Debt help is readily available, as long as you know where to look for assistance.
Debt happens to many Americans, due to expensive necessary purchases and limited income opportunities in many areas of the country.
Due to this, many need to borrow money just to get by, while the cost of living continues to exceed their capacity to pay back borrowed funds.
If you need debt help, you are not alone.
If you find yourself in debt due to borrowing more than you are able to pay back right now, then you need to investigate your options for assistance.
There are many ways to start alleviating your debt now, while others are longer-term options that can help you over time.
Depending on your needs and your financial capacity, you will need to find the best options for you to move forward despite your debt.
Wherever your debt stems from, you need to address it and start whittling away at those problems as soon as possible.
Learn About the Types of Debt
While the idea of being in debt never sounds ideal, it is still important to remember that debt can vary based on needs and financial capacity.
For example, taking out a loan for a house means that you will technically be in debt for decades to come until you are able to repay the entire loan and interest.
This is different from other forms of debt, which might result from poor financial decisions like shopping for unnecessary items or traveling when you do not have the funds for such trips.
Similarly, student debt can feel like such a burden, but the investment you have made in your future by getting a higher education is often considered to be worth the initial loan.
In both cases, however, repaying the loans as quickly as possible usually means paying less interest over time.
This can be a benefit, as the longer the term of the loan, usually the more interest you will have to pay on top of the original loan amount.
What is Debt Help?
Debt help is available as long as you know where to look for assistance and how to best utilize the tools available to you.
Getting out of debt quickly is ideal, but always be careful with any offers that seem too good to be true.
Any individual or company offering immediate and complete debt relief is likely just shifting your debt from another company to themselves.
This could result in even worse repayment terms, so always be cautious with these types of offers.
There are valid opportunities to shift your debt from one lender to another, however. For example, if you have multiple credit cards, one might have a lower interest rate than another.
Shifting your balance from the higher interest rate company to the lower interest rate company can help you save money as you slowly pay down that debt.
If you are considering transferring a balance from one company to another company you have not worked with before, be incredibly cautious and thorough in reviewing the terms and conditions of this new company.
Fees can be very high at these third-party companies, which can make your debt even worse in the long-term.
Paying down your debt over time is generally the recommended solution to avoid additional fees and other lenders becoming involved.
Since many borrowers who find themselves in debt do so after an emergency, you should try to avoid increasing your debt as you pay off the emergency bills.
If you find yourself in debt due to poor financial habits, then you should first address those before you can find any success in paying down your debt.
If you simply cannot meet your financial obligations, then you can look into the more drastic options that require more immediate relief.
Learn About Counseling Opportunities
Credit counseling can be a helpful first step to reducing your debt problems. If you have borrowed more than you can repay, then you can look into counseling opportunities at a nonprofit agency offering this type of assistance.
You will be able to review the debt, your budget and your income, plus any other factors that might affect your ability to pay back this debt.
Credit counseling can be an excellent step to take. In fact, it might be the only step you require if you are persistent and able to meet your financial obligations according to the plan outlined by the agency.
Learn About Managing Your Debt
Managing your debt, ideally with the assistance offered by a credit counselor, means taking a variety of steps to lower your interest rates and to find the best solution to paying down all of your debt.
The first step often recommended is finding the lowest interest rate where you could transfer your debt balance. This might be a lending institution you already use or it might mean another company altogether.
Just be careful to read all of the fine print to ensure these lower interest rates will enable you to fully repay your debt and you will not, instead, end up with a dramatically higher interest rate after a certain period of time.
Managing your debt through transfers and lower interest options can be a great solution to get you started on the right path.
Learn About Declaring Bankruptcy
Depending on your situation, declaring bankruptcy might be a solution for dealing with your debt.
If you qualify for this status, then you might want to consider it a viable option before considering debt consolidation or resettlement.
Declaring bankruptcy can alleviate your debt problems quickly, but this will not affect every type of debt.
Additionally, declaring bankruptcy can have a dramatically negative impact on your credit score, which can impact your future options for employment or for renting a home, among other problems.
Differences Between Debt Consolidation and Debt Settlement
Debt consolidation can help you to combine all of your qualifying debt into a single account, which can be more manageable in terms of minimum monthly payments and interest rates.
Always be careful when consolidating your debt in case there are low rates now that are scheduled to increase eventually. Also, note if there are balance transfer fees and how you might able to minimize these extra costs.
Debt settlement, on the other hand, is considered to be a final option for many who find themselves in debt.
To use this option, a third party company will typically put your payments into a settlement company account, which will then be used as leverage against your lenders to try to get you out of needing to pay the full amount you owe.
This process has a negative impact on your credit score, and you might still need to repay your loans in full, plus late fees and increased interest rates.
This is usually very risky and should only be used if you know how the process works and how you can best benefit from it.
Learn About Strategies to Help You Overcome Debt
Debt is a problem that millions of individuals face. Many people throughout America owe more money than they can afford to pay back, which can cause major financial stress.
