Debt is one of the most frustrating parts of life. It seems that everyone has at least some debt and that is not going to change anytime soon. So what can you do to clear debt? Is there some sort of magic trick you can do to clear your debt? Well, there is no magic, but with some hard work you can definitely clear debt for good.
The first way to clear your debt is to manage your money more effectively. There are several ways to do this. You can keep a diary that outlines every penny you spend for a whole month. After you have everything written out then you can go back and determine wasteful spending habits. You will need to make a monthly budget that you can actually stick to. This may seem crazy to you right now, but you should think in terms of living below your means, not above them. After a while of living below your means you will find that you have much more available cash and you can use this cash to pay down your debt. Overtime living below your means will enable you to live above your original means.
A second way to clear debt is to develop a debt management plan. A debt management plan is something that you send to your creditors in an attempt to get them to lower your monthly payments and stop charging you interest. Even if they agree, the agreement is not legally binding and can be changed at any time. While this may not offer you an over-arching solution to your problems, it will at least buy you some time to clear debts. You can get help making a debt management plan for free from Citizen’s Advice or Consumer Credit Counseling services.
A third way to clear debt is via an individual voluntary arrangement. An IVA is a legally binding contract between you and your creditor that will last around five years. Once you agree upon payment terms then the creditor is bound by those new terms. The problem with an IVA is that the cost to make one are significant. Using an IVA is only recommended for about 5% of people trying to clear a large amount of debt. Fortunately, Consumer Credit Counseling Services recently started offering IVA’s so that may make them more palatable to the masses because of the reduced costs.
A fourth option is bankruptcy. There is a lot of misinformation regarding bankruptcy. It is seen as a life-ending event that will ruin you forever. This is simply not the case. While bankruptcy will harm your financial picture for around 10 years, you can recover. Besides, part of the reason people even need to consider bankruptcy in the first place is because of our consumption at all costs based economy. Since you were a toddler, you have been indoctrinated to think that buying is good and saving is bad.
The fifth, and final, option is to panic. However, this option is not necessary. You need to remember that you are not alone. Millions of hard working Americans just like you are in debt. It is not your fault and you do not need to feel ashamed about being in debt. There is support online, in the form of forum support groups, so if you feel like giving up I would suggest you visit one. Being in debt is painful, but if you keep your head up and keep going, you will be debt-free eventually.
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