Get Out of Debt FAQ: How to Escape Quickly
The average American household is burdened with more than $35,000 of non-mortgage debt, with more than 80% of the population struggling to keep their heads above water. The nation’s consumer debt problem is growing every year, with more citizens desperate to escape and rediscover their financial freedom. If you find yourself in this position, then you may have a few questions concerning how to get out of debt—questions that we’ll aim to answer here.
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How Can I Get Out of Debt Fast?
A consolidation loan is one of the quickest ways out of debt. The idea is simple: You take out an additional loan at a reduced interest rate and use it to pay off your debt. Of course, you’re just swapping multiple debts for one big one and you’re not actually escaping debt. However, with smaller repayments and less strain on your credit report (over the long-term at least), it’s much easier to manage this new debt than your original debt.
When it comes to actually getting out of debt, there is no quick and easy way. If your debts are in a collections stage then you can negotiate with your creditors to settle them for less, but in any case, the only way out is to cough up the cash.
Can I Get out of Debt on my Own?
It’s much easier to get out of debt with help from an expert, but you can do it on your own. You just need a little willpower and perseverance. Here are some tips to help:
- Be Honest: The majority of debtors try to go it alone, too ashamed to tell partners and family members. But this just makes the problem worse. They are there to help, providing emotional and financial support.
- Confront the Issue: Gather details of all your debts and your repayments to understand how big the issue is. Don’t bury your head in the sand.
- Change Your Behaviors: Budget; sell unwanted items; stop frivolous purchases; put more money down each month; stop saving for a holiday, car or home, and start saving to clear your debts.
- Clear Your Debts: If your debts are in collections, you can arrange settlements with your creditors. If not, save more, pay more, and focus on clearing the most expensive debts first.
- Try Debt Relief: If you can’t escape using these simple methods, try debt settlement or consolidation.
Why Can’t I Escape Student Loan Debt?
Student loan debt can follow you around for years. It’s a looming, ominous shadow that sucks your finances dry and leaves you feeling like there is no escape. There is an escape, it’s just not easy.
First, look into student loan forgiveness programs and see if you qualify. These can help if you are disabled, undergoing hardship, work in a specific sector, or live in a certain area.
Secondly, look into consolidation or an income-based payment plan, both of which can help to reduce that interest and chip away at the balance.
Thirdly and finally, if the above options don’t work or apply, then look into refinancing. The only alternative is to make more money, but you don’t need us to tell you that.
Why Can’t I Escape Credit Card Debt?
Credit cards charge high-interest rates and rely on impulsive use. Consumers rarely concern themselves with whether they can or can’t afford something when they’re using a credit card, as they won’t have to deal with the consequences until later.
To escape credit card debt, just stop using your credit card. Try to limit your purchases to cash or debit, spending only the money that you actually have. Any extra cash you have at the end of the month should go towards paying off your credit card.
Obviously, it’s easier said than done and the above paragraph probably elicited a few eye-rolls and groans. If you genuinely need your card to cover purchases that you can’t afford until the end of the month, then consider a balance transfer to another card, one with a reduced rate (preferably not a rewards card, as the high rewards are offset by high interest) and one that offers a limited zero-interest period.
The money you save can go towards paying off your balance. This, in turn, will reduce the rate of interest you pay when the introductory period ends.
How to Escape Debt When You’re Broke
Getting out of debt when you’re broke or on a low income isn’t easy, but it’s not impossible either. Try the following:
- Be honest with the whole family to set their expectations and get their support.
- Eliminate all unnecessary purchases.
- Tighten your belt during the holidays—there’s no need to drop hundreds or thousands on Christmas or Thanksgiving.
- Stop using new debt to repay old debt.
- Create a budget plan, document spending, and understand every debt.
- Pay on time to avoid fees.
- Pay extra whenever you can.
- Use all financial windfalls to clear debts.
- Stop saving for holidays and other luxuries and start putting that money towards your debts.
- Put together a short-term and long-term plan.
How to Escape Debt When You Have Bad Credit
You don’t need to create more debt to cover your current debt. If you have bad credit then consolidation might be out of the question and debt settlement might be difficult, but you can still budget and utilize debt forgiveness programs and installment plans.
You can also work on building your credit while repaying your debts. Secured credit cards, which are secured against a down payment, are great for this.
Who Can Help Me Get out of Debt?
The following experts can help you to get out of debt:
- Debt settlement program
- Credit counselor
- Credit union
- Debt lawyer
Where Can I Find the Best Books on Escaping Debt?
There are many books to help you get out of debt. These books discuss payoff strategies, money-saving tips, and more. They tend to repeat a lot of the same methods and strategies, so choose one, read it cover-to-cover, and employ the methods discussed:
- Total Money Makeover – Dave Ramsey
- Richest Man in Babylon – George Clason
- How to Get Out of Debt – Jerrold Mundis
- Zero Debt – Lynnette Khalfani-Cox
- Deal with your Debt – Liz Weston
Will I Ever Get Out of Debt?
There are a lot of scary stories and statistics concerning debt. For instance, the average US consumer has close to $40,000 of non-mortgage debt; three-quarters will die in debt, and it is a leading contributor to depression, stress, and family breakdowns.
Countless Americans are earning enough to cover their interest payments, but not to make a significant impact on the principal. It can feel like there is no escape and that debt will be around forever.
The good news is that patience, dedication, and careful planning can help. It won’t happen overnight, but keep your head up, keep trying, and you can escape debt eventually.