You Can Be Debt Free Using Debt Reduction Programs

Not only the rich can be debt free (although a lot of rich people have debts too). Yes, YOU too can be debt free, regardless of where in the economic strata you belong. All you need is a debt reduction program that works. A debt reduction program that works is a program that you work hard on to succeed. Emphasis is on you, work, and hard. Let me explain:

• You are the most important element in the debt reduction program you choose to get you out of debt. You are the one who is in debt and want to get out of debt. It was you who got you in this situation. Yes, it is your fault that you are in debt. You have to take responsibility. It is the spending habits you have acquired over the years that got you in the hole. You have to change your spending (and other) habits. If you are really serious about becoming debt free, you have to be anxiously engaged in the program, otherwise, you (not the program) will fail.
• Work is the next most important element in your debt reduction program. You have to work the program as designed. This means following every principle, concept and element included in the program. This also means you have to work more than you are currently doing. You have to get a second job, start a side business, create a new income stream, whatever, but you have to increase your current income so you can get out of debt much faster. If this is not possible due to the current economic climate, cut your expenses. It is easier to cut expenses than it is to increase income in a recession.
• Hard and difficult will be the road ahead, but it will be worth it. Getting out of debt is a hard process, it involves difficult and painful changes, but success is possible and the rewards are great. Only those without debt can comprehend this for now, but you too will know once you get there. Hint: It is the exact opposite of what you have (or not have) and feel now.

DEBT REDUCTION PROGRAM THAT WORKS

The debt reduction program you choose must include the following principles, concepts, and elements:

1. Live on less than you currently earn. Start now, not tomorrow, not next week or next month. This is the first basic principle, so simple, so obvious, yet so critical. There is no way you can ever earn more than you can spend and you can never out-earn dumb spending. You are already in a hole so deep, so do not go even deeper. Do not spend money you do not have on things you really do not need. Structure your standard of living to allow a little surplus. Stick to the basic needs on food, clothing, shelter and transportation. Save your surplus, or use it to pay existing debts. Control your money or it will control you. Remember, money can be an obedient servant but a harsh taskmaster. Here is the key to spending less: discipline. You must learn to discipline yourself, your appetites and your economic desires. If you learn to spend less than you earn, you will have something for a rainy day. If you do not learn this most important principle, everyday will be a rainy day for you and your family.
2. Develop and live within a budget. This most important financial tool will help you live on less than you earn. A budget is not a journal of where you spent your money, but it is a plan where you will spend your hard earned dollars. You may think as other people do, that a budget restricts and can rob you of your freedom. A study of the truly rich and successful people shows the contrary. Successful people have learned that a budget makes real economic freedom possible. Good financial gurus all agree that the basic elements of a good budget should include first, the basic needs of food, clothing, shelter, transportation, then followed by needs for emergency like savings, health insurance, life insurance, and lastly for wise investments for the future. Nothing seems so certain as the unexpected and the emergencies in our lives. There will always be “emergencies” like illness, accidents, births, deaths, etc. Life insurance provides income continuation when the family provider prematurely dies.
3. Learn to distinguish between needs and wants. Yesterday’s luxuries for most are considered today’s necessities. Justifiably so for some, but not true to most. The free enterprise system is producing unlimited goods and services that stimulate our desire to want more convenience and luxuries. Deft marketing and advertising have created unquenchable consumer appetites. We have been conditioned to instant gratification (from things we don’t need). We want more, more, more (of things we don’t need). We want to keep up with the Joneses (who may be broke and buried in a mountain of debt). As a result, we have fallen into a trap where we can no longer distinguish between our needs and wants. Step back. Get out of this trap as fast as you can. Use sound judgment in your purchases. If you are in debt, any purchase you make that will increase your debt is an exercise in poor judgment, especially if the item is not going to affect your continued existence on this earth. One way (and there are many ways) to distinguish between needs and wants is to ask yourself, “Is this something I (and my family) can do without?” If your true and honest answer is yes, it is a want. If your true and honest answer is no, it is a need.
4. Honesty is still the best policy. Be honest in all your financial affairs. The ideal of integrity will never go out of style. Being honest with your creditors will go a long way in getting you out of debt faster and cheaper.
5. Donate, Give, and Pay an honest tithing. This is the most important element in your debt reduction program. Regardless of your religious persuasion, obey what your faith tells you to do. If you are Muslim, follow the Sharia. If you are Christian, pay your tithing as contained in the Bible. Paying tithing is discharging a debt to the Lord. The Lord is the source of all our blessings, including life itself. The Lord is therefore our biggest creditor. The payment of tithing is a commandment, a commandment with a promise. If we obey this commandment, we are promised that we will “prosper in the land.” This prosperity consists of more than material goods – it may include enjoying good health and vigor of mind. It includes family solidarity and spiritual increase. As you discharge this obligation to your Maker, you will find great, great happiness, the like of which is known only by those who are faithful to this commandment.

