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Thursday, February 19, 2009

Personal Finances in Trouble? Consider These Options

By Daniel Atolben

Are you deep in debt and looking for a way out? Are you living paycheck to paycheck, paying bills late and barely scraping by? Managing your personal finances can be tough and there are many people in your same situation. There are some things you can do to help relieve your financial stress.

First off, you should try to repay your debts as you have agreed to. Work out a budget, limit your spending and as you pay off your credit cards, don't spend on them. If you've maintained good credit then see if you can ask for a lower interest rate or transfer your balance to another credit card that has a lower interest rate. Some may offer you a limited time at a low or zero interest which may be what you need to get ahead of your payments.

Look at ways to increase your income. Think about taking up a temporary job to supplement your income. Consider downsizing your lifestyle so you can have more spending money. If you're making payments on your car, then think about selling it and buy a used, dependable one. Think about getting a roommate or moving to a smaller apartment. If you can generate just a few hundred dollars a month then you can bring down your debt in no time.

Getting a debt consolidation loan is an option that is attractive even if you're not in financial peril. This type of loan will pay off your other debts, offer you a lower average interest rate and give you one monthly bill. A debt or credit consolidation loan can be fairly easy to get if you have equity in your home and have a decent credit history.

Another, less desirable option is debt negotiation. With debt negotiation, you or a third party negotiates with your lenders for a lower interest rate, extended payments, and/or lower monthly payments. By doing this, you can afford your monthly bills and you'll have fewer worries. This comes at a price, however. Your credit cards will be frozen until your debt is clear and your credit report will be adversely affected.

There are debt negotiation services available to help you. They usually charge you a monthly service fee but they can help you get your debt under control. They advertise in the phonebook and on the internet. Be wary of ones that sound too good to be true. No one can just erase debt with no repayment unless it's through bankruptcy.

If you don't know the best option for your financial situation then get help from a credit counseling service in your area. They are usually non-profit or not-for-profit so their fees are nominal and they offer you a free consultation. Not only will they help negotiate debt settlement but they can also help you plan out a budget. You can soon be on your way to relieving debt and ending your financial burdens.

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