There is so much information on the Internet these days regarding debt, debt reduction versus debt consolidation and/or how debt management companies operate. We tried to simplify the most articles we see across this spectrum, and try to help you understand each one.
Below are some common myths & credit card debt correlations:
Myth: I should be paying off the debt with the highest interest rate first, get that one out of the way, then go to the next highest interest rate, to get that one out of debt quickly and so on.
Truth: You should do just the opposite, and pay off the smallest debt first to create the greatest momentum in your debt snowball. The debt snowball effect is another concept circulating around the Internet, we will explain to you as well. However this is not always the best way to attack debt either.
The folks that advocate the snowball affect would prefer you tackle the smallest credit card debt on your list first. Then once that particular creditor is paid off, you then take the money you were using to pay off credit card # 1, and apply those monies to paying off credit card # 2, and so on. The concept behind this is a “feel good” philosophy. If you fell like you are having some relatively quick success in paying off your smaller debt, you are more likely order to stay “in the game” and go after the next credit card. What they do not tell you is your highest debt with the highest interest rate is almost doubling faster than you can get a handle on it.
Again, the principle of the snowball affect is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. At Nationwide, we are absolutely opposed to this type of credit card debt management. Creditors cannot be ignored, especially the big ones with the high interest rates. We would much rather negotiate and settle those debts for a fraction of what you owe. If you are an average American, you currently have approximately 5-7 credit cards in your wallet, and owe somewhere between $25,000 to $50,000 in credit card debt.
You cannot afford to sit around and “feel good” when the stakes are much higher at this level of credit card debt. Therefore, we believe that by utilizing our debt reduction process, whereby our professionally trained staff can negotiate directly with your creditors to settle your current debt for a fraction of what you owe is the answer. Leave the snowballs to the kids playing outside in wintertime.
To learn about this post, or if you are in need of help regarding your debt, please feel free to contact Nationwide Debt Reduction, Inc. (NDR) toll free at 1-800-890-6658. Our professional advisors will be more than happy to answer your questions. If it is after hours (8:00 am -5:00 pm PST) (11:00 am – 8:00 pm EST) you may go onto our Contact Us website by clicking here, fill out a short form, and one of our advisors can get back to you when it is most convenient for you. We are located in the city of Mesa, Arizona in the Phoenix metropolitan area.