Four smart ways to get rid of debt

*Guest post by Veronica Brown:

Often, people get into debt but they don't have the sufficient income to get out of it. As a result they start having sleepless nights. However, there are many ways by which people can get rid of debt easily.

Four ways to get rid of debt:

* Debt Consolidation: The purpose of debt consolidation is to combine all of your unsecured debts into one monthly payment. Many financial institutions offer debt consolidation loans. In case you are stuck with several different loans, then the best way to get out of it is to go for a debt consolidation. You will get one loan that will pay back your outstanding balances. For this loan you have to make single monthly payment over a certain period of time. This loan has a low rate of interest. As you are paying over a long period of time so your monthly payments will be less.

* Debt settlement: The most popular way to get rid of debt is debt settlement. The debtors can reduce their balances from 40% to 50%. There are various debt settlement companies who offer this program. It is a process where the debtor starts saving money in a trust account(opened by the settlement company) instead of paying money to the creditors. However, this account does not usually earn any interest. It is only when the debtor has saved 50% of the outstanding balance in the trust account, the counselors start negotiating lump-sum settlements with the creditors.

* Debt management plan: This plan can also help the debtors to get rid of debt. This plan helps the debtors to pay back the unsecured debts. Usually, a third party organization access the debtor's income, expenses, credit balances. Then the counselors negotiate with the creditors to lower the interest rates and payments.

* Self-help: The debtors can also get rid of debt if they follow few guidelines. Debtors should cut down their expenses ( going for a movie, buying luxury items, designer clothes and etc). They should find ways to increase their income ( per-time jobs, forex trading). They must stop collecting new credit cards, store cards, etc. They must contact the creditors as soon as possible and negotiate with them to reduce the interest rates of the loans. They should make the minimum payments on each card on time.

These four ways can help you to get rid of debt within few years. Once you get rid of debt, you can lead a tension-free life

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