Reducing Debt
- How can I decrease my credit card debt?
- What do I do if I can't pay my bills?
- How can I learn more about reducing debt?
1. How can I decrease my credit card debt?
ANS: Consumer debt has grown steadily for the past 40 years. Since the mid-1960s, total consumer credit outstanding relative to disposable income has fluctuated in ranges of 16-21 percent. That means anywhere from 16 to 21 cents (Federal Reserve) of every dollar goes toward debt. Many Americans find themselves only a paycheck away from financial difficulty. A serious illness or job layoff could affect your ability to pay bills. There are a number of methods you can use to decrease credit card debt.
- The "Most Important" method focuses on repaying debts
most important to your credit rating or to maintain your family's safety.
- The "Low Balance" method focuses on paying off bills
with the lowest balances. Then the money used for those payments can
go to pay off other debts.
- The "High Interest" method is paying off those debts
with the highest interest rate reducing the total spent on interest
charges and increasing the amount available to pay down principal.
- The "New Payment Plan" method is used when credit payments,
not including mortgages, exceeds 15-20% of your take home pay and creditors
will work with you to set up monthly installments that are more in
line with your income.
- The "Debt Consolidation" Method is being used when
a loan is obtained for the purpose of paying off all your debts. Your
monthly payment will be lower because repayment is spread out over
a longer period of time. It's very important not to take out any additional
loans until your consolidation loan has been repaid.
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2. What do I do if I can't pay my bills?
ANS: Many people struggling financially ignore debts and fear contacting their creditors. This reaction will damage your credit rating. Creditors may take action against you in an effort to get payment. It is better to be proactive. If you're finding it hard to get your bills paid, be the one to contact creditors and lenders. Work out arrangements that satisfy you both. Decide how much you can pay back and set up a Debt Repayment Plan. For sample letters to assist you while contacting your creditors, obtain a copy of “ Getting In Touch With Your Creditors”. For a worksheet on what to do when struggling to pay bills get "When Your Bills Pile Up". from UNH Cooperative Extension. Also, consider enrolling in the personal money management course "Taking Charge of Your Finances" or Making Money Work For You offered in your county.
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3. How can I learn more about reducing debt?
Programs:
- Taking Charge of Your Finances -A four-part workshop series designed for people wanting to achieve financial
goals (retirement, vacation, college education, etc) by gaining financial management
skills that reduce debt and increase savings. The workshop series covers reducing
debt, increasing savings, communicating about finances within your household,
understanding your insurance coverage and setting up and following a spend/savings
plan. Cost is $20/person or $25/couple. For more information or to register,
contact your county Cooperative Extension Office.
- Getting A Grip On Your Money - GRIP is a seven-part newsletter series mailed
to your house on a monthly basis. Newsletter topics cover setting goals,
implementing a financial record keeping system, understanding credit
and insurance, and developing and following a spending/savings plan.
Subscription cost is $8.95. For more information or to subscribe, contact
your county Cooperative Extension Office.
- Making Money Work For You -A five-part workshop series designed for people concerned about their money,
just starting out or struggling to make it paycheck to paycheck and are looking
to manage debt and begin savings. The workshop series covers goal setting, credit,
insurance, stretching resources, spending choices and making a spending and savings
plan. Cost is $12/person. For more information or to register, contact your county
Cooperative Extension Office.
- Power Pay - PowerPay is a computer program to create a repayment plan to reduce debt load. To complete your own data entry and analysis, click here or contact your county Cooperative Extension office and request the PowerPay service for $5.00.
- Developing A Spending/Savings Plan
- Getting In Touch With Your Creditors
- NH Saves – Build Wealth Not Debt
- What To Do When You Can't Pay Your Bills
- When Your Bills Pile Up
- When Your Income Drops
- Your Credit File
- CardWeb.com, Inc
- Financial Security In Later Life
- National Foundation for Credit Counseling
- NH Legal Advice and Referral Center
- PowerPay
