Financial Independence and Debt Management

June 14th, 2008 | Stacey | Debt Management, Financial Freedom, Financial Independence

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Financial independence seems even further away when you carry significant debt. Almost seven million Americans have short term debts that exceed 20 percent of their annual income. Debt management programs consolidate debts into one payment to help people pay off these ongoing debts for greater financial freedom.A debt management program can lower your payments significantly and help you pay off debt within three to five years. As you pay off debt, you rebuild your credit rating and get rid of all those harassing letters and phone calls to collect the debt.

A credit counselor works with you to reduce your monthly payments by reviewing your current financial situation and contacting your creditors. The result is reducing interesting charges, fees and monthly payments so you can start to get rid of debt. You make one monthly payment to the debt management company who disburses the funds to all your creditors to pay them off. Your creditors will still send you statements showing your debt getting paid down.

Often people save anywhere from 20 to 50 percent on their outstanding debts by talking to a credit counselor. As a result, debt is paid off more quickly while your credit rating improves. The first step toward true financial independence is to get rid of those nagging short term debts.