8 Great ways to get out of debt

 

1) Use your Assets

If you have assets with some significant equity, such as a home or a car you may be able to use these to get control of your debt. For example, you could get a loan on your home sufficient to pay off your debts. You could be saving a considerable amount of money on interest if you pay off high interest credit card debt in return for lower cost debt.

If you have a car, consider selling it, paying off your debts and buying a cheaper car.  Be careful though!  You don’t want a “cheaper” car that will cost you a fortune in repair costs.

 

2) Get a Second Job

Use the money from this job to only pay off your debts.  List your debts noting the interest rates.  Pay off the debts with the highest rates first and work you way down the list.

 

3) Put your Credit Cards on Hold

One of the best steps you can take to get out of debt is to immediately stop using credit cards.  At the very least destroy all your cards keeping just one for emergencies.

 

4) Set up a Repayment Plan

Cut back on your expenses and/or use freed up cash to pay down your debts.  Pay off the debts with the highest rates first and work you way dow the list.

 

5) Get a consolidation loan

A consolidation loan can make lots of sense.  Get a loan to pay off all you many debts and have just one payment to make.  The new loan usually has a smaller payment and a lower interest rate.

 

6) Use the Services of a Credit Counselor

Credit Counselors can assist you in acquiring the discipline you need to get control of your debt.  Be Careful!  Many people do not fully understand all the ramifications involved such as:

           Impact on your credit ratings?

            Are your payments too high?

Your payments should be high enough to significantly reduce your debt but not so high that you have “no life”.

           How long should you pay?

Most experts feel that the term should be 3 or 4 years.  Terms that extend longer then 3 to 4 years have a very high failure rate, because people cannot see the light at the end of the tunnel and default on their payments.

 

7) Informal Proposal – Payments over time.

In some cases you can make a proposal to your creditors to set up a payment plan that will allow you to pay your debts in an orderly way and thus help preserve or repair your credit rating.

 

8) Formal Proposal – Lump sum payment

Some creditors will negotiate settlements if you offer lump sum payments.  This can reduce your debts by 20% to 30% in some cases if you have the means.  This can also save you from racking up additional interest charges or late fees from your creditors.