Can you imagine your life without mounting credit card bills, payday loans, medical bills and threatening calls from collection agencies? Well, living a debt free life isn't impossible. All you need is the determination, time and patience to find the right way out of debt. Once you get rid of the burden, you can enjoy a stress-free life.
Paying your bills on time and getting debt free is a great way to get your finances back on track. Given below is a list of 7 steps on how to lead a debt free life.
Admit that you are in debt problems
The first step towards a debt free life is to admit that you are in debt. Leaving bills unpaid and avoiding creditor calls isn't the solution to your debt problems. In fact it makes the situation worse. However, the fact that you're reading this article implies you have already accepted that you are in debt and you're ready to take the next step.
Seek professional help to get debt free
Get professional help from a debt relief company. If you want to lower your rates and consolidate your bills into a single monthly payment, then debt consolidation program is the right option for you. If you want to reduce the outstanding balance and can't see how to make your monthly payments, then you should enroll in a settlement program.
Free counseling to help you get debt free
The consolidation/settlement company will offer a no-obligation free counseling session. In this session, a consultant will analyze your financial situation and suggest the right debt solution for you. To make his task easier, you should prepare a list of your debts/bills. Next to each of your dues, put down the name of the creditor, the total amount you owe, the rate of interest and monthly payment. This will give the consultant a better picture of your financial standing.
The consultant prepares a monthly budget for you
Based on the total amount you owe and your monthly income, the consultant will help prepare a monthly budget for your expenses. This is to find out how much you are left with after paying your utility bills and other expenses. The amount left over will be used to pay off your debts.
The consultant negotiates with your creditors
In a consolidation program, the consultant negotiates with the creditors/collection agency in order to lower your rates and monthly payments. However, if you'd like to settle debts, the consultant won't negotiate for lower rates. Rather, he'll talk to your creditors about reducing your outstanding balance.
Start making payments
You need to make a single monthly payment to the consolidation company which distributes the amount amongst your creditors. This goes on for 2-6 years till you get debt free.
If you choose debt settlement, you'll have to stop paying your creditors and make a monthly payment to the settlement company. The payments accumulate into lump sum cash in a trust account. The lump sum amount is then paid off to the creditors/collection agency.
Say a big 'No' to any new credit card/loan
While you consolidate or settle debts, make sure you don't apply for any type of credit/loan. Otherwise, it will be difficult for you to get debt free.