Welcome to the Carnival of Debt Reduction!
Most of us are familiar with the basic debt reduction techniques, debt snowballs, etc. But what should you do if you are really in a bind, and you need to reduce your debt quickly? These tips can help you make a big dent in your overall debt as fast as possible. The articles that are highlighted with them can give you even more information on frugality, debt reduction, and financial education.
We had some really excellent submissions for this carnival, and I am excited to share them with you. My editor’s picks are first up below. Enjoy!
Emergency Debt Reduction Step #1: It’s not going to go away overnight…
Yes, you need to reduce debt quickly – but the first step to debt reduction is understanding one simple principle: You didn’t amass the amount of debt you have overnight (at least I hope not..) and it’s not going to go away overnight either. Debt reduction takes time, and work. The more time and work you put into it, the quicker it will go away.
If you truly want to get rid of your debt, then you have to decide to do it no matter what: No matter how long it takes me to get rid of my debt, I am going to stick with it, and do whatever it takes. That’s it, that’s the first most important step: Be completely committed.
The articles below are my editor’s picks for this carnival, I loved reading them, and I hope you will too!
- Free From Broke presents No Job Is Below You.
- The Dough Roller presents 10 Tips to Declutter Your Finances
- Billeater presents 5 Money Saving Secrets Grocery Stores Don’t Want You to Know.
Emergency Debt Reduction Step #2: Get Help
If you are deep in debt, and you have no idea what to do about it, get help. There are a number of agencies out there (some free, some paid) that are qualified to help you get out of debt.
My favorite recommendation for people with a large amount of debt is to go through a debt negotiation process. Debt negotiation involves allowing a professional to negotiate your credit accounts for you. The pro we work with here on Ask Mr. Credit Card is Sam Sky. Companies like Sam’s specialize in reducing your current credit card interest rates, lowering your monthly payments, and removing all the fees on your credit accounts.
Using a professional also helps you to negotiate reduced, lump-sum payments on your debt. Instead of paying down that $10,000 on your card, a debt negotiator can set it up so that the credit card company will accept a one-time payment of $6,000 instead.
Debt negotiation is a quick way to reduce your debt by 1/4 to 1/2 of it’s current total. It’s also relatively stress free, and requires very little work. All around an excellent emergency technique.
It is important to stress that this is an emergency technique – Debt negotiation involves closing your credit accounts which damages your credit score. It’s not something you want to do if you don’t need to reduce your debt fast – but if you do need help, it’s the best place to start.
- E-Trades presents Day Trading Tips From The Pros – Time To Cash In!
- Almost Frugal presents Saving or Spending? What Do You With Windfalls?
- Cash Money Life presents How Do You Improve Your Credit Score When Credit Card Companies Close Your Account?
- The Canadian Finance Blog submitted a post called Reduce Your Credit Card Interest Rate.
- The Sun’s Financial Diary presents What Happens to Your Car Warranty if GM or Chrysler Goes Bankrupt?
Emergency Debt Reduction Step #3: Do It Yourself
What if you need to reduce your debt, but don’t want all of your credit accounts closed out? You can call your lenders on your own and negotiate. You’ll probably never be able to reduce your debt by half this way, but you can certainly knock it down a bit just by spending some time on the phone.
Here’s the key strategy:
Make a list of everyone you owe money to, and the amounts you owe. Note any fees that you have paid on those accounts: Membership fees, late fees, over-limit fees, annual fees, etc.
Start calling you lenders one by one and ask them to remove the fees. While you have them on the phone, ask them to lower your interest rates. Most credit card companies will lower your interest rates if you tell them that you are planning to balance transfer your debt unless they negotiate with you. (Do not threaten to close your account, “balance transfer” is the magic word.)
Every penny that you can have “taken off the top” of your debt is a penny that you do not have to pay back. It makes eliminating your debt faster, and easier. It really is as simple as making a phone call. If the general customer service rep can’t help you, ask to speak to the retention department, or a manager.
- Man Vs. Debt submitted a post called How I Saved $175 On My Verizon Bill
- Personal Finance Analyst submitted a post called Packing a Little Extra Snow on Your Snowball
- The Smarter Wallet submitted a post called Budget Your Money and Control Your Spending Using This Simple System
- The Happy Rock presents The Simple Dollarâ€™s New Financed Car
- Learn Financial Planning presents Being Frugal is Just the First Step.
Emergency Debt Reduction Step #4: Is that really necessary?
Sometimes I think we have our priorities seriously out of whack. If you have a lot of debt, sit down with your family and ask yourself if the following things are really necessary (at lest, until your debt is paid down):
New clothes / shoes / makeup etc.
Designer coffees and foods
You get the idea here. If you’re living above what your income can afford, make the cuts where you can, and make them fast. If you talk to your family, and set priorities for what you are going to keep, and what you are going to sacrifice there will be less wailing and gnashing of teeth. Everyone participates, and everyone agrees they are going to work together to get out of debt.
