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Poverty Reduction Strategy Papers

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We all would love to get rid of our outstanding debts, those loans, credit cards and overdrafts that seem to leech money out of our pockets each month. How can we achieve the lifestyle that we want if we constantly have to give our money to people who constantly call and write to us asking for the money that they loaned us so easily and quickly, and that we pay them a huge premium for each month.

It is easy for us to become embroiled in what is known as a debt spiral. This is when we spend more than we earn and have to plug the gap each month by borrowing. However we can easily get caught up in a vicious circle when we have to pay back the money we borrowed, whether it is on credit cards, or the bank overdraft, we find that each month, we are constantly borrowing more to plug the gap left by having to service an increasing debt. Our income cannot cover the shortfall, therefore we borrow even more to cover the expenses we have and thus we descend into the debt spiral at an ever increasing pace.

Spend Less, Save Move

One way that you can achieve our desired goal of becoming debt free is to spend less on things that we dont need, and use the money we save to pay of the expensive credit that causes us so much pain.

To do this, you need to identify the items that you spend money on each month, and weed out the ones that are not essential. It is fine if you have money, but If you are broke, then you need to consider whether

Do you actually need the item?

If you need it, can you afford to buy it?

Can you find the item or one of similar quality cheaper somewhere else?

These are common sense questions that you can ask yourself each time to go to make a purchase.

Dont Impulse Buy

Forget about buying things on impulse. Often we see something and make ourselves believe that we need it. Just stop for a few minutes before buying the item and ask yourself those questions.

Taking the time to consider these will help you to curb the initial impulse that you had and you will find 9 times out of 10 that that is enough to break the pattern.

Use The Money You Save On The Most Expensive Debt

A good debt reduction strategy is to use the money that you have saved by identifying non essential spending on paying off the most expensive debt.

Once you have paid your essentials, such as the rent or mortgage and other living or work related expenses, then you should use the money left to pay off the most expensive credit that you have.

Identify the one with the highest interest rate, and pay that money saved on that bill. Paying the most expensive debt will help you in the long run to achieve debt free status much quicker. Expensive debts leech money out of your pocket at a faster rate than lesser ones. Again this is a common sense debt reduction ploy, one that you may have already identified. Regardless of whether you have identified this debt reduction strategy, have you begun to implement it as yet?

Managing your debt reduction plan can be hard, but the goal, once achieved will leave you happier and with a great feeling of achievement. Be sure to spend less on those non essential items and use the money you save from that decision to pay off debts.

Poverty Reduction Strategy Papers

But what happens when you use so much credit that you can no longer pay your credit card bills every month?

And what happens when no matter how much you pay, your bills get bigger…and bigger…and bigger?

There are several strategies for getting out of debt.

All of them have their good points. And all of them have their bad points. Which one is right for you? Here is an overview of the different debt reduction options available to you:

Borrowing money from friends or relatives:

If you have a friend or relative who has enough money to help you get out of debt, consider yourself lucky. But think long and hard – and then think again – before choosing this option. While borrowing from a friend or relative can help you avoid the high cost of interest (if they are willing to give you the money without asking you to pay interest), borrowing money can hurt, or even ruin, your relationship. Everybody wants to pay back their “rich uncle” – but what happens if you don't? Or you can't? This can put both of you in an uncomfortable position. Even if the money is a gift, it can change your relationship entirely. So make sure to give this option a lot of thought before borrowing money from a friend or relative.

Credit counseling:

For many people, credit counseling is a good option. After all, inmost cases you can lower your interest rate, lower your monthly payment, and combine your credit card bills into a single payment. But be careful. There are LOTS of “non profit credit counseling” companies out there. And not all are created equal (and not all do what they say they will do). Before signing any paperwork, it is a good idea to ask lots of questions. And compares the fees and other program details. Just because a business is non-profit doesn't mean there aren't costs to you – and doesn't mean you don't need to shop around and compare programs!

Debt consolidation loan:

If you are fortunate enough to own a home (and you have enough equity to borrow money from your home's value), a debt consolidation loan may be the way to go. In many cases, your interest may be tax deductible (but check with a tax professional first to make sure). And also think carefully about this option – because if you borrow “against” your home, and you cannot make the payments for whatever reason, you may risk losing your home! Fees, interest rates, and terms vary, so make sure to shop around for the best loan program for you!

Debt settlement:

If bankruptcy seems like the only option, then debt settlement (also called debt negotiation) may be a good alternative. The process of settling your credit card bills (paying them off for less than you owe) is a more aggressive approach to getting out of debt. But if you are behind in your payments, this can be a less drastic step than declaring bankruptcy. You will pay income taxes on the amount you save, but this amount is usually still much less than the amount you would have paid in interest. Before deciding on debt settlement, make sure you feel comfortable with such an aggressive strategy – and once again, shop around and compare terms and fees.

Bankruptcy:

Typically, bankruptcy is the last alternative. And with the new bankruptcy laws put into place in October 2005, you should consult with a bankruptcy attorney before considering this option. With good reason (for the most part), having your debts “written off” through bankruptcy has become more difficult. So, find a good lawyer, and discuss your options carefully.

Now, which of these debt reduction strategies is right for you?

There is no simple answer. The best advice is to check out all your options – very carefully – before deciding which strategy is best for you. Before signing up with any company:

• Ask lots of questions so you are comfortable with the company

• Learn how the process works, find out the fees, and get ALL agreements in writing

• Check with the Better Business Bureau to see if there are any unresolved complaints

And while being in debt is certainly very stressful, always remember that life is not entirely about money. Life is about making the most of each day, and being thankful for the things that you do have – while you are working on fixing the things you don't!

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About Author

Both Ben Needles & Kris Bickell are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Ben Needles has sinced written about articles on various topics from Business Credit Cards, Anger Control and Business Credit Cards. About the Author (text)Genivive writes about Debt management and personal debt reduction at mydebtratio.com. Read more about debt reduction strategies and. Ben Needles's top article generates over 550000 views. Bookmark Ben Needles to your Favourites.

Kris Bickell has sinced written about articles on various topics from Make Money Online, computers and the internet and Buying and Selling Home. Kris Bickell is the owner of Debt-Tips.com, a site for consumers struggling with credit card debt. For more tips on getting out of debt faster, sign up for the free course “5 Simple Tips For Getting Out Of Debt Much Faster” at. Kris Bickell's top article generates over 12100 views. Bookmark Kris Bickell to your Favourites.

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