A Plan To Help With Getting Rid Of Your Debts

One of the biggest problems for a lot of people today is that it is easy to see that you have a debt problem but it is  to see just how large that problem is. You could be surprised to discover that a significant proportion of those people with debt problems do not have any idea how much they actually owe or how much in total they are paying out in interest on their borrowings each month. As a result, your initial job in sorting out your debt is to work out just how large your problem is.List all the debts that you presently have, noting down how much of your original debt remains outstanding and how much you are currently paying each month. You also need to separate out every payment to see how much of the payment is a repayment of the original borrowing and how much is simply interest.You may be shaken by what you find, not just in terms of how much money you actually owe, but in terms of how much of your monthly income is simply being used to repay interest. For instance, if you earn $4,000 a month and are having to pay $400 a month simply in interest then this means that you are paying out 10 percent of your monthly income without actually reducing the overall amount that you owe. If this sounds bad enough, then take it one step further. If $400 is the most that you can afford to pay out every then you can continue paying this for years without actually reducing your debt at all.With any luck the balance between the sum which you are having to pay in interest and the amount being used to repay your original loans will be more realistic and it is hard to say just what this ought to be as it will change from one loan to the next. For instance, in a typical home loan it is not unreasonable to be paying 90% interest and 10% principle in the early years of a mortgage, however you most assuredly do not want to be paying this on your credit card debt.Once you have discovered the extent of the problem the next thing you ought to do is to work out a plan to pay off your debt as soon as you can. For this you are going to need to work out how much in total you can afford to pay off every month and then decide how this amount ought to be divided between your various debts.One possible answer is occasionally referred to as the 'snowball' approach and involves paying off your smaller debts. You then have more money to apply to the remaining debts and can slowly work your way up to your largest debt.A second answer to the problem is to tackle your largest debt first and thus save the greatest amount of money in in essence wasted interest payments. This is not an easy method however and progress tends to be slow making it hard to keep to this plan.Whatever plan you decide to follow you cannot simply ignore one or more of your debts while you clear the others or you will run into trouble with your lenders and cause problems with what might already be a damaged credit record. If you find that meeting at least the minimum payment on all your loans then you will need to speak to the lenders in question and see whether they are prepared to assist. The vast majority of lenders will have a debt reduction settlement program and they will generally agree to help you by accepting reduced payments for a short period of time, or even to waive your payments for one or two months, if you explain your problem to them.If you find yourself in a mess and are trying to figure out how to get out of debt then do not make things even worse by taking on more debt. This might appear to be obvious but you would be surprised at how many people in debt try to borrow their way out of debt. This never works and merely makes an already bad situation much worse.