The Road to Debt Freedom: 5 Ways to Reduce Your Debt

Start Living a Life That is Debt Free

by Wes Markham

Are you swimming around in debt? Even worse, drowning in it? Then you will be happy to know that there are multiple ways that you can jump out of the ocean of debt you’re in. You may find that one or more of the available options will work for you. Your best bet is to use as many as possible to quickly get out of debt and stay that way.

1.     Negotiate with Your Creditors

The first thing you should do to eliminate debt is to contact your creditors and see if you’re able to negotiate a lower lump sum settlement or a payment plan for the current debt owed. Simply gather up all of your debts and contact info for the creditors they are owed to and begin calling around. If you choose to do lump sum payments, you may want to do one debt at a time or set up the payments to be made down the road, so that you have time to accumulate enough cash to pay off each of the settlements. If you need quick cash for your payments, you can get it from a financial institution that offers them.

2.     Transfer Over Your Credit Balances

If your credit rating hasn’t been hit too hard by your debts, you can apply for a balance transfer credit card that has an interest rate lower than the ones you currently have. Some will even offer ridiculously low introductory rates as low as 0 percent. Either way, with a lower interest rate, you will be able to handle the payments on your credit cards without the hefty interest fees that you have been paying. In the end you’ll be saving money.

Another tip you can use when dealing with credit cards is to avoid the “minimum amount due” trap. You should always pay your balances in full to avoid the accumulation of interest.

3.     Debt Consolidation

When your debts are coming from multiple creditors, you can consolidate them all, so that you only have to worry about one monthly payment. Some people even opt for a home equity loan, which can be used to pay off all of your debts, then you will just have one monthly payment to worry about.

4.     Work with a Credit Counseling Company

Sometimes, working with a credit counselor can help minimize your debt and eventually get rid of it. When you sign up with them, they will work with your creditors on your behalf in an attempt to either negotiate a debt settlement or a payment plan for what you owe. They will charge you a fee for their services. Credit counselors will also help you to come up with a reasonable budget to help stop your debt from accumulating and to help you stay out of debt once you have paid everything off.

5.     Bankruptcy

It’s said that this should be your last resort, but bankruptcy is still an option for many people that are having problems with debt. Many opt for bankruptcy when their debts are extremely high and impossible to repay. Just make sure to look into the new laws that have been created to keep people from abusing bankruptcy.

During the process of eliminating debt, you should always keep your finances in mind. How much are you realistically able to pay for a lump sum settlement payment or monthly for consolidated debts? Is bankruptcy the best option for you? Working with a counselor can help answer your financial questions and keep you on the right track for becoming debt free.