Amassing huge negative balances that you are financially responsible for can prove to be an extremely difficult situation for many to handle. Locating a clear and decisive path for paying off your debt is often the best solution to the problem, and there are several options you can take to get a better handle on your finances.
If your debt is becoming too much to handle, the immediate step to do is to stop shopping. That means – no more unnecessary things, such as designer coffee, nick-knacks, designer clothes, etc. And trimming the extra spending by conserving electricity, limiting your cable and water usage will help you to save some money to pay of a portion of your debt. By taking the financial responsibility seriously you will be able to assess your financial situation.
Obviously you cannot stop spending altogether, so take the time to build a monthly budget of your total living expenses and debt you have to pay. Make a master list of debt and include the following:
- Total amount of debt
- Creditor to whom it is owed
- Deadline for payments
- Amount of interest being charged
Total up the dollar amount and you will know know the full amount of the mountain you have to tackle. With that in mind you can accurately assess the situation and figure out your personal best debt solution. There are many options for debt solutions such as:
- Contacting all your creditors directly and trying to negotiate a lower interest rate on your current debts then pay more than the minimum amount due
- Tap into savings to pay down debt as earning a 3% rate of return while being charged 17% is just bad math
- Debt consolidation: you combine all your debt into one lump sum, which will be charged a lower interest rate
- Find a low interest credit card for balance transfers and use that as a free debt consolidation loan
- If you cannot figure out a path for yourself, call a debt counselor at a non-profit agency for some free advice
- If you are in way too deep, bankruptcy can be used as a final resort
It probably took months or even years of you overextending your resources to get in debt. It will probably take an equal amount of time to get out of it. Make sure to be honest about your situation, curb your spending and develop a logical course of action to follow for your best debt reduction solution.