4 Tips To Help Shrink Your Debt
If you spend more than what you earn, you are creating debt. The debt will keep snowballing from month to month if it is not being managed properly. It can become financial burden when it hits the level beyond your financial affordability. Therefore, you should get rid of it as soon as possible while it still at a manageable level. Here are the 4 tips that can help you to shrink your debt.
1. Medical Debt Negotiation
You may get drowning into medical debt if you do not have emergency fund to handle a sudden need of cash for major medical expenses. The debt can be a great burden if you don't find a solution to resolve it. Medical providers normally are often open to working out a payment plans for their patients if the bill is beyond their financial capability. So, talk to your medical provider to find a potential solution to the medical debt. In addition, many hospitals have government funds to help patients who can't afford in their medical care, and there are independent nonprofits that can provide financial assistance if you need helps.
2. Credit Card Debt Consolidation
Credit card debt carries the highest interest rate. It can run as high as 33% for cardholders who late in payment or have low credit score. If you owe credit card debt, it may easily hit you at overwhelming level if you do not handle it properly. The best way to avoid the high interest rate of credit card is by transferring it to a lower interest-rate loan through a process called debt consolidation. Search around to find a consolidation loan that best fit you and consolidate all your credit card debts into this loan. Today, credit crunch has led to the lowest interest rate ever. It is a good opportunity to consolidate the high interest rate credit card debts into a low interest-rate loan.
3. Mortgage Refinancing Through "Hope for Homeowners" Program
If your mortgage payment is getting hard to afford, then you should take some actions to resolve before you lose your home due to default payment. In order to recover from credit crunch situation, the government has introduced programs that encourage lenders to do mortgage refinancing for their clients if the clients are at risk of losing their homes. According to the record, there are more than 200 lenders sign up with the government-run program called "Hope for Homeowners" since it introduction and more lenders are expected to join the program. You can contact your lender to see whether it is participating into the program. If it is, then you could make a request to refinancing your mortgage under the program which has much lower interest rate to reduce your debt burden.
4. Credit Card Balance Transfer
You credit cards may have different interest rate. If clearing off the credit card balances are not possible at the moment; then transferring the balances to the credit cards with lower interest rate will be a good option to save some money. But, you must be careful about the balance transfer terms as most of the low interest rate offered in balance transfer has a due date. After the period, the interest rate will either go back to the same level or some may even higher than before. Therefore, you should carefully read the fine print of the terms and conditions to ensure the interest rate after the promotion period don't hurt you.
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