Does debt have you down?
That’s not surprising. Dealing with debt can be one of the most stressful things a person deals with through their life.
Debt is a serious problem today. The average American has around $38,000 in personal debt. You aren’t alone if you are overwhelmed with debt.
But with all the debt you have, is there anything you can do to find relief? There is, and this post will tell you how.
Let’s talk a look at seven things you can do to start tackling your debt.
1. Decide What Debt to Pay off First
Do you know how much interest you are paying with each of your payments?
Figure this out. The higher the balance and interest are on these accounts, the harder it will be to make the minimum payments to get your principle balance lower. See if getting a debt consolidation loan would make sense.
Make a list and rank your debts. Focus on paying more than the minimum on your highest cost loans. These payments will save you the most amount of money in the long run.
When you only pay the minimum on a high balance, you could end up spending more than two or three times the debt in the long term.
2. Pick up a Side Job
You don’t need to rely on one source of income to pay your bills. The internet has made it easier than ever to pick up side work and earn extra cash.
Do you have any unique skills? Marketplaces like Etsy allow you to sell DIY crafts.
If you have professional skills like graphic design or programming, you can try freelancing to bring in extra money.
There are a lot of opportunities out there. If you have free time, then it is worth giving it a try.
3. Try Negotiation
When your bills are sky high, you might think it’s a lost cause. But you’d be surprised about the relief you can get by talking to the people you owe money to.
Call up your credit card companies or loan providers to see if they can make any changes to your terms. They could reduce your monthly payments or give you an interest rate reduction.
If you have a good payment history, they may be willing to work with you.
You can also talk to your utility providers about your rates. If you have cable or internet, try negotiating a lower monthly price.
If you explore your options and make them compete on price, you could get lowered to the introductory rate for a year.
4. Settle Your Debt
Say you’re paying off your debt and building up a savings account at the same time.
What are you going to do with this extra money? Ask your creditors if you have the option to settle your debt.
When you do this, you will pay off the entire balance of your credit at once. Creditors will accept a smaller amount when you do this.
These offers are harder to get but worth asking about if you have the opportunity.
5. Credit Counseling
If you think you don’t have any options, credit counseling may be an effective way to get started.
Credit counseling is a service usually offered by non-profits that help people learn how to manage their money to get out of debt. Having someone on your side to help can make a big difference when tackling debt.
A typical session will start with a call or short in-person meeting to figure out exactly where you stand.
Once the session is over and the counselor knows what you need to do, you will get help in developing a budget and a management plan that will help you pay down your debt.
6. Consolidate Your Debt
How many credit accounts are you paying down at the same time?
If you have more than one account, debt consolidation programs are an option.
These programs will give you a personal loan to pay down all the debt you have. These programs are a good option if you have high-interest credit cards.
By moving your debt to a loan, you can reduce your interest rate and your monthly payment.
Having one payment can also help you mentally. Instead of stressing about all the payments you need to make during the month, you only have one.
7. Keep Your Accounts in Good Standing
If you fall behind on some credit lines and end up having the account go in bad standing, don’t let it cause problems for your other accounts.
Make sure to keep as many accounts in good standing as you can. Talk with the creditors of your bad accounts to see if they can work with you on payment options.
Your accounts in bad standing have already hurt your credit. If you let your other accounts slip, your credit is only going to get worse.
8. Move Credit Card Balances to New Cards
Credit card interest is a killer. When you are stuck paying the high-interest rates, it can be hard to put a dent in your balance and get it paid off.
If you can open a new credit line, it may be worthwhile to transfer your balance to another card.
A lot of credit cards offer 0% APR for the first year. If you move your balance to one of these cards, you can save a lot of money on interest.
9. Declare Bankruptcy
If you’ve exhausted all your options, then you might not have another choice. Declaring bankruptcy is the last resort that will help you get rid of your debt.
If you take this option, be prepared to have your credit ruined.
You have two ways to file bankruptcy.
Chapter 7 requires you to give up some property, while Chapter 11 will allow you to keep all your things.
Bankruptcy is a long and expensive option, so don’t make this choice lightly.
Don’t Let Being Overwhelmed by Debt Stop You
You shouldn’t feel bad about being overwhelmed by debt. It happens to a lot of people, so you aren’t the only one experiencing the struggle.
Instead of letting your debt control your life, use it as a way to learn how to manage your money better so you can become debt-free.
If you are looking for more tips about money management and investments, we’ve got you covered. Read our money blog for more tips for increasing your wealth.