5 Steps to Get Out of Crippling Debt

Have you found yourself stuck in crippling debt? Are you having trouble keeping track of all of your loans, much less paying them off?

You aren’t alone. Nearly 340 million Americans are currently in debt, and the number is only likely to grow in the coming years. But just because you find yourself in debt, doesn’t mean you’re bound to be stuck there.

So what are some ways you can get yourself out of debt? Are there strategies to start heading in the right financial direction?

That’s what we’re here to look at today. Read on to find out more about the 5 key ways you can get yourself out of crippling debt.

1. Take Stock of All Debts

It can be hard to take a look at all of your debts, but you have to face the music at one point or another. Clear off your biggest table and line up all of your outstanding debts, whether that be bills or loan statements.

Take a look at your monthly bills and see if that exceeds your net income. If they do, that’s a good indication to make some lifestyle changes. After that, look at your loan statements to see what you need to prioritize.

2. Make Plan of Attack

Try to rank your loan statements in order of how important or pertinent they are. Target loans with high interests first, while putting low-interest or tax-deductible lower on the totem pole.

If you do have high-interest debt, try to cut it out of your life. Things like high-interest credit cards don’t have a place in your wallet if you’re trying to climb out of high debt.

3. Look at Credit

While looking at your credit report might feel daunting, it provides a lot of important information about your spending and lending habits. It serves as a sort of damage report, and they’re usually free.

Once you get your credit report, check if it’s accurate and look at accounts with the highest debt. If you have high-risk accounts, look to get rid of them by prioritizing those payments.

4. Negotiate Terms

Get a list of your creditors, especially ones that are high on your priority list. Organize all of your documents before meeting them, and bring a credit counselor if need be.

If you want a debt counselor, make sure you’re getting the best of the best. Debt counselling is a great way to strategize how you can get out of your debt the right way.

Meeting with your creditors to negotiate your terms doesn’t always mean it’ll be successful. But if you can prove that you’ve been trying to avoid defaulting on loans, you might be able to renegotiate.

5. Consolidate Loans

Another strategy to climb out of crippling debt is through debt consolidation. This means you’ll be consolidating all of your debts into a single loan and a single payment. It can be done by applying for a consolidation loan or getting a bad credit loan and then using that money to manually pay every bank or lender you’re owing to.

Consolidated loans often have lower interest rates which make them easier to pay off in the long run. If you are consolidating your loans, you’ll have to create a monthly budget to make sure you’re always making payments.