How to Solve Debts

Although there are no quick fixes for resolving debt, there is a solution for virtually everyone. You need not have a million dollar income; solving debt is possible with a modest income and mighty discipline. The key to getting out of debt and staying out of debt is a willingness to commit the time, patience, work and creativity over the long haul. Strategies and resources for solving debt are varied and can be tailored to an individual's circumstances.

Instructions

1

Negotiate a Payment for Deletion (PFD) deal with creditors. In a Payment for Deletion arrangement, borrowers offer to pay creditors the full amount of debt owed in exchange for removal of the account from the borrower's credit reports. Steve Bucci, debt advisor with www.bankrate.com, advises borrowers using this option to do three things: get the agreement in writing, honor the payment agreement, and check all credit reports about one month later to be sure the negative item has been deleted.

2

Pay off credit cards with the highest interest rate. According to Dave Ramsey, financial guru, there is nothing good about credit cards because consumers will always spend more than they would with cash, thus creating more debt. Paying off credit cards with the highest interest resolves debt by reducing the total amount of money to be repaid on the debt. Funds saved can then be used to retire debt on credit cards with the next highest interest rate. The "Reduce credit card debt calculator" at www.bankrate.com makes it easy to see how quickly debts can be solved and how much money can be saved using this strategy.

3

Pay bills early. The American Bankers Association advises paying bills before the due date to save on interest expenses. In other words, paying early means paying less (and paying off debt sooner) in the long run. Set up an online bill pay service or automatic payment plan with your bank to avoid additional penalties and fees for late payments.

4

Earn additional income. Consider a second job, a yard sale or ways to turn a hobby into a source of income. Liz Pulliam Weston's msn.money article, 20 ways to earn $100 more a month, includes other ideas such as selling at online auction sites or delivering newspapers. Use the additional income to solve debts.

5

Retire the plastic. If credit card balances are stacked high with what MP Dunleavey of msn.money calls lifestyle debt, it is time to place a moratorium on credit cards and how they're used. Lifestyle debt is not about car repairs or medical bills; it's about frivolously spending more than you earn on things like too much shopping and dining out. Debt can only be solved by living beneath your income.