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It is ordinary for people to find themselves in growing mountains of debt, especially during these rough times with the global recession affecting just about everyone all over the world. Some people might even deem this as normal already! If you are one of the people who are dealing with this unfortunate problem, then you might want to consider turning to the alternative of debt consolidation. For this, you can enlist the services of debt consolidation agencies so that they can prepare a debt reduction plan for you. If you do not want to part with your money since there is not much to begin with, then you can opt to create your own plan! Self-help is actually a good idea because not only would you be able to save money, you would also be able to empower yourself! Here are the basics on how you can create your own debt reduction plan.
First, assess your present financial status. How else would you start paying off if you do not know how much you really owe in the first place? Come up with a list of all your financial obligations and make sure to list them according to priority as well. Make sure to list all of your credit cards, their corresponding interest rates, fees, and their required minimum payments. You should also include your credit card balances.
After you gather all the needed information, proceed to sorting your list. Your high-rate cards should be on top while the low-rate ones should be at the bottom. This is helpful because you would then be able to see just what cards would cost more. These are the ones that you should then pay off first.
After which, you should then total the minimum required payments across all cards. This way, you would know the amount that you need to pay off in a month. You should also determine your monthly income. If you find that your monthly income is significantly lower than your minimum payments, then take a look at your monthly budget. Get rid of all unnecessary expenses right away.
Next, exercise your right to negotiate with your creditors. You just might be in debt right now because you lost your job or you became heavily sick for a long period. Whatever your reason may be, contact your credit card companies so they can give you a bit of leeway.