A Straight Talk on Debt

A Straight Talk on Debt gives you the real deal on debt, straight from our employees and personal finance experts. Learn more about debt relief plans and how to be financially fit.

How Can I Pay off my Debt?

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This is a very popular question and one which many of us have asked ourselves repeatedly. Paying off debt is usually a goal we set every year, and one which many of us fail to meet.

There are a variety of methods available to help pay off debt. Some methods include better budgeting or accessing savings to pay off accounts. Other methods involve seeking help from organizations like CareOne and enrolling in a Debt Management Plan (DMP) or Debt Settlement Plan (DSP). The important thing to do is pick the right method for your budget, and your situation. Remember, more debt is not the right answer.  

Better Budgeting and Being Cost Conscious: 

I recommend carrying a notebook and writing down every expense you incur for two weeks. This includes your mortgage, car payment, gas, and even the three dollar coffee. If you spend money, write it down. By doing so you are tracking all of your expenses and can identify areas that can  be cut. Cutting a few dollars a day, translates to several dollars a week, and even more dollars each month. These funds can be applied to your debt instead.  

CareOne Debt Management Plan:  

A DMP is a great option for paying off unsecured debt, particularly if your credit card interest rates exceed 10%, as most do. Attempting to pay off debt with interest rates of 20 - 30% can take a lifetime and you may wind up paying back many times the original amount you borrowed. It is a losing situation for you and a winning situation for the creditor. Enrolling in a DMP is a great way to get your interest rates lowered, waived late and over the limit fees, and pay off your debt sooner than you would be able to on your own. A DMP makes it possible to kiss that debt goodbye within three to five years depending on your balances.  

CareOne Debt Settlement Plan:  

For some customers who are unable to afford a DMP payment, or who have creditors that do not offer benefits on a DMP, Debt Settlement may be the answer. Debt Settlement works by building money up in an escrow account, instead of being sent to your creditors each month, until the creditor is accepting of move favorable repayment terms. DSP is much tougher than DMP because it is not a creditor sponsored resolution, like DMP. Collection calls will continue and the accounts will become delinquent, if they have not already. It can be an excellent alternative to bankruptcy for qualified customers.  

Home Equity Line of Credit:

This was a very popular method for people during the last decade. Home values were rising exponentially and banks were lining up to offer lines of credit with very low interest rates, which of course were tax deductible. It was easy to use a HELOC to pay off credit cards. However, it was a false sense of success. Sure, the cards were paid off but, the debt was only transferred to another lender and worse yet, the credit cards were still open and the opportunity was there to run the balances back up again. It happened, time and time again. This is not a great option.   

The Bottom Line: 

  • Track your spending
  • Make budgeting cuts
  • Ask for help
  • Don't think you have to face this on your own 

    Rob Taylor

    Rob is a contributing writer for the Straight Talk on Debt blog. Rob has been in the business of helping people get out of debt for the past six years. He is a product manager with the CareOne team and focuses on making debt relief plans even better.

Related Posts:

What is a Debt Management Plan?

Creditors Keep Calling Me. What Are My Rights?

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