Being in debt can be stressful. It’s a situation most people try their best to avoid, and when they find themselves in debt, they want to get out as soon as possible. However, this is often easier said than done.
Fortunately, there are plenty of debt-resolution strategies people can choose from. They each have their pros and cons, and different situations might call for different plans of attack. Be sure to do your research to choose which one will work best for you.
Some popular methods of driving down debt include:
1. Creating a Debt Payoff Plan
A debt payoff plan is a strategy that you create based on your unique situation. As MoneyGeek explained, it can be incredibly difficult to stick to, especially if you have significant debt. Your dedication is a must to make this work.
To start, you’ll need to assess all of your debts. Take a close look at how much you owe, to whom and what the interest rates are. Paying off the debt with the highest interest rate first will save you money in the long run, but going after the smallest amount could give you motivation to stick to the plan early on. Whichever method you prefer, create a game plan and an order in which you’ll get rid of your debts.
“Your dedication is a must to make a debt payoff plan work.”
Next, you’ll need to take a close look at your income to determine how much you can reasonably allocate to debt payments every month. Be careful – if you dedicate too little, your debts will shrink slowly. But if you overpay, you may end up relying on credit to make ends meet at the end of the month, furthering your debt problem.
2. Negotiate Your Debts
Credit.com pointed out that some creditors will take it easy on you if you call in to explain your situation. You might be able to get a lower rate on your credit card or come to a lower settlement on a particular loan. Either way, paying it down will be made much simpler.
3. Home Refinance
If you are a homeowner, you are living in one of the biggest assets you own. Your home accrues equity as you pay off your mortgage, which is yours to use if you choose. If you refinance your mortgage, you can not only get your equity in cash, but could also qualify for a lower interest rate. You can use your equity to pay down high-interest debts.
4. Credit Counseling
A credit counselor will help you manage your debt for a fee. The counselor will work directly with you, your unique situation and will also reach out to creditors on your behalf. Having a professional on your side never hurts, especially when it’s in regards to something as complicated as debt.