This is a common sense step, but sadly, I think it’s the number one step people in debt don’t take.
We all love the style of life we are accustomed to, but if that lifestyle is getting you into debt, things have to go – cut them fast and don’t look back. Living without debt is much more enjoyable than those little amenities, I promise.
- Out of Debt – Christian Finances and Debt Help presents Top Ways to Waste Money on Your Home.
- Personal Investment Management submitted a post called Most Individual Investors Are Poor Personal Portfolio Managers.
- Bank Savings Review presents Four Banks Give Back TARP Already
- MyMoneyMinute submitted a post called A Few Details Once You Pay Off Your Car Loan.
- Low Cost Index Funds presents Just Buy Index Funds Directly.
- Fine-Tuned Finances presents Why Young People Will Benefit Greatly from the Recession.
- Finance Tips 101 presents Tips On How To Apply For A Scholarship.
Emergency Debt Reduction Step #5: Raise Your Income
If you’re sitting in debt, get to work! Take on an additional part time job, or find a way to work part time from home. Anything and everything you can do to bring in additional income will wipe away your debt that much faster.
On another note, if you have stuff sitting around that you can sell, get rid of it. We’ve all made bad purchase decisions. Your old, unused iPod could bring in much-needed debt money. Use EBay, local re-sellers, everything you can. Your home will be more peaceful too, without all that stuff sitting around.
I view it this way: every unused item I own that is worth money could be reducing my debt and my stress level in one go. Trading your old stuff in for peace of mind is a very, very good deal.
- The Digerati Life submitted a post called ING Direct Orange Savings Account Review: Online Bank Features
- Savings Toolbox presents Consignment Shops Help You Save and Make Money.
- Recession Depression Therapy presents the French Toast Club.
- Studenomics presents 10 Places to Find Startup Funding for Your Business.
- Investing School presents Beginning Options Trading.
- Save Few Bucks presents Work From Home Call Center Jobs.
- My Financial Success submitted a post called Top 5 Financial Secrets you must Use.
- The Low Cost Auto Insurance Guru presents 14 Auto Insurance Secrets – They Donâ€™t Want You to Know – Part-4.
- Bankling presents The Ultimate Guide to Free Samples: 50+ Ways to Get Free Product Samples.
Emergency Debt Reduction Step #6: Get Educated!
Finances are a learned skill, not an innate ability. No one is born knowing how to manage debt, use credit properly, invest wisely, etc., etc. These things are learned, all of them. If you have a significant amount debt that’s a signal that you should brush up on your financial knowledge. Articles like the ones listed here are a great place to start, but you can check out popular books on the topic too.
Consider reading books by authors like Dave Ramsey, Robert Kiyosaki, Suze Orman, etc. Every time you increase your knowledge, you will make your financial situation better. Every single time.
- Debt Freedom presents How To Become Debt Free.
- ifvat presents Investing in the Stock Market.
- Everything Finance presents Health Savings Accounts Explained.
- Christian Personal Finance submitted a post called How I make a living from my blog.
- No Debt Plan submitted a post called Cut Monthly Costs by Asking for a Discount.
- Debt Free Scholar presents Giveaway: Free TurboTax Online Premier Tax E-Filing.
- Dollar Frugal presents Norton Let Me Cancel!
- ETFDB presents How to Build a Simple and Effective All-ETF Portfolio.
Emergency Debt Reduction Step #7: Talk to your kids about your debt
For some reason, many of us keep our children completely in the dark about our financial situations. This is the last thing you should be doing. Remember when we said finances are a learned ability? Well, it’s a learned ability for your child too. If you are in debt, it’s an excellent time to teach your children what they should do to either avoid being in debt, or to fix it if they are.
You do not want to scare your child, but you do want them to understand that getting into debt is a process, and getting out of debt is a process. If you get them on your side, and help them to understand, they will be more willing to help you make budget cuts. Even the young ones can be shown that they need to save for toys instead of ing on Mom or Dad’s credit card. Older children can work through a basic budget with you, and you can discuss the pro’s and con’s of different approaches to repayment.
Money management is not taught in schools – if you don’t take the time to give your child these tools, they will have to find them on their own, usually much later in life, after they are deep in debt. By being open with your child about your debt, you can teach them about what money management really means.
- Debt Goal presents Quickfire Challenge: Debt Problems versus Debt Solutions
- My Dollar Plan presents The Final Decision on Downsizing
- Harvesting Dollars presents Invest For Retirement Or Pay Off House Early?
- Automatic Finances submitted a post called Do You Know Where Your Money is Going?
- Darwin’s Finance presents Is it Ethical to Re-Lock your Mortgage When Rates Drop?
- RateNerd submitted a post called Debt Reduction FAQ’s.
- Budgets Are Sexy presents New Credit Card? Don’t forget to update all your accounts!
That’s it for this week’s edition of the Carnival of Debt Reduction. Thank you all for your excellent submissions!