According to the Federal Reserve, the average American is walking around with well over $100,000 worth of debt. This includes everything from credit card debt and student loan debt to auto loan debt and mortgage debt.
If you have too much debt hanging over your head right now, you know how crippling that it can be. It can cause a lot of stress, and it can also prevent you from living your life in the way that you want to live it.
You don’t have to let your excessive debt hold you down forever. There are a bunch of different financial strategies that you can use to eliminate your current debt load from your life once and for all.
Want to find out what some of these strategies are? Continue reading to learn about the things you might be able to do to get rid of debt for good.
Utilizing the Debt Snowball Method
When you have a mountain of debt sitting in front of you, it can be hard to see a way to get yourself out of it. You’re obviously not going to be able to pay off all your debt in a day, a week, a month, or, in some cases, even a year.
But you can pay it down if you take the right approach to doing it. A lot of people have found success with what’s called the debt snowball method in recent years.
To use the debt snowball method to pay off debt, you’ll need to take these steps:
Make a list of all your individual debts, starting with your smallest debt and building up to your biggest one
Commit yourself to making at least the minimum payments on each of your debts
Throw any extra money that you can at the smallest debt on your list until it’s paid off
Dedicate the money that you were using to pay off your smallest debt towards your second-smallest debt and pay it down aggressively until it’s paid off
Continue to work your way up the ladder by paying off each debt on your list one by one
At first, it’s going to take some time for you to get your “snowball” going. But you should be able to pay off your smallest debt within just a few months, which will get you excited to move on to the next one. It’s a great way to make your debt seem more manageable.
Consolidating Debt
While the debt snowball method has proven to be a very effective way to deal with having too much debt, it doesn’t work for everyone. So let’s also discuss some other debt-relief options that you’ll have.
Consolidating debt is an excellent option for anyone who is currently trying to pay back a bunch of different forms of debt. It’s especially useful for those who might have five or six different credit card balances that they’re trying to tackle at once.
You can take out what’s known as a debt consolidation loan and pay off all your debt balances at one time. You can then work on tackling that singular form of debt as opposed to scrambling to pay down a lot of smaller debts and struggling to do it.
Refinancing Debt
Are you having a really tough time paying down, say, an auto loan because of the high-interest rate that’s attached to it? This is a common problem that people have when it comes to trying to eliminate debt.
Rather than continuing to throw money at a loan with a balance that just won’t go down due to a high-interest rate, try refinancing that loan instead. You might be able to find another lender that will give you the money you need to pay down your auto loan while giving you a much lower interest rate on your new loan at the same time.
Your new interest rate will help you pay down your loan so much quicker than you would be able to otherwise. It’ll make your debt a thing of the past in no time.
Settling Debt
If you have so much debt right now that you’re missing debt payments all the time, it’s not going to be long before debt collectors are calling you every day (if they haven’t started already!). This can make you feel overwhelmed and hopeless.
Your creditors aren’t necessarily going to love the idea of settling your debt with you. But they might be open to doing it if they sense that they’re not going to be able to recoup the money that you owe to them in any other way.
If you’re able to get creditors to agree to settle your debts, they’ll accept a lot less than what you owe them to get things squared away. It never hurts to ask creditors if they would be willing to discuss debt settlement with you.
Filing for Bankruptcy
If you try everything else on this list and find that you’re still in debt, you might think that you’re all out of options. But there is one final thing that you can try to stop debt from destroying your life.
There are some people who would benefit greatly from filing for bankruptcy. While bankruptcy isn’t a cure-all for every kind of debt, it can help you turn your life around in some cases and get back on the right track.
Make sure you speak with a bankruptcy attorney if you decide to go down this path. They can help guide the way and talk to you about the different types of bankruptcy that might be right for you.
You Shouldn’t Let Having Too Much Debt Ruin Your Financial Future
Having too much debt is no way to live your life. It’s why you should do everything you can to stop debt from having an impact on you.
If you’re sick and tired of being in debt, try one or more of the finance strategies listed here. They can help you deal with excessive debt and pay it down quicker than you would be able to do it on your own.
Check out our blog to find more informative debt-related articles.