In 2013 Credit card debt ballooned to astronomical proportions and Americans are gearing up to tackle that debt head-on in 2014, but very few people have a clear cut strategy in mind to attack debt. They are aware of the seriousness of the issue but are at their wits end where and how to seize the problem. If you are facing such a problem it should not end up as a New Year’s resolution that gets forgotten by February.
Without a strategy you are out of the picture
Here we take you through a merry go round of strategies that fellow Americans are employing all the time, some successfully, many not so successfully.
The strategies are listed in declining order of preference with the top most actions being the most preferred solutions employed by the largest community of debt ridden citizens.
Creating a budget and sticking to that budget come-what-may.
Stopped or curtailed expensive dining and eating out/ replaced with packed lunches and home takeaways.
Reviewed and cut unnecessary cable, telephone, insurance and mobile bills through reduced usage and shifting to cheaper tariff/ premium plans.
Availed a low-interest loan to consolidate credit card balances.
Added jobs to supplement existing income/ Took to part time work in spare time and weekends.
Pruned miscellaneous domestic expenses that were threatening to get out of control.
Took in a roommate to share rentals, utilities and domestic expenses.
Importance of money tracking and budgeting emphasized
Obviously consumers realize the importance of budgeting and curtailing unwanted expenses. The very act of tracking expenses gives a person a realistic overview of his spending habits. In fact, it gradually becomes therapeutic and we see old habits falling off as we understand the consequences of retaining those habits.
Benefits of loan consolidation, credit counseling and bankruptcy suits
There is no one-size-fits-all approach to debt management. Every individual needs to work out his own method of eliminating debt suited to his own unique conditions. The debt management methods adopted by most Americans in 2013, in order of importance, were:
Credit card debt consolidation– the vast majority saw this as a fruitful way of controlling and managing debt, not all of it successful if the fundamental spending patterns persisted. It was OK where the subsequent loan was low interest bearing and was not limited by a shorter tenure (as in special offers that expire quickly).
Credit counseling– Lot of people preferred to access professional help and considered it fairly helpful in tackling their finances. The only problem was handling expenses and fees.
Bankruptcy– Increasingly being resorted to by Americans saddled with irreconcilable debts that overshot their existing sources of income.
People that favored the debt consolidation route stated that their biggest hurdle in obtaining finance was a bad credit report. In such situations the majority preferred counseling for implementing other strategies.
The rewards of diligence and hard work
Whatever the strategy one adopts, in the ultimate analysis it all boils down to patience, hard labor, persistence and an undying zeal to rectify old financial wrongs. Such a proactive approach was instrumental in repaying massive amounts of bad debt.
Expenses tracking and periodical budgetary analysis
Almost all successful people mentioned that monitoring and tracking their debt balances from time to time was crucial to the success of all debt management initiatives. The benefits were multiple. For one, it was encouraging to be able to watch yourself succeeding even in small ways. It was also thrilling to see credit scores improving even marginally as people struggled through their initial payments.
Periodical review of credit status reports
Many consumers realized the importance of reviewing their individual credit reports and mentioned they were committed to reviewing accounts at least once a year through the free financial reports released by the three major credit rating agencies.
What sensible individuals do in financial emergencies
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