Getting out of bad credit debt looks hard the first time, however there are some very simple steps people with debt can follow to eliminate debt and solve their credit problems. You can look for advice to solve your bad credit, or you can use ”DIY debt busting methods”, and the second option is going to be much cheaper. If you set up a debt consolidation plan and follow it, you can really achieve your goals very fast.
Budget
Every debt consolidation plan starts with setting up a careful budget. You want to save every penny to pay towards your debt, and literally every penny counts. Therefore you will have to have a look at your current income and expenditure. You need to look for ways to increase your income or reduce your monthly regular bills and outgoings.
Evaluation
You have to get to know what is causing your bad debts before you can solve the situataion. Therefore you do need to make a list of all your debt, including the balances, the interest rates and the monthly repayments. It is also important that you do look into the history of the product, which one caused you the most trouble, like late fees, charges or extra interest added on because of missed payments.
Determine your free income you can put into consolidation
If you are thinking of consolidating your bad debts, it is important that you set up a careful and realistic plan of how much you can pay back each month. If you cannot keep up your current repayments, it might be because of the high interest or late fees, charges, but you need to make sure that the new figure you have in mind for your new repayments can be met each and every month.
Get a copy of your credit report.
It is important to know before you start consolidation one or more of your debts to know which products give you bad credit. Therefore obtaining a copy or your credit file is essential. It might be the case that some products affect your credit score more than others, and you will have to start with clearing off these debts.
Look for consolidation products.
Once you know which debts you want to get rid of and what is your monthly budget, you will be able to look for consolidation products. You have already obtained the balances and interest rates and made a note how long it would take you to clear off these debts if you carried on paying the way you are. You can opt for either refinancing or taking on a new debt consolation product that is going to clear your debt faster.
The aim of every debt consolidation plan should be to either reduce the monthly repayments, the interest rate, or to pay off the debt faster than you currently are.