Debt Blogging – The Biggest Benefit of a Public Debt Blog

I began this debt blog, which I called Debt Reduction Formula, in September of 2007.

That happened to be the same month I sold my home in Highlands Ranch, Colorado, and moved into a rental home in Parker, Colorado.

At the time, I owed $75,286.38 in debt. I was really feeling the pressure of the debt I owed and felt I needed to do something proactive to get it under control.

Continue reading Debt Blogging – The Biggest Benefit of a Public Debt Blog

Carnival of Debt Reduction – Opting Out Edition

Welcome to this week’s Carnival of Debt Reduction!

My favorite submission this week is from PT Money. He shares how to opt out of credit card offers and junk mail in general.

This is an excellent idea, and I highly suggest you follow this advice. Because the more offers and advertisements you receive in the mail, the more likely it is that you’re going to spend money you shouldn’t be spending.

My second favorite submission was from Mighty Bargain Hunter. He suggests kick-starting debt reduction by selling your stuff.

One tip he shares was new to me. He writes: “A nice collection of DVDs can be sold as a lot on eBay for a few hundred dollars (or more).”

I hadn’t thought of selling small items in lots before. This would probably work well for many different kinds of collections. Just something to keep in mind if you need to raise money quickly to pay down debt.

Here are some other good articles worth reading:

That’s it for this week. Thanks!

Christian Debt Reduction – How to Find Peace from Debt

For believers, Christian debt reduction is a big decision. You desperately want to get rid of debt and finally have peace in your life again. You know you need help, but you don’t want to hire just anybody. You want to hire a believer like you.

So where do you start?

First, it helps to understand the process you will likely go through. There are two options for Christian debt reduction: there’s debt consolidation and there’s debt settlement.

When you still have some breathing room, it’s more likely that you’ll try to consolidate debt, lowering interest rates and minimum payments in the process.

But when you’ve racked up so much debt that you can’t even make your minimum payments anymore, it’s likely that you’ll put together a plan for debt settlement.

Christian Debt Reduction through Settlement

Debt settlement is a process where you stop paying your creditors and save the money you would normally pay them. When you have a certain amount saved up, you then approach your creditors to try to get them to settle with you.

Basically, when you settle, your creditor is agreeing to accept a certain amount of money less than what you owe. Sometimes this can be less than 50% of what you owe.

By accepting your payment, your creditor agrees to write off the rest of your balance.

While some individuals attempt to manage this process themselves, it is strongly advisable to hire a Christian financial organization that is experienced with these kinds of situations. They will be able to manage the process for you and make sure everything is happening according to your plan.

Pay Off Your Debts Faster and Find Peace Again

Unfortunately, when you have crushing debts that you can’t seem to pay off, it can affect you physically, emotionally, and spiritually. Many people have trouble sleeping, get angry, and distance themselves from God.

One of the reasons Christian debt reduction organizations exist is to help believers find peace and draw close to God again. Many times, this can only happen once a certain level of financial stability is achieved.

Did you know that God actually made provisions in His law for people who fall into debt?

Every seventh year was a rest year where you could actually take a break from repaying your debts. Every 49 years God commanded that a Jubilee be kept. During the Jubilee, all debts were forgiven!

Of course, there’s not a country in the entire world that acknowledges or follows this Biblical precept. But wouldn’t a Jubilee be awesome? :-)

Let Christian Debt Experts Help You

Thankfully, there are many believers who sincerely care about how debt is affecting Christians. And they are committed to helping Christians become debt free.

One such organization that I’m aware of is Trinity Financial Mission. It is a non-profit company dedicated to helping Christians find relief from debt.

This is the same company that my brother and his wife are using. They are currently following a debt settlement plan. My brother told me they got their first debt settlement offer from Citi the other day. Woohoo!

It was hard for my brother to admit that he had accumulated more debt than he could handle. It was hard for him to admit that he needed help. It’s hard for anybody, Christian or not.

But if you have reached a point where you recognize the severity of your debt problem, then I strongly recommend getting Christian debt reduction help. Often it’s just a matter of filling out simple web form or picking up the phone and making a call.

Credit Card Debt Reduction – Seven Methods Revealed

Getting a credit card debt reduction is not always easy, but it can be done. Naturally, some methods are less stressful than others. Let’s look at the easy options first.

Ask for an interest rate reduction first.

