You look at the pile of bills and wonder just how you compiled all of this debt. And how you're going to escape it. It's clear you need a strategy to deal with all of your creditors and prioritize your bills.
Here's how to get started:
- Stop all unnecessary spending and divert the money you would have spent on, say, gourmet coffee to your debts. If you spend $25 a week on coffee, that's $100 a month you can put toward debt.
- Get caught up on all accounts by making minimum payments. You don't want to be late on your accounts moving forward.
- Call your credit card companies to seek a lower interest rate. If you're paying less interest, it will be easier to pay off your balances.
- Once you have your interest rates settled, pay off the accounts with the highest interest rate first. Some experts will say to pay off the smallest balances first. But if that small balance has just a 10 percent interest rate but the larger one carries a 30 percent rate, it makes more sense to pay off the bigger balances.
- Find additional work. In today's gig economy, there are many ways to find side jobs. Put all of that income, after putting aside a percentage of it for taxes, toward your debt.
These strategies will help to pay down your outstanding debt. But if these tactics aren't enough to whittle down that mountain of debt, you might need other methods of debt relief or debt consolidation. Some debt settlement or relief companies could make promises they can't keep, however, so it would be wise to think twice before signing on with one. Consult with an attorney well-versed in financial issues to learn your options.