What is a debt resolution program and how it can improve
Hiding from debt won’t solve the problem. You need to be proactive in your battle against debt to secure a promising financial future. One of your biggest assets is a reputable debt relief service provider who can help you develop a debt management program to reduce your debt levels in a manageable manner.
Professional help can save you from crippling bad debts and restore your credit score. However, you need to own the debt relief process and do whatever it takes to break the debt cycle and rebuild a solid financial foundation.
How Bad Debts Can Hurt Your Finances And Hijack Your Future
Bad debt comes from purchasing anything that doesn’t increase your net worth and has very little or no value. In practical terms, bed debt includes high-interest (payday) loans and consistently late payments. While credit card debt can be good, it can also be very bad if you frequently spend more than you earn or just manage the minimum payments each month.
Bad debt starts to have a serious impact on your credit score when your credit utilization rate goes above 30% and when you have debt that is long overdue. Overdue debt can result in your creditor sending the debt to a collection agency. It’s listed as delinquent on your credit score and remains there for up to seven years.
Even if you manage to reduce your debt, having a delinquent notice on your credit score makes it very difficult to get any more credit.
There are two courses of action if you’re facing bad debt.
- Consolidate your debt. Talk to a company that provides debt relief solutions about how best to consolidate your debt; for instance, should you get a loan or open a balance transfer credit card account?
- Get credit counseling to help you identify and address bad spending habits, and draw up a rigid budget that will get you out of debt, provided you follow it. Counselors can also create a debt relief program to help you settle your outstanding balances as quickly as possible.
How to Get Rid of Your Debts?
Debt takes a terrible toll on your finances, but it can be equally bad for your physical and emotional health. That’s why it’s so important to get professional help from a debt settlement company to eliminate debt before it gets out of hand.
The following tips will help you escape debt and restore peace of mind.
Eliminate Unnecessary Stress
Debt can cause so much stress that it has the term, debt stress syndrome. When we’re stressed, we can’t think clearly, we have a negative mindset, we eat and sleep badly, and we can slide into depression.
It’s important to reduce stress as soon as possible. Two of the most common methods to reduce stress include:
- Meditation: Anyone can meditate anywhere. YouTube has many meditation videos on anything from breathing meditation to color meditation.
- Taking time for yourself: Do something you enjoy, whether it’s a walk on the beach, a long hot bath, reading in your favorite nook, or gardening.
Improve Your Credit Score
Improving your credit score will make it easier to secure future loans, especially mortgages and auto loans. There are several ways in which you can improve your credit score.
- Keep your credit card balance low. You can manage your monthly payments to ensure that the balance is low whenever your financial services provider reports to the credit bureaus.
- Get higher credit limits. You must be disciplined to use this approach because you need to maintain the same low balance without increasing your spending.
- Pay bills when they’re due. Late payments will wreck your credit score because the debt is marked as delinquent and stays on your report for seven years. Some creditors provide a 30-day grace period, but you must notify them if it looks like you’re going to miss that too.
- Add more credit. It sounds counterintuitive that increasing your lines of credit will help your credit score. However, several lines of credit will bump up your credit score, provided they are well-managed.
Own Your Life, Resolve Your Secured Debts
A secured debt is a large loan from a financial service provider that is backed by collateral. A mortgage is a secured loan because the house is the collateral. If you default on your payments, the bank takes your house and sells it to recoup its costs.
The interest rates on a secured loan are usually low, and the payment period is usually long, so you are more likely to settle the debt.
It’s worthwhile overpaying a secured loan, like a mortgage, to settle the debt more quickly. You can save a lot of interest if you pay off your home in 15 years instead of 20, and your credit score will also reap the rewards.
Have Additional Income
Additional income lowers your credit utilization rate, which is good for your credit score. Income can come from a second job, a cottage industry, consulting, or moonlighting. However, additional income is taxed, so you want to make sure that what you earn provides enough benefits to justify the extra tax.
Gain Control Over Your Finances
The best way to manage your money is with a budget. Budgets can be simple, but if you have several lines of credit and additional income, you’ll need something a bit more robust. There are plenty of budget apps and templates that will help you get started, but remember that your budget is unique, so you can adjust as necessary.
A savings account or emergency fund will help pay for expenses like a short vacation or medical bills. The idea is that you don’t have to pay the costs with your credit card, which could throw your well-maintained balance out the window and swamp you with interest.
A financial adviser can help you with some of the more complex strategies, including investments, tax breaks, and retirement funds.
Debt Resolution Eliminates Unnecessary Stress from Your Life
There’s no denying that living with debt is stressful, but with the help of a specialist debt resolution company like Alleviate Financial Services, you can get rid of your debt stress and breathe a little easier as you whittle away at your debt.
We can help you with different types of debt. including unsecured loans and credit card debt relief.
To get a debt-free life, talk to our debt expert by calling us at 800-308-2935 at Alleviate Financial Solutions today!