Credit Card Debt - It Can Be Overcome

When you're in credit card debt, interest gradually accrues. If you pay the minimum payment on a loan, by the time you've paid it off, interest may very well have doubled (or even more than doubled) the initial amount you were responsible for. If you took out a loan for $20k, paying the minimum on it could result in over $40k in payment over a few decades from interest.

This is one reason student loans tend to last for many years after a young person has graduated. With that in mind, there are options you can pursue to both reduce the amount of debt you ultimately have, and help you pay off your debt quicker. Following, we'll cover the three best ways to do this:

  • Consolidate Debt With A Debt Management Plan Through Debt Relief Consultants
  • For Property Owners, Tap Into Home Equity
  • Pay More Every Month And Reduce Your Discretionary Spending

Consolidate Debt With A Debt Management Plan Through Debt Relief Consultants

Debt consolidation works like this: a "debt relief agency" or "debt consolidation group" -- or whatever they call themselves -- buys your debt. They pay off what you owe, and then give you a new consolidated sum with a different interest rate. So say you had five credit cards with $1k to $5k in debt between them. The agency would pay off the credit card groups, then combine what your debt was into one solid payment representing all your debt.

The value here is that instead of separate interest rates on each debt, now you've got a single interest rate, and it should be lower than the others combined. Also, the term of your loan may shift if you go this route, allowing more financial relief going forward.

For Property Owners, Tap Into Home Equity

If you have property, there is financial equity involved in that property, and you can tap into it. A "cash-out" home mortgage refinance can produce readily available cash, as can a reverse mortgage--though you've got to be over 65 for a reverse mortgage. Even so, this is a bit of an extreme option, and you want to make sure this is the right choice for you or your family. Consulting groups specializing in debt relief can examine your specific situation and help appraise you of what your best moves are.

Pay More Every Month And Reduce Your Discretionary Spending

This is the most secure, straightforward way to eliminate credit card debt. Figure out what you owe, and how much you're paying every month. Then, increase that payment. If you're financially close to "the line", you may have to live threadbare for a while.

Figure out where you can "trim the fat" from your monthly budget. Fast food seems cheap, but you can make more nutritious food cheaper at home if you just do your own cooking. If you're spending $10 a day on fast food, that's $280 to $310 a month, or $3,650 a year.

Are you buying a $5 coffee every day? Between fast food and coffee, you're spending $5,475 a year. You can more than cut that in half if you make food and coffee at home. Find where you're spending money unnecessarily, and simply cut that out until your debt is gone. That in itself could provide you enough resources to cover the debt.

Escaping From Under Debt

Getting away from debt is hard, but it's not impossible. Consider loan consolidation, tapping into equity, paying more on your debt principle every month, and strategically reducing your discretionary spending. These are the best debt consolidation options, but there are others; do some research to find those which best fit your particular situation.

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