Are Minimum Payments an Effective Debt-Relief Strategy?

If you have found yourself deep in debt, you know what a destructive force excessive debt can be in life. It can limit your opportunities for receiving financing, it can affect your job search, and, of course, it can cost you a significant portion of your income. And this does not even begin to address the feelings frustration and stigmatization that come along with such situations. Many people believe that the only way out of debt is the option right in front of them: making the minimum payments and waiting for the debt to be paid off in whole. In this article, we will address that concept, and we will discuss why it may not be the best option for you.

 

Making minimum payments is the most conservative approach to paying off debts, and as long as you do not feel that your debts are having a negative impact on your life you may wish to go this route. However, you should be aware that you will end up paying nearly 50% of your balance in interest alone over the first three years, and that, if your rates are over 25%, it is almost a mathematical impossibility to pay off your debt through minimum payments. Repayment through this method can sometimes take 20 years or more, and if you stop making repayments at any time (regardless of the reason) you will be destroying your credit while doing nothing to help your situation.

 

Taking a more aggressive approach can get you out of debt faster, allowing you to move on with your life. Though it is true that not all debt relief programs are created equal, you owe it to yourself to look into debt settlement. Debt settlement is not a bank-managed program like debt consolidation, and it does not carry the ten-year stigma associated with bankruptcy. Rather, it is a way of negotiating and lowering debt on the friendliest terms possible. Debt settlement has helped countless people get back on track financially: could it be right for you? Visit Madison Monroe and Associates online today to learn more. www.madisonandmonroe.com or simply give us a call 877-346-2797 we are here to help.