How to Solve Your Debt Problems

Debt can be both a problem in and of itself and a symptom of a larger financial problem. Debt is burdensome because you must use money you earn today to pay off debts you incurred in the past, and the interest associated with debt always makes debt more expensive to pay off. If you manage to crawl out from under the weight of a heavy debt load, you must learn how to adopt frugal strategies to avoid getting into debt again.

Instructions

1

Budget. By crafting even a simple budget, you can see in hard figures how much money you are taking in versus how much you are spending. Without an accurate accounting of your financial situation, it is difficult to impossible to solve a debt problem.

2

Negotiate. Even if you haven't missed payments or aroused the ire of any of your creditors, it can never hurt to try to negotiate a lower interest rate or principal balance on your debt. Negotiating a lower interest rate will prevent your debt from escalating, while reducing your principal balance allows you to pay off your debt faster. Call your creditors and ask if there is any way they could offer you either of these benefits.

3

Pay as much as you can. The fastest way to solve a debt problem is to have the money to pay it off. While this is not always an option, you may consider using some of your investments or savings to pay down some or all of your debt, particularly if you are paying a high rate of interest on the debt.

4

Save. One of the reasons people get in debt in the first place is the lack of a savings plan. Having savings for emergencies allows you to avoid going into debt when the unexpected happens, such as a surprise car repair or a medical procedure. If you can weather the storm with your savings instead of a credit card, you can avoid a debt problem.

5

Live on less income than you earn. Credit makes it easy to spend more than you earn. To solve a debt problem, however, you must have the discipline to avoid spending money that isn't truly yours. View a credit card as a loan, not as money in the bank. Use it primarily for emergencies or convenience, not to buy things for which you are unable to pay.