Back on Top: The Best Strategies for Reducing Your Debt

Wednesday, January 6, 2016, 6:00 AM | Leave Comment

Debt can be a drain on both your wallet and your health. When you have to pay off credit card bills, a mortgage, or a car loan, you may feel like you are working for the benefit of your lenders.

What are some strategies that you can use to reduce your debt and regain your financial and personal independence?

  • Ask About Debt Forgiveness

    The first thing that you should do is attempt to lower the amount that you owe.

    Debt forgiveness may enable you to get out of paying some or all of a balance owed to a creditor.

    If you are unable to get your balance reduced or unable to make your current payment, it may be in your best interest to file for Chapter 7 bankruptcy.

    Doing so will eliminate your debt in days or weeks, and you don’t risk your retirement or social security benefits in the process.

  • Consolidate Whenever Possible

    Consolidating your debt may make it easier to get a lower interest rate compared to what you are paying today.

    With a lower interest rate, more of each monthly payment goes toward your principle balance, which helps you pay off your debt sooner.

    Transferring existing credit card balances to a 0 percent interest card could save you hundreds or thousands of dollars each month.

    Other ways to consolidate debt include getting a home equity line of credit or applying for a persona loan.

    Home equity loans or lines of credit are preferable as you pay roughly the same rate as your current mortgage and may be able to write off any interest that you do pay.

  • Create a Plan That Best Fits Your Personality

    Most people choose to either eliminate the debts with the highest balance first or choose to eliminate the debt with the highest interest rate first.

    Those who have trouble getting themselves motivated to save generally opt to eliminate the balance with the highest interest rate regardless of how large that balance may be.

    However, it doesn’t matter how you attack your debt, as long as you create a plan that works for you and you can stick to it.

    Consider seeking the help of a financial counseling service like Financial Guidance Center, which can assist you in meeting your financial goals through education and counseling.

    A professional can guide you through the often-confusing process of debt reduction.

Getting out of debt is one of the best feelings in the world.

Instead of paying your creditors, you can afford to put money in the bank or take a trip around the world.

With hard work and a cohesive strategy, you can reduce or eliminate your debt no matter how much you may have right now.

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