Helpful Debt Solutions

There are several approaches to tackling debt, but the first step finding out exactly what you're dealing with. Write down all your debts, amounts and interest rates so you can see exactly what you're dealing with. Then figure out what approach fits your finances and personality style and get busy paying them off. Any approach you take will require making and keeping a budget.

Debt Snowball

The debt snowball approach assumes that you'll stay motivated when you see progress. Write down all your debts and begin paying them off, smallest debts first. When you pay one debt off, roll the money you were spending on that debt into paying off the next debt. Each time you pay off a debt, you'll have more money to throw at the next debt and paying debts off will become faster and easier.

Debt Avalanche

The debt avalanche approach focuses on the fact that debts with high interest rates cost you the most. Put the largest amount of debt payoff money into the debt with the highest interest rate. The sooner you pay those debts off, the more money you'll have to tackle other debts because you won't be pouring so much money into interest.

Debt Consolidation

Putting all your debts into one payment makes tackling debt less complicated. However, there are good ways and riskier ways to consolidate debt. Moving your credit from credit card to credit card tends can damage your credit score and often winds up with you running up the last credit card after you've rolled the balance onto the new one. A better solution is to take out an installment loan at your bank and pay debts off with it, then pay the installment loan. This kind of credit is looked on more kindly by credit agencies. Home equity lines of credit are also an option, but they can put your home at risk.

Credit Counseling Agencies

Most reputable credit counseling agencies can help consumers create a debt solution for free. Look for agencies that are members of the Association of Consumer Credit Counseling Agencies or the National Federation for Credit Counselors, which are both recommended by MSN Money. If your debt amounts are high, they can create a debt management plan in which you pay them a certain amount each month and they pay your unsecured debts. They also can negotiate down fees and interest rates. Credit counseling agencies usually charge a small fee for debt management plans, and they require you to cut up your credit cards.