Did you know that the average American owes over $6,200 in credit card debt alone? Like many Americans, you might be in more debt than you had planned for. Thankfully, the good news is you can settle your debt quickly if you take the right steps.
If you want to learn how to get out of debt, explore these helpful tips:
5 Ways To Get Out Of Debt - Infographic
1. Create Your Own Debt-Reduction Plan
A debt-reduction plan requires careful analysis of your current expenses and a disciplined approach to pay down your debt. When you identify your debt, you can start paying it off in different ways. Some people start with their lowest amount of debt in order to feel the gratification of eliminating one obligation from their list. Others start with the debt carrying the highest interest rate because the quicker they pay that off, the more money they will save in the long run. In the meantime, they are making minimum payments on their other debts while they work to pay off one in full.
After one debt is paid off, it's important to take the amount of money you were paying and apply it to the next debt obligation on your list. This approach to paying off debt is known as the snowball method and keeps you focused on the task at hand rather than incurring more expenses. You'll see yourself progressing steadily toward debt-free status.
2. Consider a Debt Consolidation Loan
You may be able to take out a personal loan to cover all your debts, and then pay off that loan in one payment, often at a lower interest rate than what your debts carried individually. Beware of the false sense of security that comes with this approach. You need to be mindful not to run up new debt on your credit cards simply because your card balance is $0. Remember, you have shifted the debt to the loan and it is not eliminated until you have paid off the loan.
If you are a student working to pay off student debt, consider a loan to consolidate debt. This will give you one monthly payment on all of your federal student loans.
Try Our Debt Consolidation Calculator
3. Balance Transfer Credit Card Debt
If you are in credit card debt, one option to help you get out of debt is to transfer your balances to another credit card with a lower interest rate such as our Rate Advantage Visa® Credit Card1.
You can also look for a credit card that offers an introductory period for balance transfers with 0% interest for 12 – 24 months. This can give you time to pay down your debt without accruing more from high interest rates.
Learn More About Our Credit Card Payoff Calculator
4. Look Into A Debt Settlement
Debts that are overwhelming you and can't be paid back could be eligible for a debt settlement to stop the collection agencies from calling you every day. This approach involves negotiating with your creditors over a settlement amount that is lower than the amount you actually owe. While a debt settlement reduces the amount you will pay back, it comes with an aggressive timeline for repayment. You may have only 24 months to pay off 30% to 50% of your original debt owed. Consider whether this option is better than declaring bankruptcy, and if it is, be prepared for some stressful months when you're tightening your belt significantly to meet the terms of your settlement.
5. Save On Everyday Expenses
When you’re struggling to get out of debt fast, reducing your expenses and putting that savings towards your debt can help. Here are some ideas on things you can do to cut down on your everyday costs to help get out of debt faster:
- Apply your tax refund toward your debt
- Cut down on eating out – spend time meal planning
- Sell things you don’t need
- Go to the library instead of buying or renting books
- Find fun ways to enjoy yourself for less – go for a hike, bike ride or picnic
- Cut the cord – for cable, and find less expensive streaming options for TV
Coastal Can Help Find The Right Debt Relief Option For You
Being in debt isn’t fun, but you can get relief. If you need help to build a plan to get out of debt, or want to speak with us about your options, please contact us or visit us in person at one of our branches.