Sea of Debt - Debt Reduction Plan

Debt Reduction Plan

Shorty the Shrimp was in debt. He needed a debt reduction plan, and he needed one soon.

Shorty's Dive into Debt Reduction

Shorty knew he had to do something about his debt, but he didn't know what his options were. Then he talked to his friend Sam Salmon who told him to check into a debt reduction plan. Apparently, Sam swam through a similar Sea of Debt and a debt reduction plan is what saved him.

"What's a debt reduction plan?" Shorty asked Sam. "It sounds like some kind of scam."

"No, not if you get the right debt management company. The beauty of it is that if you keep swimmin' along, barely keeping your head in the water, it'll take you 20 years of more to get out of debt. But with a debt reduction plan, most of the time you can get out of debt in about five years. There are a couple that take longer, like a debt consolidation mortgage. In fact, you might want to check into that. You're a homeowner, aren't you?" Sam asked.

"Yeah. In fact, that's how I racked up so much debt. I bought my house two years ago. It was a fixer-upper in Sponge Bob's neighborhood, and I used my credit cards to do the fixing up. It looks great now, but now I'm stuck with all this debt."

"Then your situation isn't as dire as you think, my friend. A debt consolidation mortgage is a debt reduction plan that tacks on the amount of your debt to your mortgage. The mortgage company gives you a check for it and you pay it back over the life of your mortgage. This debt reduction plan actually benefits you in a number of ways," Sam explained.

"How's that?" Shorty asked.

"Well, number one, you get the same low interest rate as your mortgage. That way instead of the 18-24% you're probably paying on your Home Depot card or whatever, you're paying 6% on the amount you owe (or whatever your mortgage interest rate is). Number two, you get to write off some of the interest on your mortgage, and since your credit card debt will be part of your mortgage, you are essentially writing off some of that interest."

"Wow!" Short exclaimed. "That really is great! How do I get started?"

"Just call your mortgage company and ask about it." Sam advised. "Just be sure that once you're out of credit card debt that you don't rack up more. And remember--your house payment will go up just a bit--maybe $25 a month or so. It depends on how much you owe."

And Shorty did call his mortgage company. He got a debt consolidation mortgage, and life was grand!