How to reduce debt is relatively easy when you follow a few basic tricks, and debt calculations, to help you see when your debt load is leading to the danger zone. Debt is not bad at all if you know how to use it. You should learn how to avoid the pitfalls to stay free of stress brought about by a creeping debt.

You should be aware that creditors use budgeting guidelines in the assessment and approval of credit applications. If your debt exceeds the parameters in their recommended guidelines, then you have a higher chance of your credit applications being denied. Use the following recommended budgeting guidelines (the same ones used by Financial Institutions) to review the items in your budget:

1. Housing should take about 35% of your budget;

2. Transportation takes 20%;

3. Other expenses 20% that includes:

• Mortgage or rent, taxes, repairs, improvements, insurance, and utilities;

-Monthly payments, gas, oil, repairs, insurance, parking & public transportation;- Food,

insurance, prescriptions, doctor & dentist bills, clothing

4. Debt payment takes 15%; and

5. Investments & Savings covers about 10%.

Get the ratio of your debt and your income. You should know the importance of your debt load to your overall financial status. Your debt income ratio is the percent of your monthly take- home pay that goes to paying debts. It can be calculated by taking the total amount you needed to repay your debts each month and divide it by your net take-home pay. Remember to include only the actual amount that goes to debt repayment in the calculation.

If you were able to pay off a credit card, don’t close the account right away because if you do, you are actually negatively impacting your credit score. The reason for this negative effect is in the calculation of the Credit to Debt Ratio itself. If you pay off a credit card, you reduce your debt, but, if you close the account, you are also reducing the credit limit you have, and usually by a higher percentage than you are reducing your debt.

Do not settle for the minimum payments on your credit cards. Paying just $10 extra a month on a credit card, above the minimum required payment, can cut your repayment term in half, if not more! So, make that extra payment, however small, do it monthly, and take advantage of the compounding effect of snowballing your way to reduce debt.

I’m the CEO of Debt Free Solutions, a debt consulting firm located in Long Beach, CA. I have established business in October, 2000. I’m dedicated to assisting Americans nationwide to eliminate excessive credit card and other unsecured debt.

I expose how credit card companies trap Americans into suffering in debt- often for life. I have developed a deep-rooted passion for helping debtors fight back and escape the credit card trap!

I utilize my expertise to analyze my client’s financial situation. Based on each debtor’s unique needs, various programs and strategies are implemented to aid them in dissolving their debt in the quickest, safest, and most cost-effective method possible. I structure my programs to drastically minimize the risks that are inevitable with all debt elimination programs.

I offer our clients much more than a debt settlement company. The vast majority of debt negotiation companies simply settle your debts on your behalf with your creditors- nothing more.

I, on the other hand, provide free services to significantly minimize the risks that are involved in negotiating with your creditors.

Sincerely,

Joseph Hernandez

CEO

Debt Free Solutions

www.debtfreesolutions.mobi

(800) 668-8090