When looking for debt cures that work, turn your eyes from the debt counselors who peddle their services on television. For a fee, they might help you find some measure of debt relief, but before turning over more money to get out of debt, there are steps you can take on your own to help bring down your debt and improve your credit score.
Pay Higher Interest Debts First
If you are confused about which debts to pay down, start with the higher interest debts first, then work your way down. Even if your higher interest debts have smaller balances, these balances will grow faster than your other debts because of interest. Pay down (or pay off completely) those debts first to avoid paying unnecessary amounts of interest down the road.
Pay More Than the Minimum Payment
Just because credit card companies calculate a minimum payment for you, that doesn't mean it helps you to only pay that amount. If possible, try paying double, or even triple the amount. This will help mitigate future purchases on credit you use, and it also helps you pay off credit balances you don't use. Most of a minimum payment goes to interest. If you want to pay down your debt, you have to reduce the balances.
Consolidate Debts Yourself
Instead of consolidating your debts through bankruptcy, which can cripple your credit rating for at least seven years, try consolidating your debts yourself. Move higher interest credit card balances to lower interest credit cards. Most credit card issuers charge a small fee to transfer balances, but this is a small price to pay for cutting 5 percent to 10 percent interest off of your balances. If a family member is willing to loan you a certain amount of money at low or no interest, jump on this offer and use this loan to pay off your higher interest debts.
Pay-As-You-Go System
Adopting a pay-as-you-go system, or only buying things you can afford to purchase with cash, can prevent plunging you into further debt. It takes discipline, but once you decide what you can afford per month without using credit, you can create a healthful lifestyle without the allure of unneeded credit. Once your debts are paid off, you will have already adopted a philosophy that will keep you from repeating the cycle of debt that ensnared you in the first place.
Acquire Collateral
If your debt-to-cash ratio is too high, but you still have some cash available, you might want to try to acquire some collateral. Try buying a house or car by way of auctions, which often have good homes or cars available for a small opening bid. These purchases will give you collateral that you can use to try to convince a bank to help consolidate your debts. You might be able to negotiate a lower interest rate loan than your current debts, and use your loan to pay off older and higher interest loans or credit cards.
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