if not thousands of account representatives all over the world and what doesn’t work today might work tomorrow.  You just have to be persistent with the process.

Questions???

Finally, as you’re working through this do it yourself debt settlement guide for negotiating with your creditors feel free to ask questions in the comment area.  It can be tough when you’re just starting out; I know how this feels but if we work together you can make it happen.

This article was featured on The Carnival Of Personal Finance by Being Frugal.

Are you a beginner to getting out of debt?  A lot of people are, in fact when I worked in financial services many people had no idea what it took to get out of debt.  They didn’t know how to structure a debt elimination plan or what it took to stay focused on getting debt free once and for all.

So today I’m going to give you the tools and the advice you need to get started with your own debt elimination plan.  These two things however will only get you half way though, the other 50% has to come from you, to stay focused enough to stay on track and accomplish your goals.

So are you ready?

UMMM… I can’t hear you, ARE YOU READY!

The Tools You Will Need

Great, lets get started.  The first thing you will need are the proper tools to get started and keep track of you or your plan.  To get started all you will need to do is download the Debt Snowball Worksheet.

Once downloaded you will have to extract the file, and once that is done you can open any one of the four Exel files inside.  Once it’s open it should look something like the picture below.

Add Your Debts

Now that you have the tools we need to add the debts to the program.  If you look at the picture above you will notice I have some sample debts already in place.  Simply do as it says and add your creditors name, the current balance, the interest rate you are paying and the current payment you are making.  As for the custom column leave that blank for now.

Before we go on their is one thing you should know, if you are adding a credit card, the rate and payment can change from time to time but for now just add the current rate and the minimum payment.  If you pay extra on your credit cards that’s great but to make this plan effective you will want to keep all of your payments to the minimum.

Add Your Extra Monthly Payment

Now you need to add the amount of money you are willing to put towards paying off your debts every month.  I recommend at least a $100 or more.    This money will be applied to your first debt, usually with the lowest balance.  Their are some other options but I will discuss them in more detail in the next section.

Now, I know what your thinking where am I going to come up with a $100 at?  For starters look at your own budget.  If you were applying extra money towards your credit cards before you can use that money.

For example if you have a credit card with a $3000 balance and the payment is $100 and you’re paying $50 extra every month, you can use that money for the extra payment you need to pay down your debt.

You should also consider putting a budget together as well if you haven’t done so already.  This will help you identify were you may be able to cut some frivolous spending habits, and if that don’t work you may want to look into getting a part time job.  I knew a guy once who took up a paper route just so he could have some extra money to pay down his debt.

Choose Your Strategy

Next, in the course of setting up your debt elimination program we need to choose a strategy that will best suit your situation.  Below I will discuss each option.

• Snowball ( Lowest Balance First) The first option is to pay the lowest balance debt first.  I recommend this route first  for one big reason, doing this will allow you to see results much more quickly.  This can go a long way when your just getting started.
• Avalanche ( Highest Interest Paid First) The next method is the avalanche method which pays down your debt with the highest interest rate first.  This plan is designed to save you tons of money on interest payments.  If you want to see how much interest this will save you can compare it against the snowball plan.
• Customize Your Own Plan Next you can even customize your debt elimination plans to pay down your debt in the order you want to pay them off in.  To do this just back up to the beginning to the column that says custom.  Here you can enter the order of of how you want to pay off your debts.  For example maybe you would prefer to pay down a certain credit card over another one.  This is were the customize tool comes in handy.
• No Snowball Finally, you can choose to see what would happen if you did nothing at all.  This strategy is not really an option to consider but rather to show you the difference between doing nothing or running the snowball plan.   In fact in the example I have above if I were to do nothing I would pay over $30,000 extra in interest payments compared to the snowball plan.  As you can see this would make a huge difference.

The Snowball Growth Chart

Finally, you will see the growth chart which will give you a visual picture of how your debts will be paid off.  In the chart below the green represents the amount of money increasing and being applied to each debt by the plan while the red line shows the interest being paid down.

An Important Warning

An important note I should add is that what ever money you do apply to your plan you must keep adding that money up to the next debt once you get the first debt paid off in order to make your plan work effectively.

For example, lets say you have a monthly debt payment of $200 and you are adding an extra $100 to help pay the debt down faster.  Once you have this debt paid off you will apply the extra $200 plus the $100 towards the next debt.

Failing to do this will only delay the process.

Review Your Payment Schedule

Last but not least you will want to check out your payment schedule which you can find marked at the bottom of the page.  In the example below you will be able to see how many months it took to pay off the debt, the month it will be paid off, and how much interest you paid on the debt.

Questions???

Of all the debt elimination advice I’ve giving out you’re certainly going to have a few questions.  If so feel free to leave a comment.  This may all look a bit tough at first so take your time with it at first and play around with it.

I also suggest once you have your debt elimination plan worked up that you print it out and post it somewhere you can see it often.  I like to put mine on the fridge but anywhere will work.  Reviewing your plan often will keep you focused on your goals to the end.

Good Luck

This post was recently featured on The Carnival Of Personal Finance by Simply Forties.

Hello, and welcome, I am happy have you here.  If you are looking for a solution to help you get out of debt you’ve come to the right place.  Many people don’t know all of their options when it comes to getting out of debt.

This blog is dedicated to that end, giving you all the information you need to make an informed decision about which type of debt program you should use to get out of debt.  I’ve worked in this field for several years helping others decide which debt relief option is right for them.

5 Debt Relief Options This Blog Will Cover

1. DIY Debt Options ( Do It Yourself)
2. Consumer Credit Counseling
3. Debt Consolidation
4. Debt Negotiation
5. Bankruptcy

There are many pros and cons about using all of these options, in fact not one of these options is the best nor the worst option, however some are better in certain situations than others.

Finally, if you haven’t yet signed up for our RSS Feed you can do that here.  If you would rather get these update sent directly to your email in box check out the email sign up to your top right.