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Don't Wait to Act

Don’t wait to act. The sooner that you recognize that there is a problem developing, the less costly it will be financially.

If your credit balance is $8,000, and you make minimum monthly payments at 18% interest, it will take you 25 years and 7 months to pay off the debt. Doing this, you would pay $15,432 in interest charges, (almost twice the beginning balance), bringing the total you pay to $23,432.

If you are having trouble making debt payments, you may start to add extra charges; things like late payments, fees for returned checks, higher interest, over-credit limits, etc. These are charges that you want to avoid. They will add to your over-all bill.

You also have a lot more negotiating power if you contact a creditor before a debt is turned over to a collection agency. If a bill is turned over to a collection agency, the collection agency will have little interest in working out any kind of more favorable arrangements. The original creditor will be more interested in negotiating, since they will get more total dollars than if they have to pay the additional charges of the collection agency.

Let the creditor know you have a problem. Be realistic about what you can pay. Be consistent in following through on any kind of agreement you promise the creditor.

Don't ask for credit limit increases. This is a quick fix that may create a larger disaster in the long run.

Beware of debt consolidation. Most consumer finance companies that offer this service charge very high interest rates.

Ignoring debts will affect your credit rating. Your property can be repossessed. Your wages may be assigned or garnished. You may be forced into bankruptcy. Your credit rating also affects your home and auto insurance rates.

Take a deep breath, then start down the road of reducing your debt. Don't wait for the problem to become worse. Contact your creditors and make sacrifices. Unless you start to deal with the problem now, it will get worse.

Take steps now to manage your debt.

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