With so much debt going around, it’s understandable so many debt relief programs erupt onto the scene. There are debt consolidation, negotiation and management companies all offering their services to those poor folks who have had the misfortune of falling into debt. Most people don’t really need these companies though. They can do it all by themselves.
Nothing comes easy and getting out of debt certainly isn’t an exception. It takes hard work and patience to clear debts. It needs some serious lifestyle changes that a lot of people aren’t willing to make. Expenses need to be cut down so that you only spend money on what you need, rather than what you want. Buying groceries is a need. Going clubbing is a want. People not wanting to change their lifestyle is why these debt relief programs are so successful. They’re looking for an easy fix. They don’t fully realize that these programs tend to have some seriously negative consequences. They usually end up paying more money, or with a bad credit rating.
The way to do it is by paying off as much as you possibly can every month, until you’ve cleared every debt you have. Don’t just pay off your minimum payments. Your creditors love you for doing this, because the interest rates will make your debt grow bigger the longer it’s intact.
The cheapest way to clear your debts is to pay off all the minimum payments to your creditors, and give all the extra money you have left to the most expensive creditor. This squares off the most expensive debt first. Once that one is cleared, you do the same to the next expensive debt, and so on.
If you want to build some early momentum, you can also start with the smallest debt. This has the psychological benefit of giving you a win. If you’re a person that’s unlikely to stick to something unless you see quick results, then use the same approach as above, but go from small to big instead of most expensive to least expensive.
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