American Dream Theme - Debt Reduction

Debt Reduction

All of us would like to experience debt reduction, but sometimes it's easier said than done--especially if you're doing it on your own.

Debt Reduction, Weight Reduction....It's All the Same, Right?

Well, no. In fact, the only similarities between the two are that you're reducing something (debt or weight) and there are a lot of programs designed to help you do both. For weight reduction, there's Weight Watchers, Jenny Craig, L.A. Weight Loss, Nutri System, the Atkins Diet, etc. For debt reduction, there's debt consolidation, debt consolidation loans, debt consolidation mortgages, debt settlement and student loan debt consolidation. Another similarity is that some of the weight loss programs mentioned offer counseling. Likewise, some debt management programs offer credit counseling to help you stay out of debt once you finally reach that goal.

Different Methods

When it comes to debt reduction, we mentioned above that there are different ways to achieve it. Here's a brief overview of each:

Debt consolidation is the most common way to achieve debt reduction. It doesn't require collateral, a house, or a lot of money all at once. It does get you big reductions in interest rates and removal of some fees, which results in balance reductions. Plus it offers convenience and savings. (Convenience in that you only make one monthly payment for all your credit card debt instead of several different payments to creditors. Savings in that you'll be out of debt in five years instead of the 20 years or more it would take you otherwise.)
A debt consolidation mortgage is really the best way to get rid of your debt. There's no risk of adverse credit reporting, you only end up paying around $25 a month more on your mortgage and the interest rate is dramatically lower because the amount you owe is tied in to your mortgage. And since you can write off some of your mortgage interest, you're essentially writing off interest on your debt too.
Debt settlement is an attractive option for some people because it can knock 60-80% off of what you owe your creditors. This means you pay back less than what you actually owe. However, if your creditors agree to this, they will expect payment immediately and in full. In addition, it will have a negative effect on your credit record for 7-10 years.
Debt consolidation loans require you to have collateral that's worth the amount of your debt in case you default on the loan. Unlike debt consolidation, it doesn't get you any reductions in balance or interest rate. However, the interest rate on this debt reduction plan is usually so low that you can have it paid off in five years. So you'd be done with your debt in five years.
Student loan debt consolidation is a debt reduction program designed to greatly reduce the interest rate on your student loans and make your student loan payment smaller. It bundles all your student loans together, gives you one low interest rate, and spreads your payments out over 30 years or so. This way, you can afford to have a life.

Whatever you decide to do about your debt, it will benefit you to do something, and in most cases it will save you money too. Find out just how much time and money you can save with a well-chosen debt reduction program. You have so much to choose from in this day and age, comb through some of the debt reduction services that stand to help you get out of the debt for good.