Facing a mountain of debt is not a pretty prospect – for anybody. Debt is often accompanied with stress and grief – and other things you already know about. The good news is that there are steps that you can take that will help you to bring your debt under control. Here are some practical tips to help you find the debt solutions you need.

First, Count Up Your Total Indebtedness and Monthly Income

If you do not already know how much indebtedness you have, not counting your mortgage, then you need to sit down and total up all your debt. In addition, you need to find out how much total income you have – after taxes. This will show you what kind of money you have each month once you subtract monthly bills from monthly income. If your income is less than your monthly debts, then you will need to act quickly to make some immediate changes.

This prospect might seem a little daunting, but it’s really not all that difficult. You can do it old-school, with pen and paper, but I prefer the mod cons, so I use a budget planner spreadsheet. Get a ready made one here, as well as instructions on how to get it working (it’s an American site, but the info is good for Aussies too).

Consider Your Debt Reduction Options

If you have a lot of credit card debt, and not other kinds, then you may be able to obtain a new balance transfer credit card. This kind of credit card is valuable to you if:

• You do not put new charges on the old cards
• You are able to transfer debt without charges – or minimal charges
• You will reduce your charges as fast as possible while you have 0% interest.

Consider a Debt Loan

Taking out a debt consolidation loan to pay off your other loans can be a very good idea, although it will not work to everyone’s benefit. It will help you if:

• Your current loans have high rates of interest.
• You can get a lower interest rate and longer terms.
• You have an income that will enable you to meet payments comfortably.

In order to be considered for a debt consolidation loan, you will find that a lender will more readily work with you if you have some assets – a secured loan. Secured loans are obtained more readily because there is some collateral behind it. Don’t forget about the possibility of refinancing your loan, too.

Let Debt Consolidation Work for Your Lasting Good

Getting a new loan for debt consolidation will work best for you if you will work to pay it off as quickly as possible. Doing so will help raise your credit score if it has been hurt because of the debt and missed payments. Ideally, you would want to get a debt consolidation loan before that happens.

You want to avoid letting this new loan take its full course. It is to your advantage to pay it off quickly in order to avoid as much interest as possible. This will enable you to get out of debt quicker and enjoy the freedom of being debt free again. Debt consolidation loans work best if the end result you seek is total debt elimination. Anything less should not be looked at as a lasting solution.

Talk to Debt Counselors

Most people probably do not need to talk to debt counselors, but in some cases it will be necessary. This may be an especially good idea if:

• Your debt exceeds your income
• You have no idea what to do
• You do not handle money well
• You are considering declaring bankruptcy.

You can get the help with your debt that you need. The first step is to see where you can comfortably reduce your monthly expenses and put that money toward your existing debt. Oftentimes, with good money management and a tightening of the belt, you may be able to slim down your budget and eliminate debt on your own – although it will not happen overnight.

Photo by restlessglobetrotter

Related posts:

1. The Dark Side of Debt Consolidation
2. Be Careful with Secured Loans
3. Is Credit Card Debt Consolidation the Right Move?
4. What You Need to Know about Personal Loans
5. How NOT To Get Screwed on a Debt Consolidation Loan