This article is a guest post from Donna Nell:

Legal debt relief programs – Reducing credit card bills with their help

Do you face the problem of shortage of cash in your hands? If yes, then these are such situations when you will feel tempted to use the plastic money and buy things that you need. This way of living beyond your means may lead to serious debt problems. Now, before you are completely aware, you find you’re already floating into the sea of credit card debts. You will have to search for legal and suitable debt relief programs that provide you relief from debt problems.

Credit card debt relief programs – Are they really helpful to overcome huge bills?

There are situations in life when your fixed income does not allow you to meet even your necessities. You are then forced to take out credit cards from your wallet and swipe it to make the necessary purchases. Some people even use it in grocery shops for buying the essential things when money seems tight. The major drawback that occurs is that these people do not pay off the card balance on time failing which they fall into credit card debts. You will then have to look for suitable credit card debt relief programs to eliminate debt worries. Before you choose a debt relief program, make sure you know about the different types and how each of them works.

• Debt consolidation

Debt consolidation is considered to be a legal way of managing credit card debts. You can merge multiple credit card bills into one and make a single payment every month on all your outstanding debts. The interest rate on the debt amount you owe also gets reduced in this program. The consolidator negotiates with the creditors for you so as to make the payments affordable. Now, the creditors may not disturb you by calling frequently. This makes it convenient for you to make the debt payments in situations when you have incurred excessive debt burden.

• Debt management

Debt management involves working with a credit counseling agency, working out the payments with your creditors and then paying off the debt depending upon the money you may have left over every month. While debt management educates the financial skills, it also requires you to hold on to a strict repayment plan in order to become debt free.

• Debt settlement

If you are searching for a genuine debt solution, debt settlement is the right option for you. Your outstanding balance gets reduced by at least some amount in this program. The debt specialist bargains with your creditors so that they may reduce the outstanding balance to as much as possible. This will make the payments within your means. Thus, even if you’re facing financial burden, debt settlement will help you reduce the debt amount you owe.

The best debt relief program is the one that gives you fruitful results. Make sure you choose a program that will help you pay off credit card debts at the earliest possible. Thus, once you become debt free, you will be able to enjoy the pleasures of life in a better way.

The contents of this page is taken from Dave Ramsey’s website and shared with you. If you wanna learn more and decided to start your journey to financial freedom you can go to http://www.daveramsey.com/ to find tools you can use for your journey.

Baby Step 1

$1,000 Emergency Fund

An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.

This beginning emergency fund will keep life’s little Murphies from turning into new debt while you work off the old debt. If a real emergency happens, you can handle it with your emergency fund. No more borrowing. It’s time to break the cycle of debt!

Baby Step 2

Pay off all debt using the Debt Snowball

List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.

The point of the debt snowball is simply this: You need some quick wins in order to stay pumped up about getting out of debt! Paying off debt is not always about math. It’s about motivation. Personal finance is 20% head knowledge and 80% behavior. When you start knocking off the easier debts, you will see results and you will stay motivated to dump your debt.

Baby Step 3

3 to 6 months of expenses in savings

Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund. Ask yourself, “What would it take for me to live for three to six months if I lost my income?” Your answer to that question is how much you should save.

Use this money for emergencies only: incidents that would have a major impact on you and your family. Keep these savings in a money market account. Remember, this stash of money is not an investment; it is insurance you’re paying to yourself, a buffer between you and life.

Baby Step 4

Invest 15% of household income into Roth IRAs and pre-tax retirement

When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth.

Dave suggests investing 15% of your household income into Roth IRAs and pre-tax retirement plans. Don’t invest more than that because the extra money will help you complete the next two steps: college savings and paying off your home early.

Why shouldn’t you invest less than 15%?  Some people choose to invest a small amount, if anything, because they want to get a child through school or pay off the home in a hurry. But the kids’ degrees won’t feed you at retirement, and if you throw all your money into your mortgage at this point, you’ll end up having to sell the house and buy the book 72 Ways to Prepare Alpo and Love It. Bad plan.

Baby Step 5

College funding for children

By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.

In order to have enough money saved for college, you need to have a goal. Determine how much per month you should be saving at 12% interest in order to have enough for college. If you save at 12% and inflation is at 4%, then you are moving ahead of inflation at a net of 8% per year!

Never save for college using:

• Insurance
• Savings bonds (only 5-6% growth)
• Zero-coupon bonds. (only 6-8% growth)
• Pre-paid college tuition (only 7% inflation rate)

The best way to save for college is with Education Savings Accounts (ESAs) and 529 plans. Remember, college is possible without loans!

Baby Step 6

Pay off your house early

Now it’s time to begin chunking all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments.

As you attack this last debt, you will gain momentum much like you did back in the second step of the debt snowball. Remember, having absolutely no payments is totally within your reach!

Baby Step 7

Build wealth and give!

It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It’s really the only way to live!

Golda Meir says, “You can’t shake hands with a clenched fist.” Vow to never hold your money so tightly that you never give any away. Hoarding money is not the way to wealth. Save for yourself, save for your family’s future, and be gracious enough to bless others. You can do all three at the same time.