One of the first things you should do is call up each of your credit card companies to ask them to reduce your interest rate. Ask them if they have any better rates available and, “Is this the best you can do?”

By getting your interest rate lowered, you will automatically pay off more debt every time you make a payment. Less will go to interest and more will go toward paying down your principal.

Consolidate balances onto low-interest cards.

Although it’s not always possible, you might consider consolidating two or more balances onto a low-interest credit card. While you may pay a balance transfer fee, this could be off-set by the lower interest rate.

The end result is you get a lower interest rate, which makes it easier to pay off your debt faster.

Pay off high-interest balances first.

In many cases, it makes the most sense to pay off your highest-interest cards first. Take whatever extra cash you can afford and use it to pay down your highest-interest balance.

Once you pay off this balance, you will have even more to pay down your next highest-interest balance. And so forth.

Use lump sum payments like tax refunds to pay down principal.

Many families will get at least one lump sum of money each year, usually in the form of a tax refund, sometimes in the form of an inheritance or performance bonus.

Rather than using that money to buy a new doodad or gadget or toy, use that money to pay down the principal of one or more credit cards.

By using your windfall in a wise and responsible way, you will quickly see a significant credit card debt reduction. You may even pay off one of your cards entirely and get to enjoy more cash flow every month!

Put your credit cards in a Ziploc bag of water… and freeze them!

One of the big reasons so many good people struggle to get out of debt is because every time they make some progress, they put more debt on their credit cards.

The temptation to use credit cards is just too easy. And you’ll never make long-term progress if you keep using your credit cards while you try to pay them off.

One technique is to simply remove your cards from your wallet or purse and place them in a file at home. But if the temptation to use them is still too strong, you can put them in a Ziploc bag full of water… and freeze them!

By doing this, you will not be able to use your credit cards whenever you feel the compulsion to buy something. You will actually have to pull the Ziploc bag out of the freezer and let it thaw.

Of course, this may take a few hours. And by then, you may have cooled down yourself — and no longer feel the need to buy whatever it was you wanted.

All of these methods are relatively painless. Anybody with enough self-control and self-discipline can do them. But if you’re really in a pinch… and you’ve got to get a credit card debt reduction fast… then there are a couple of more painful methods.

Hire a debt reduction and consolidation service.

There are many debt reduction and consolidation services that will create a debt repayment plan for you and deal with the credit card companies on your behalf.

This is the route my brother and his wife chose to go. They hired a company that figured out how much they could afford to pay against their debt each month. They then used this figure to create a debt repayment plan.

During this time, my brother and his wife stopped making payments to the credit card companies. They began to get calls from collection agents. But they expected this.

Fortunately, the company they hired has been able to bear the brunt of the calls and negotiate debt reduction deals with the credit card companies.

Thankfully, my brother and his wife are making good progress now. And even though they are still in debt, they finally see the light at the end of the tunnel. They have hope.

Try to get a credit card debt reduction yourself.

Although it’s usually not advisable to do this, you can try to negotiate a credit card debt reduction yourself.

Unfortunately, most credit card companies are very experienced. They’ve heard all the sob stories. And they won’t be very willing to forgive any of your debts.

Which means you will have to stop making payments if you want to have any kind of leverage in the negotiation. This is the same process you would go through if you were working with a debt consolidation company… but this time you’d be handling all the phone calls and negotiation yourself.

It’s not necessarily the way I would do it; but I have heard of some brave individuals trying to go it alone.

No matter whether you hire a company or not, it’s fairly common for people to get credit card debt reductions of anywhere from 40% to 60%.

So if you had a balance of $10,000 on one card, you might see it reduced to as low as $4,000 and maybe as high as $6,000. In the end, you have to decide:

Is all the stress worth it? Is it worth it to wreck your credit score to reduce your debt? And could you possibly accomplish the same thing by choosing some of the easier, less stressful methods first?

Wrapping It All Up

If you’ve still got a source of income, and you can discipline yourself, then definitely choose some of the less stressful methods first. Try to get your interest rates reduced. Consolidate balances onto a low-interest card. And so on.

If, on the other hand, it is literally impossible for you to make all your minimum monthly payments, then you will probably be forced into choosing the more stressful method of hiring a debt consolidation company — or trying to negotiate with the credit card companies yourself.

Choose wisely. And I wish you all the best as you seek to get a credit card debt reduction.