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Reducing the balance on your outstanding debts can be as difficult as it was easy to accumulate. As much as possible, it needs to be paid off as stipulated in the agreement that you made with a creditor. The longer a debt runs, the greater the chances of it ballooning to absurd proportions from penalties and compound interests. Before you know it, what was once a benign-looking balance could turn into a seemingly insurmountable financial deficit.

In some cases, debt issues get so bad that people are forced to declare bankruptcy. When this happens, outstanding debts are discharged but a person’s credit and reputation are heavily impacted for a very long time. If it can be helped, you’ll want to keep bankruptcy declaration as the very last of your options. With enough knowledge, discipline and will, debt can be significantly reduced, and you can avert the worst-case scenario of your financial life.

CreditAssociates has helped thousands of Americans get out of debt for over a decade now. Throughout this time, we’ve seen what works and what doesn’t when it comes to debt reduction. If you’ve made up your mind and you’ve decided to stop living a life of indebtedness, this post is for you. Here are seven of the best things you can do to rapidly chip away at your outstanding balances:

  • Be Honest and Write It Down– The first thing to do when addressing your debt is to determine where exactly you stand. It’s difficult to deal with what you’re up against when you haven’t made the effort to size it up. More importantly, not accounting for every open debt you owe will likely result in missed payments and bad spending decisions that stem from denial.
  • Live Below Your Means– This sounds basic, but it’s where a lot of people struggle and fail when it comes to debt. Spending less than what you actually make is entirely possible, but our culture mentally conditions us to spend even when we don’t have money in hand. As such, American society has become more receptive than ever to marketing messages and people have taken to thinking that credit cards are extensions of their wallets. The “enjoy now, pay later” idea may have been good in the beginning, but it’s taken on a life of its own and has created a culture where indebtedness has become the norm.
  • Sell Unnecessary Things– Another effect of consumerism is its tendency to make hoarders out of the American people. A lot of us have stuff in our attics, basements and garages that we barely used and are just gathering dust. Consider selling everything you don’t need in a yard sale or via eBay. The proceeds can then be used to cover some of the debt that you’ve incurred.
  • Undergo Debt Counseling– Sometimes, your willpower and planning won’t be enough to break the bad habits that got you into debt. You could make several attempts at debt recovery and still find yourself on square one for whatever reason. If you’re in this predicament, it’s natural to feel despair and anxiety. However, you can’t let these emotions take hold of you because they’re not the kind of feelings that will; help you get out of debt.
  • Never Pay just the Minimum– Credit card companies allow you to pay a small percentage of what you owe them at the end of each billing cycle. However, this doesn’t mean that this is the amount that you can keep paying if you have intentions of getting out of debt. That’s because the minimum amount they charge is often the equivalent of their interest rates. If you keep paying the minimum, you’re not making a dent on the principal debt and you’re just kicking your can of indebtedness down the road.
  • Avoid Bankruptcy and Find a Debt Relief Expert– If your debt situation spirals out of control and bankruptcy seems like your only recourse, stop and consider all the alternatives. Bankruptcy should always be the last option when it comes to getting your debts discharged. While it’s true that bankruptcy declaration will put an end to your creditors harassing you, it’s guaranteed to have devastating effects on your credit for the next decade or so.
  • Claim and Use Money That’s Rightfully Yours– here’s a nice little secret that should put a smile on your face: you probably have more money than you’re aware of. As a matter of fact, this is true about hundreds of thousands of Americans. A lot of us probably have checks written to our names that are sitting in a government office somewhere just waiting to be collected.

Take a moment to sit down, calm your nerves and gather your mental strength. This is the part where you need to face the music. Collect every letter that you receive each month from your creditors and write down how much your dues are, how much you owe in total and how many more installments need to be made. Do this even for bills that you don’t get constant reminders for. From the list, determine which debts need to be paid off first and which ones can wait.

Larger debts that incur penalties and have high interest rates should be the first to go. Debts that don’t grow much over time are the ones that you can put on the shelf for now. Keep in mind that it’s always a better strategy to take on one debt at a time. Stretching your resources for debt payment could result in very little progress over a long period of time.

If you’re having a hard time remembering all your credit accounts, you can download your annual credit report here. Expect to find information on the following:

  • Credit card accounts
  • Mortgages
  • Personal loans
  • Student loans
  • Car loans
  • Other debts

It’s crucial for you to determine the number of open debts listed under your name and the status of each one. The longer debts stay buried and unaccounted for, the bigger they’ll grow.

Make a detailed account of all the money that goes to your bank account each month. Next, list down all the necessities that your household requires. Separate those items from things you spend on but don’t actually need. You may be surprised with how much you can save by sticking to the things that matter. That same money can then be used to pay off more of your debt.

It will seem difficult at first, but you have to put into perspective what really matters to you. Is it your short term wants or your long term financial health? Remember that you most likely got in debt because you forgot about the basic rules of personal finance for years. Think of your current situation as a phase where you’ll be correcting those mistakes and come out wiser and better off.

Old furniture, fitness equipment, appliances or computers can find interested buyers pretty easily. The same goes for bicycles, house tools, outdoor gear and sporting goods. When choosing which belongings to sell and which ones to retain, do it on a need-to basis. If the item isn’t used frequently enough, it probably doesn’t deserve its spot in your household.

In cases where self-help isn’t enough, consider getting professional assistance. Signing up for debt counseling sessions can provide you with the clarity, information and inspiration you need to turn the tide against financial troubles. By allowing debt relief professionals to provide valuable advice, you can make the right decisions and stick to your debt relief game plan for the long haul.

Debt counselors are trained to provide you with options that will set you on the right path to debt relief. These professionals have seen hundreds of cases similar to yours and they can tell you what works and what doesn’t in similar situations. They can also show you examples of people who’ve successfully fought debt and won – just so you know that your situation isn’t hopeless.

Remember, you can enlist the help of debt relief agencies. These are specialized firms that will assess your debt situation and provide you with free advice on what you can do to get some of your liabilities taken off the books.

Firms like CreditAssociates will negotiate with creditors on your behalf and in some cases, they might be able to reduce your debt by as much as 60%. The great thing about legitimate debt relief agencies is that they never charge you anything until your debt is successfully negotiated. Usually, the charges are a fraction of the debt that was forgiven. In a sense, their services pay for themselves.

Visit the website www.MissingMoney.com and see if there’s anything waiting for you to claim. The site has information on possible tax refunds, inheritances, equity dividends, security deposits, service benefits that might rightfully belong to you but have long been forgotten. Some people have been documented to have tens of thousands of dollars in unclaimed cash after they moved from one state to another. While most of us probably won’t get that lucky, getting a few hundred or a few thousand dollars in unexpected income will help a lot in the settlement of the money we owe.

Debt relief is never the easiest thing to undergo in the world. Yet, it’s a necessary part of our financial lives and it’s our moral responsibility to the people and organizations who entrusted us with deferred payments. As long as you have the determination to take back control of your financial life, you’ll find a way to get through the tough times.

To learn more about debt relief solutions and how to start living with financial freedom, contact CreditAssociates for a free consultation or use our Savings Calculator to see how much you could save.