If you have debt lurking around, you may be scared to deal with it – and you’re not alone. The good news is facing debt doesn’t have to be terrifying. In fact, it can be empowering to deal with your debt and start moving toward a healthier, happier financial future.
This is the time of year when we all take a good look at what scares us, so this October, consider coming up with a game plan for dealing with debt. If you work to lower your debt load, you should be able to keep more of your hard-earned money and could meet your more exciting financial goals like buying a house, traveling, retiring, or paying for college.
3 reasons debt is not that scary
At first, debt may seem frightening to even think about. When you take the time to really consider it, however, you may realize that dealing with your debt isn’t so bad. Here are a few reasons why.
It’s nothing to be ashamed of
The total U.S. consumer debt is $14.3 trillion, so it’s possible (or even likely) your friends, family, and neighbors are dealing with debt, just like you. Americans carry debt from mortgages, auto loans, credit cards, student loans, and more. Not being able to pay debt can be the result of job loss, divorce, loss of a breadwinner, or many other circumstances that can happen to anyone.
Anyone can tackle debt
You don’t have to earn a lot of money or even be good at math to set up a plan to get rid of your debt. What you do need, however, is commitment and hard work. A solid strategy that may involve earning a little more, spending a little less, or getting professional help. Begin with setting up a budget to see where your money really goes each month, and then take it from there.
It’s easier to get started than you think
No matter how much debt you have or where you are in life, you can work toward becoming debt free by just taking it one step at a time. These workplace ideas from The Muse can easily be applied to starting your plan to reach your financial goals:
- Look at the big picture
- Follow an example of a smaller success
- Find the low-hanging fruit
- Identify your biggest roadblocks
- Lay out a phased plan
- Set expectations
- Get going (this one is ours!)
In addition to these steps, there are tools out there that can simplify the process and help you meet your goals. To get started, it’s a good idea to familiarize yourself with a few of these tools, which we’ll discuss in greater detail below.
Tools to tackle debt
While there are countless tools to tackle debt, here’s a brief overview of several of the most common ones.
If you consider yourself a DIY-er, you may want to try one of these solutions. You won’t have to hire a professional or invest in a product, but you will need strong personal motivation and commitment.
- Debt snowball: The debt snowball method is where you pay off your smallest debts first, then roll the amount you used to pay those first debts into paying off larger ones.
- Debt avalanche: To help save money on interest, you should opt for the debt avalanche method where you focus on your high interest debts initially and move on to those with lower interest rates.
Debt consolidation loans
With a debt consolidation loan, you roll several debts into one. This way you won’t have to keep track of multiple payments and worry about whether you’ve made all of them on time. Since debt consolidation loans can come with lower interest rates, you may also be able to save money on interest.
Balance transfer cards
A balance transfer card could give you the chance to consolidate your credit card debt into a single credit card with a promotional rate as low as 0%. As long as you can pay off your debt by the time the promotional rate comes to an end (usually after about 12-16 months), this may be a good option. While you may be able to save on interest, you’ll need good credit to qualify for one of these cards.
If you work with a credit counseling agency, they will design a debt management plan (DMP) for you. A DMP is where a credit counselor will negotiate a lower interest rate and set you up with a payment plan that aims to free you of debt in 3 to 6 years. You’ll send monthly payments to the agency so they can distribute your funds to your creditors until you’ve paid off all your debt.
Also known as debt settlement or debt negotiation, debt relief is a program where you work with a company who will negotiate with your creditors to settle unsecured debts for less than you owe. While you can try to do this yourself, working with a professional debt relief company like Freedom Debt Relief may get you better results because of the established relationships with creditors as well as nearly a decade of experience negotiating settlements with them.
Turn to FDR for debt relief
If you’re dealing with debt and it is making you stressed, scared, or affecting your ability to pay for the things you need, a debt relief program may be a good option for you. To learn more, talk to a Freedom Debt Relief Certified Debt Consultant. They’ll help you find out if you qualify or provide information on other options you can use to resolve debt and build a stronger financial future. Get started now.
- Did the Fed Just Help You with Your Credit Card Debt? (Freedom Debt Relief)
- Balances at a Historic Low: Time to Get Credit Card Debt Under Control (Freedom Debt Relief)
- Can Debt Collectors Wipe Out Your Bank Account? (Freedom Debt Relief)
- Dealing with Debt (USAGov)