If you find yourself in debt, you may worry that you won’t be able to repair your finances and get your budget back on track.
However, there are many different strategies you can take advantage of to help repair your finances.
Some of these steps you can take are outlined below. With a little preparation and a clear understanding of your financial goals, you can pay off your debt and improve your financial situation.
4 Things You Can Do to Help You Get Out of Debt
Paying off debt can feel like a daunting task. Before you get started, there are some actions you can take to help you get a better understanding of what you owe and how you can reorganize your finances.
1. Have a thorough understanding of your debt.
One of the biggest problems people in debt face is not knowing exactly what they owe.
If you’re deeply in debt, it may seem easier to ignore your problem than face it directly. However, this could only cause you more problems in the future.
If you’re serious about regaining control of your finances, you need to make sure you know the amounts you owe for all of your debts.
This means you’ll need to look the following types of debt you might have:
- Credit cards
- Student loans
- Medical bills
- Utility bills
Once you understand the types of debt you have and the amount you owe, you can get a better sense of how much you’ll need to pay off your bills.
2. Set realistic financial goals.
Once you take a look at your current financial situation, it’s time to think about where you want to be financially.
Feel free to dream big at this point. Some people might dream of retiring at a certain age, while other people’s goals are related to buying a house or car.
No matter what it is you’d like to do with your money, it’s important that you name it and have a clear understanding of the amount of money you’ll need to reach that goal. The clearer your vision is, the easier it can be to stay motivated to pay off your debt.
3. Decide how you’ll pay off your debt.
Your debt payoff strategy is likely to be as unique as your financial goals are. There’s no one perfect way to get out of debt, and the method combination you’ll need to use depends largely on the:
- Type of debt you have.
- Amount of debt you have.
- Amount of time you have to pay off your debt.
When you’re determining how you want to pay off your debt, remember that there are many different strategies you can take advantage of.
For some, debt consolidation might be the right option. In more extreme scenarios, you may need to declare bankruptcy.
To help you make the best decision for you, be sure to speak to a financial counselor or another trusted resource.
Lawyers or accountants might also be helpful professionals who can help you make an informed choice regarding your finances.
4. Keep track of your progress and remain with your strategy and goals.
The most challenging part about having a new budget and debt repayment plan for many folks is staying consistent with it. In a similar fashion, keeping track of your progress with your debt repayment plan can also get tricky when you become busy.
If you want to completely remove your debt, it is vital to remain consistent to making your predetermined payments and keep track of them.
Keeping track of them can show you how you can adjust your strategy to your current circumstances.
Debt Consolidation Resources
- National Foundation for Credit Counseling
- Federal Counseling Association of America
- Student debt consolidation information
How to Create an Effective Debt Payoff Strategy
Once you’ve done the preliminary work to understand your debt, you can create a strategy to pay off what you owe.
Different tactics you can use are outlined below.
Tip 1: Reduce Your Credit Card Usage
Paying high sums of credit card debt while still using credit cards is not an effective way to pay off debt.
In order to pay off what you owe, you must reduce your credit card usage until you have been able to pay off at least most of the credit card debt on all your accounts.
It can seem challenging to pay off debt that has been accruing over time. However, the only way to overcome this is to stop spending your money and creating new debt.
During this time, you’ll need to limit your unnecessary purchases and put all the extra money you have toward paying off your debt instead.
Tip 2: Utilize Low-Interest Offers to Pay off High-Interest Debt
Another way to reduce the total debt you have is to use a new credit card with a low introductory debt transfer rate to pay off a high interest credit card.
Usually, you’ll do this with a balance transfer credit card that charges no interest during the first year or so that you have it.
If you can pay off your debt within the year, this can be an effective strategy. If you can’t, it may help to look for another debt reduction solution.
That’s because you’ll start accruing interest on your balance at the end of that introductory period, which means that after that point, this strategy won’t really save you money.
Best Low-Interest Credit Cards
- Wells Fargo Platinum card
- Capital One SavorOne Cash Rewards Credit Card
- BankAmericard credit card
- American Express Cash Magnet Card
- Citi Simplicity Card
- Discover it Balance Transfer
- Discover it Student Chrome
Tip 3: Eliminate the Most Expensive Debt First
Many Americans don’t pay attention to the interest rates they are being charged for each of the debts they have. This can cause major problems the longer it takes for you to pay off your debt.
When coming up with a debt payment strategy, you might want to consider paying off the debt with the highest interest rate first.
This is especially true if you have credit card debt that’s spread across several different cards.
Tip 4: Go Beyond Your Minimum Monthly Payment
Paying the minimum required amount for credit card debt and certain types of loans may seem like a good decision.
However, this is only beneficial in the short term. That’s because the longer it takes for you to pay off the principal amount you borrowed, the more you’ll be required to pay in interest over time.
Furthermore, you need to make sure you’re making your required payments on time each month.
Making late payments not only hurts your credit score, but it also leads to penalty fees that you’re responsible for paying on top of your current debt.