There you sit or maybe stand wondering how in the world you are ever going to be able to get out of debt. One of the problems with debt is that it can be very easy to get into but very difficult to get out of. We’ve become a very credit-centric society. In fact, it’s almost impossible to get through life without borrowing money – whether it’s in the form of a mortgage, an auto loan or credit card debt.
Fortunately, there are debt solutions available if you are willing to do the necessary work. That’s because, make no mistake about it, getting out of debt requires work and self-discipline. And there’s no doubt about the fact that getting out of debt isn’t half so much fun as it was getting into it – especially when it comes to credit cards.
The good and bad news about debt solutions
First, the bad news. There are really no debt solutions for what are called secured debts. These are debts where you were required to use an asset as collateral such as your house or your automobile. And while student loan debts are technically not secured debts, there is also not much you can do about them except pay them off. In fact, you can’t get rid of student loan debts even through bankruptcy – thanks to our U.S. Congress.
The good news is that there are debt solutions for unsecured debts. Medical debts, credit card debts and personal loans are examples of unsecured debts as you were not required to put up any sort of asset to secure them and there are debt solutions for them.
Solution number one: Cut your variable expenses
A good first step is to sit down and list all of your debts and then divide them into two columns. The first column should be fixed expenses such as your mortgage or rent, your automobile payment, student loan debt and so forth. The second column should be variable expenses. This would include groceries, dining out, clothes, entertainment, utilities and, yes, your unsecured debts.
Next, review all your variable expenses, especially things like your cable and Internet bills, health club memberships and cell phone bills. The odds are that you can find cheaper alternatives than what you currently have. For example, you might be able to drop that health club membership and find a different cable package that would cost less than what you’re currently paying. Cell phone plans have become much more competitive recently and with a little homework you should be able to find one that costs much less than your current one. The objective here is to cut these costs as much as possible to free up money to pay down your debts.
Other variable expenses you should take a hard look at include clothing, food, dining out and entertainment. These are areas where it should be easy for you to cut your spending without sacrificing much. As an example of this, most people find they can cut their grocery spending by as much as forty percent just by menu planning, careful shopping and the use of coupons.
Solution number two: Consolidate your debts
One of the things that might be making you crazy about your debts is the need to keep track of all of your payments, their due dates and their minimum payments. In the area of debt solutions, one easy answer is consolidation. You could do this by getting a debt consolidation loan and paying off all of your other debts. You would then have just one payment a month and it would probably be dramatically lower than the sum of the payments you are currently making.
Another way to consolidate your debts is through debt negotiation. This is where you hire a BBB accredited company like National Debt Relief to settle your debts for less than you owe. Once your debts have been settled they will become consolidated in that you will then have just one payment to make a month to National Debt Relief or whatever settlement company you choose. And again, it should be much less than the sum of your current payments.
Solution number three: Credit counseling
You may have heard of credit counseling but not know exactly how it works. It’s one of the more popular debt solutions because it doesn’t require that you borrow any more money. The simplest explanation of this is that you find a trustworthy, non-profit credit-counseling agency and let it develop a debt management plan or DMP for you.
The agency will assign you a counselor that will review all of your finances and determine how much you can afford to pay on each of your debts. He or she will then contact your creditors to see if they would be willing to accept those payments. If so, you will then have a payment plan with the credit-counseling agency whereby you send it a check each month and it then distributes the funds to your creditors. This is actually yet another way to consolidate your debts.
Which one of these debt solutions would be best for you? That’s a question that only you can answer. But if you’re willing to buckle down and do the work any one of them could help you get your debts under control or even paid off and wouldn’t that be a wonderful thing?