Debt Reduction Program: Debt Consolidation

Debt Consolidation

Debt consolidation is one among many debt reduction programs available to someone needing help to become debt free. Debt consolidation is a term generally used to describe debt repayment plans which may include debt management plans and debt settlement plans. Other debt settlement companies use different terms for these debt reduction programs but they are all basically the same, each with slightly different features, just different names. These plans allow you to combine your monthly payments to your creditors into one monthly payment combined with lower interest rates and other creditor benefits. All of these plans are designed to get you out of debt as quickly as possible.

The best plan for you?

Which plan will work best for you depends on your situation, the kinds of debts you have, your income and ability to pay and what you believe and agree to what is affordable for you. A debt counselor will help you through the process of selecting which plan will work best for you. Some companies have online guides to help you select options to help you understand and learn how these debt reduction programs work.

Debt Management Plans

A debt management plan is a mutual agreement between you and a credit counseling company in which you agree to repay all of your unsecured debts in full over time, without taking any more debt. With a debt management plan, most if not all of your creditors will agree to substantially reduce your interest rates. Future fees for late payments and over the limit penalties can also be avoided with this debt reduction program which can bring your account into current status.

Debt Settlement Plans

If you can not afford to pay your debts in full, debt settlement services could be your alternative to bankruptcy. A debt settlement services option will allow you to pay your debts in part. On a debt settlement service agreement, your monthly payments are typically held in a protected account and your provider works to negotiate with your creditors for a less-than-full repayment.
Over time, this allows deals to be made with each of your creditors separately and allows you to become debt free usually in 3-5 years.

During the time on a debt settlement service agreement, creditors may choose to continue collection activities, including judgments, lawsuits, and wage garnishment. It is important to consider these risks when choosing a debt settlement service.

Reminder

In my next post, I will discuss the pros and cons of each of these alternatives. Also, remember that any of these alternatives will work only if you follow the program as it is designed and to be completely successful, you have to learn and live the correct principles of debt free living.

Live life to the fullest!

Principles and Debt Reduction Programs

The culture of debt that is now prevalent in all levels of society have created a proliferation of businesses offering help to relieve those afflicted with the heavy burden of debt. This help come in the form of debt education, debt reduction programs, debt elimination strategies, tools, counseling services or a combination of any or all of these.

These products and services are advertised on TV, radio, newspapers, magazines, billboards, and the Internet. Google the words debt, credit card debt, credit counseling, debt elimination, debt reduction programs, or any word or combination of related words will give you thousands, if not millions of results. All of these, you already know, but choosing the right company, products, debt reductions programs, or services that is right for you can be daunting and difficult considering the gazillion of options available.

Before making any choice of the debt reduction programs available, may I suggest the very first step you or anybody in debt need to take: STUDY and LEARN! They say knowledge is power but I say correct knowledge is even more powerful. Acquiring the correct knowledge will give you more power in your quest for a debt free life. In this case, learn the correct principles of debt free living. Learning and living the correct principles of living a debt free life will lead you to debt free living as much as living a healthy lifestyle will give you better health. Agree? You probably say, "Yeah, but what if I am already in debt, how will learning these correct principles help me get out of debt?" Well, if you find yourself in a hole, shouldn't the first thing you do is stop digging so you don't go any deeper? Learning the correct principles of debt free living will help you stop digging. In other words, you are now in a hole because of the bad habits you have learned through the years and by learning and living correct principles of debt free living you will unlearn those bad habits and learn new good ones. Then you become a changed person. That changed person will now become more powerful in getting out and staying out of debt using any of the debt reduction programs he may choose.

Learning the correct principles of debt free living is learning the why of debt free living. Studies have shown that people who have learned the why of debt free living have more success in getting out and staying out of debt more permanently than those who have learned just the hows. Those who have learned the hows and not the why had temporary success. They had gotten out of debt but have returned to being more in debt because they have not changed their ways.

So, go buy a book about this subject. Study and learn those correct principles, and most importantly, apply what you learn so that the debt reduction programs you select will be more effective!

Live life to the fullest!