Being in debt can seem like you are under slavery. The constant thoughts of having to look for ways of repaying your debts can place your mind in a mental slavery such that you end up not thinking about anything else. Debt reduction is not rocket science, but it takes some mental strength and effort to come out of your debts.Discussed below are some ideas for debt relief
How Can I Get Out of Debt?
1. Expense reduction.This is a form of frugal living. Critically check your daily, weekly and monthly expenses against your budget and income. Cut on any unnecessary and extravagant expenses and then use the money saved on such reductions to pay off your debts. This is a very effective way of paying off your debts. Such expenses may include membership’s fees, vacations, eating out in restaurants among others.
2. Settle debts and reduce credit card purchases.The best and quickest way of reducing debts is to pay up your already existing debts when they are due. Many debtors allow you to pay up a fraction of the debts you owe. You should try as much as possible to pay off your debts when they fall due to prevent paying extra interest charges. At the same time, you should avoid living on credit cards and strictly buy goods and services using cash. Any further credit purchases increases your debts.
3. Move to a smaller house and have a yard sale.If you live in a large house you probably have a lot of things you do not use and so you do not need. It is prudent to move to a smaller house and have a yard sale whereby you can generate cash from the sale of those items you do not need and then use the cash generated to pay off some of your debts. This is a fast way of liquefying the junk around your house. These items may include old clothes, furniture, old car, house wares among many others.
4. Use of coupons.Coupons are a good way of reducing expenses as far as groceries and other items are concerned. The money saved on coupon use can be used to boost your debt repayment efforts.
5. Do it yourself.If you are in the habit of hiring people to do some of the domestic chores such as grass cutting, cleaning the pool, washing the car, gardening, house cleaning among many others, it is high time you try to do some of these things by yourself. The exercise is both healthy to your body and your pocket. You can use the money saved on doing these chores to pay off your debts.
6. File for bankruptcy. If you are seriously in debts and you have not been able to pay your debts for periods exceeding six months, the chapter 7 bankruptcy is an option you can use to reduce your debts. This is especially useful to those who are in a severe financial distress by talking to an attorney who will ascertain they are truly bankrupt and so their debtors can not touch them
7. Debt consolidation loan.This is not a quick form of debt relief since it can take quite some time to pay off your debts. The idea is to pay off loans and debts of higher interest rates by borrowing cheaper loans and using the proceeds to do so.
8. Debt settlement program. With a debt settlement program a person must first be behind on all of their debts. Once their accounts are all sent to a collection agency, negotiations start. One by one a debt settlement company will settle and pay off each of your creditors. This program will improve your debt to income ratio by the time you graduate, but while enrolled on the program it will lower your credit score. People often pay back less than 40% of what they owe on each of their unsecured debts, by the time they graduate the program. (with fees included)
Attorney based debt settlement programs provide their client’s with legal protection and lawsuit defense while enrolled on the program. With an attorney based debt settlement program a person’s debt collectors will be required to direct all communication to their legal team. This is the law under the Fair Debt Collection Practices Act.
9. Consumer credit counseling. A non-profit consumer credit counseling company will consolidate all of your bills into one payment. Within that one payment funds will then be distributed by the company to your different creditors. A consumer credit counseling company will negotiate lower interest rates on each of your accounts. With this type of program since you will have reduced interest rates, you will get out of debt in 4-5 years.
Now you won’t need to ask yourself “how can I get out of debt“. Take some of these steps and you will be on your way to financial freedom.
Phil Farell is a finance writer who loves to give useful tips to overcome bad debts. He also shares his insights on investing, financial management and lease financing. His blogs currently feature several investment articles for those who want to grow their finances.