How to Get Debt Under Control

Getting debt under control helps you regain control of your personal finances. Carrying excess debt harms your credit score and often increases your debt-to-income ratio. This increase affects buying power when financing a car or mortgage. But with self-control, you can get debt under control. The key is learning how to live on less and fighting the urge for instant gratification.

Instructions

1

Develop a plan and determine how much you need to earn, recommends Bankrate. Paying bills without establishing a payoff goal is not efficient. Add up all your debts, decide when you want to be debt-free and work toward this goal. For example, if you want to pay off $5,000 within 12 months, you will need to provide an additional $416 a month.

2

Talk to creditors about your interest rate. Review the interest rate on your credit cards and work to get these percentages reduced, reports The Motley Fool. Reducing your rate can save you money on interest charges each month and help bring down the debt faster. If a creditor is unwilling to negotiate, shop around for a low-rate card and transfer your balances if the transfer fee does not negate the interest savings you would gain.

3

Pay lump sums on your balances to eliminate the debt quicker. Making $10 payments on a credit card with a $2,000 balance can take 200 months, or nearly 16 years, to pay off, assuming you don't add new debt. Pay more than the minimum if possible, reports The Motley Fool. Review your budget to determine how much you can spend on debt each month. For example, if you can make monthly payments of $200, you might be able to pay off the same debt balance in less than a year and save money on interest charges.

4

Take out a home equity loan to consolidate debt. Consolidating debt and paying a lower interest rate with a home equity loan can help get debt under control, states Key Bank. Talk with your lender to determine whether you're eligible to borrow money from your home's equity to pay off balances. Consider whether the closing costs of the home equity loan will offset the savings.

5

Get help. Professional services can help get debt under control. According to Key Bank, credit and debt counselors can consolidate your outstanding balances and renegotiate your rate and monthly payment with creditors and lenders. They may place a freeze on your accounts to stop the accumulation of debt, and they can create a payoff plan to help you pay down balances faster.