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How to Drastically Reduce Your Debt

Most people at some point in their lives, either early on or somewhere in the middle, run up debt. It can come from going to college, starting a new business, losing a job or raising a family. If you find that you are in over your head, you do have ways of restoring your good name and reducing your debt without the need for filing bankruptcy. It will mean making a few cutbacks and reducing your expenses wherever possible, but you can do it.

Credit card debt

If you use your credit cards regularly and don’t pay off the balance each month, your debt can become almost impossible to get under control. Luckily there are ways to halt the compiling interest for the short term so that the payments you make go straight towards the balance owed. If you make your payments each month on time and have a good credit score you can apply for a new card that allows you to do a transfer of your balance. Companies like CreditSoup.com have already done the work for you. They provide you with a list of credit card companies and their perks. This allows you to acquire the credit card that best suits your needs. Usually, the credit cards that let you transfer your existing balance have an introductory period of 6 to 12 months interest-free. Another way to reduce your credit card debt is to pay more each month to the one with the highest interest rate. Once you pay that one off you can move onto the next one.

Student loans

So you’ve graduated college and are ready to enter the workforce. The only problem is that you’ve racked up an enormous debt in doing so. This is a situation all too familiar with recent graduates. The first thing you want to do is figure out the exact principal amount of the debt owed. If you’re like many other graduates you went to more than one school to acquire your diploma. Make a list of the debt owed and then consolidate it into one monthly payment.  When it comes to your student loans the first impulse it to get it paid off quickly. Once you have the debt consolidated with one lender you can make more than the monthly required payment to reduce the debt faster. This may mean giving up a few luxuries for the short-term like your morning coffee and dinners out. But, if you stick to your plan of attack, you’ll have the debt paid before you know it.

Unpaid tax debt

There’s nothing worse than owing the government money. It can send fear down the spine of the toughest guy on the street. But, believe it or not, they will work with you. The most important thing to remember is to address it quickly. Acknowledge that you have an outstanding amount to an IRS agent and they can set up affordable monthly payments. This will get you back on your feet and remove the fear factor. If you avoid it, they will send you a certified letter with a notice for demand of payment in full. If this happens, contact them immediately. You can still work out payments. Not responding to their letter will result in severe penalties accrued and maybe even a garnish of your paycheck.

Debt is something that creeps up on you and most times at the most inopportune time. The good news is that if you buckle down and pull in your belt, you can make it through virtually unscathed. The important thing is to address your debt and take a realistic approach for getting it back under control. If it means moving to a smaller place or picking up a second job, you do it. Do whatever it takes and before you know it your debt will disappear.

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