As of 2008 the average number of credit cards an American holds is 3.5 and the average debt of each American is around $15,799. How does the average American get into debt? A majority of their debt comes from credit card bills, home loans, automobile loans as well as insurance payments.
For some consumers $15,799 is easily manageable but for most Americans this amount is a very significant amount and although they may have regular income they cannot pay the entire debt in lump sum. What happens is that this amount gets charges with interest as well as penalties that get added on to the principal amount and so on and so forth. After a few months this amount gets inflated so bad that it is not uncommon to see the total debt increase to twice the original amount.
This article has three goals. First is to provide consumers with a viable alternative other than being buried in debt. Second is to make sure that the alternative chosen is the best possible fit for their financial situation and capacity. Third is to ensure they do not go back into debt.
Get Out of Debt: Debt Negotiation and Consolidation
A number of financial experts agree that for the average consumer consolidating all their overdue debts from different lenders and paying them all at once with a single loan is the most effective way to get out of debt, avoid an increase in the total debt and get back on track with consumer credit rating. This is especially true if debt consolidation is coupled with debt negotiation which is the act of asking the creditors to lower the amount of the debt. This option is especially viable with interest and penalty incurring debts like credit card debts, automobile loans as well as home loans.
Get Out of Debt: Making the Most Out of Each Deal
Assuming you do choose to negotiate and consolidate your debt, it is very important to follow these tips and techniques:
- Research: Know what type of deal your financial capability as well as personal situation allows you to have. Then focus all your efforts into options that are viable and realistic.
- Legwork: Go to at least a dozen of lenders and compare their offers. Try to pit one against the other. A simple statement that Lender X and Lender Y are offering better deals coupled with a few solid facts and applicable statistics will make lenders more pliable to your demands
- Read: Always ask to have the quote or agreement in writing and always read the final contract making sure it is 100% what you agreed upon. Be especially wary of miscellaneous fees and other fees.
Get Out of Debt: Financial Education
Relying on common sense when dealing with your finances can only get you so far, sometimes you also need professional help. You can get this by reading easy to understand financial magazines, reading newspapers, availing of newsletters or attending financial freedom seminars.