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David Engelman, CEO of Smart Payment Plan, realizes the average person knows a little but not a lot about their credit score. Confusion exists regarding the details of on-time loan payments.

“Only payments 30 days late are reported to the credit bureau,” Engelman said. “However, if you exceed 30 days the penalty can be quite severe. Miss a monthly payment and the score drops 60-75 points. Miss 2 consecutive payments and the score drops 122-167 points. What’s interesting is that if you were to declare bankruptcy, your score would only drop 150 points.”

With that in mind, consumers should look for ways to make consistent payments. A variety of strategies exist.

“There are no right or wrong ways to pay off debt. If you are paying off debt, you are moving in the right direction,” Engelman said. “That said, it’s difficult for many to budget and create a consistent plan. At Smart Payment Plan we focus on the psychology of debt, eliminating stress and giving people a consistent plan they can stick to going forward.”

A large part of overcoming debt is psychological. Debt is and can be overwhelming. Creating a plan requires an individual to change their habits. Dave Ramsey promotes the debt-snowball method (paying off the smallest debt first) because it is designed to give people small, instantaneous victories. This lets them build toward success. The economics of debt may call for paying off the largest debt first but Ramsey and others found that people have a hard time sticking to a plan that is slow to show results.

Smart Payment Plan, with psychology in mind, believes debt can be removed through smaller payments.

“We match smaller payments to paydays. Smaller, automated payments create less stress for the consumer. This simplified budget plan allows people to pay off home mortgages seven years earlier and auto loans up to eight months earlier,” explains Engelman.

According to, there are five steps to debt reduction. Evaluate your debts, look at your budget, make a plan, start negotiations and follow-through. The fact that follow-through is listed as a step points to the difficulty many have sticking to a plan.

When economists analyze various ways to reduce debt, those methods are created without taking in to consideration the human element. Dave Ramsey and companies like Smart Payment Plan realize that it is the most important part.

“We are in a people business, not a numbers business,” said Engelman.

About Jeff Barrett

Jeff Barrett is an experienced columnist and digital public relations professional. He has been named Business Insider’s #1 Ad Executive on Twitter, a Forbes Top 50 Influencer In Social Media and has contributed to Technorati, Mashable and The Washington Times.

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