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Debt Relief | XL Financial blog

Strategy is An Important Tool for Debt Relief

Posted on 02. Apr, 2014 by in Uncategorized

Many people consider debt to be an integral part of the modern American experience. Millions and millions of Americans are in debt, and recent studies have indicated that just almost half of Americans have owe more money in credit card debt than they have stashed away for emergencies. That is a frightening statistic, but there are several effective ways of reducing one’s debt. Here are a few helpful tips on ways to manage your debt and work toward some realistic debt relief.

The most expensive debt is the one that is accruing interest the fastest. A high interest rate is going to continue damaging your chances of achieving debt relief, so it makes sense to focus your attention on paying down that account first. You will save more money over time by mitigating this heavy interest rate, but you will need to be focused and stick to a regular schedule of payments.

Meanwhile it will help your overall credit score if you can keep that balance to under 30% of the available credit line. Debt utilization is an important metric for the determination of your credit score, and what it does is examine the amount you owe compared to the amount of available credit left over. Lower utilization makes for a better score.

Another tactic is to simply target the smallest debt and pay that one off first. After that, target the next smallest, and so on. This is more of a behavioral strategy than a financial one. The idea is that the sense of satisfaction of ridding yourself of one piece of debt will inspire and encourage you to continue hacking away at the rest. Obviously exceptions should be made for debt to the IRS, or if you are in danger of foreclosure. Paying down debt can be a daunting and depressing process if you feel overwhelmed by it. Maintaining motivation and a positive attitude goes a long way in actually accomplishing the debt relief that you need.

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