If you accumulate too much debt, you have to find a way to get out of it before the debt becomes overwhelming. There are a number of strategies that you can put into action to help you get out of debt. Some of these methods work better than others. Take some time and review all of the methods to see which ones are the most effective and efficient for your situation.
Benefits
To get out of debt, the first thing you should do is stop accumulating more debt. If you are using your credit cards, stop immediately. This will keep you from accumulating any new debt.
Paydown Method
List all of your creditors on a piece of paper, starting with the smallest balance first. Pay off your smallest balance and apply that payment to the next balance. Every time you pay off a debt, that monthly payment should go to the next debt in addition to the payment you are already paying.
Interest Rate
Call all of your creditors and negotiate a lower interest rate. With a lower interest rate, more of your payments will go to the principal balance and less to interest. This allows you to pay down the balances faster.
Bonuses
If you receive any bonuses, incentives, commissions or even tax refunds, apply them to your debts.
Settlement
You can call your creditors and offer to settle the debts. Settlements can reduce your balance by 50 percent or more. However, if you do settle with your creditors, it will show up on your credit file in a negative way and lower your credit score.
Balance Transfer
Do a balance transfer. If you can find a credit card that offers a zero percentage interest rate for a year, you can save money on finance charges. Your entire payment will go toward reducing the principal balance. When your promotional rate expires, do another balance transfer to another credit card with a promotional rate.
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