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Many consumers are overwhelmed by accumulated debts. In most cases, the problem creeps up gradually, until the total debt load reaches unmanageable proportions. Sometimes even minor problems such as temporary illness can tip the balance for the heavily indebted because they have no savings on which to fall back. Here are some suggestions to help ease the debt burden.

Credit Cards

If you know you are tempted to overspend on credit cards, leave them at home when you go shopping. Pay with cash and you will not have the temptation to overspend.

Develop a Budget

To take control of your financial situation you must have a realistic assessment of how much money you earn and how much money you have left over to spend. Calculate your total income, then list your “fixed” expenses – those unescapable charges you incur every month – like mortgage payments or rent, car payments, and insurance premiums. Next, list optional expenses such as entertainment, recreation, and clothing. Writing down all your expenses, even small ones, is a helpful way to track spending patterns, identify necessary expenses, and prioritise the rest. The goal of a budget is to ensure that your basic needs are met before any discretionary spending.

Contact Your Creditors

Contact your creditors immediately if you’re having trouble paying debts. Tell them why it’s demanding for you, and try to establish a modified payment schedule that reduces your payments to a more manageable sum. Do this before your account is handed to a debt collector. At that point, your creditors have given up trying to collect the debt voluntarily.

Car and Home Loans

Debts are referred to as unsecured or secured. Secured debts usually are tied to an asset, like your car for a car loan, or your home for a mortgage. If you miss payments on a secured loan, the lender can repossess your car or your home. Unsecured debts are not linked to any asset, and include virtually all credit card debt, unsecured loans, and debts for other services. It is wise to pay off secured loans first, to avoid loss of assets.

Debt Consolidation

Debt consolidation loans reduce interest rates thus lowering your monthly payments. Shop around for the best rates. There are many different companies offering widely different rates. Consolidation loans can give you a fresh start, consolidating all of your loans into one simple payment, in virtually all cases at a lower rate of interest.Methods of Debt Consolidation

Credit Card companies and banks offer debt consolidation as unsecured individual loans. Because these are risky loans for the lender, they’re usually more expensive than secured loans and not always available if you have a lot of debt and a bad credit rating.

If you own your home a secured home owner loan is an option. Rates are lower than unsecured loans, but if you default, you may lose your home.

Speak to a Debt Adviser

It’s always best to talk things through with an experienced debt adviser before you decide to enter into an arrangement.

This is because the debt solution that is best for you depends on your personal circumstances.

Debt advisers can help you make the right decisions so that most of your money will go to paying off your debts.