In creating a Debt Elimination Plan, you are saying that you now want to face your debts head on. In fact, what you are doing here is making a list of every single penny that you owe. If you are unsure about the first steps to take when dealing with your debt, then reading this article will point you in the right direction.
There are millions of us in debt and when we are in debt the world can seem a very threatening place indeed. We feel lost, alone, and in many cases completely ignorant of what we can do to deal with the problem. The biggest problem of all when it comes to debt is ignoring the signs when they begin to occur. Instead of nipping potential debt problems in the bud, a lot of us hide them away in our drawers. Or we ignore the phone ringing because we know full well who it is on the other end.
This is the trap that the majority of us fall into time and again. And so, by ignoring our debts we believe that they will magically disappear. But this is the real world, and they do not disappear – in fact the problem begins to escalate until it becomes a monster, taking over our lives. We begin to have sleepless nights and with worry comes stress, and then added health problems, caused by worry and stress.
However, when deciding to create a Debt Elimination Plan, what we are saying is that we are willing to face up to our debts head on. We are willing to sit down and work out, to the penny, what are the debts that have given us the most problems. We want to eliminate our debts, and the only way we can go about doing this, is by working out some kind of plan and also by receiving the right kind of help. And that is the important thing, that with the right kind of advice and help it will see you on your way to becoming debt free.
There is help out there for those who are struggling with the monster that is debt. You are never alone, so those who are reading this article who think that they are by themselves, think again. If you cannot, or do not know how to work out a Debt Elimination Plan then help is there for you. You may find the prospect of doing one, daunting to say the least, then what you need to do is to contact one of the many debt management companies that will help you.
By contacting a debt management company you are asking for help with your debts. They will ask you to provide all of the information as possible in order to help you. This includes, receipts, payments you are making now {if any} addresses and contact numbers of the companies concerned. This will also include any unemployment benefits you may be in receipt off, and for how long.
Once all of the information has been provided by you – including what you are spending {outgoings} and what you are bringing in {incoming} then the debt management company will look at all of the information provided and work out a Debt Elimination Plan. You will tell them what it is you can reasonably pay back, after everything has been worked out.
The debt management company will then create a Debt Elimination Plan for you – if you ask for one and if you do not know how to do it yourself, or you are not computer savvy. What this plan does is list all of the companies you owe debts too, the current balance, the interest rate you are paying, and any current payments you are making right now. This is all done on a worksheet – which has to be downloaded from the Internet. It is split into columns with lines going across it and down.
On the top of the sheet in oblong boxes are the titles that you need to guide you. For example, the name of your creditor, balance, rate, payment, and confirm. Under each title you – or your debt management company will insert the financial information that you have provided for them.
One thing to note here is that if you are adding a credit card the rates and payments on that card can change at any time, but we will concentrate on the present by just adding the current rate and payment. If you have been making extra payments on your credit card, then that is fine. However, you must, in order to keep the plan effective, keep all of your payments to the minimum.
Once the financial information has been put down on the plan, the next stage is to add the amount of money you are willing to pay off from your debt, every month or so. If you can afford one hundred dollars a month than that is a nice round figure to be going on. This money will be applied to your first debt with the lowest balance.
There will be many people who will baulk at having to pay 100 dollars, or pounds a month, but you must think of it like this. If you have a credit card with a balance of two thousand dollars/pounds, and you are paying 50.00 dollars a month extra, well you can use that money for the extra money you need to pay off the debt.
If you can put a budget together, as well, this will help you identify where you may be able to cut down on your spending. Next, you need a strategy and a plan to help you move forward in managing your debt. The first option would be to pay off the lowest balance first. This will help you get that debt paid more quickly – simply because the debt is smaller, so the results will be quicker. This method is called ‘snowball’.
The next method is called the ‘Avalanche’. What this means is paying off your debt with the biggest interest rate first. Obviously, if you do it this way, it will save you a huge amount of money in the long run – which would have gone on interest payments. There is no comparison when you look at the interest you will still be paying on the snowball plan, compared to the interest you will be paying, on the avalanche plan.
The great thing about a debt elimination plan is that you can also customise it. This means that you can pay off your debts, in whatever order you place them down on the plan. So, this plan gives you complete control over your debts and in what order you wish to pay each one off.
Once the first debt is paid off on the plan, you must keep adding money to the plan in order to pay off the next debt. This helps your plan work at its maximum level – and work effectively. For example, if you have a debt payment of 100 dollars, and you are adding another 60 dollars to help try and get this down faster, then once this is paid that 100 dollars – plus the 60 dollars – will go toward paying your next debt. However, by failing to do this, it would just make the process a lot slower.
Always review everything that you have paid off so far. Make sure everything is up to date and your debt payments are working as they should. With this plan you can see how many months it took you to pay off a certain debt, the month it will be paid, and how much interest you paid on that particular debt.
If you are confident in using a Debt Elimination Plan, then download one from the Internet. and begin today. However, if you are not so confident and you would like somebody to help you, then get in touch with any debt management company with all of your financial information at hand. They will be only to willing to help you come up with a plan that will suit you. They will also contact the said companies you owe money too and speak on your behalf..
They will act as a kind of go-between, between you and the said companies.. Once a decision has been made and accepted by the companies at hand, as to whether they will agree to lower their debt payments, then the ball will be rolling. However, it has to be said that any agreement that your debt management company has brokered with your creditors and you go on to break that agreement, then the full original debt will be incurred by you.
This simply means that you would have broken the contract agreement set by the companies and your debt management company, and your creditors could very well take you to court for the money owed. Check out the numerous debt management companies on the Internet, simply type in debt management companies, into Google.
This will bring up a whole list of companies who deal in debt and debt management. The advice and help they give, in most cases, is free, if you do not have the confidence in setting up and preparing your Debt Elimination Plan, then they will be only too willing to help you.