What To Do If You Have Too Much Debt

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You have been ignoring the signs for months, but you just can’t ignore them any longer. You feel the weight of your bills pressing down on your and you don’t know where to turn or what to do – you are totally overwhelmed.

But what can you do?

Here are 5 action steps to take when you find yourself up to your neck and you don’t know what to do.

Negotiate A Lower Interest Rate For You Debt

The very first thing you need to do after you have accepted that you can no longer hide from your debt is to find a way to negotiate a lower interest rate for your various debts.

For instance if you are carrying a high amount of credit card debt, you can call up your credit card company and ask for a lower rate.

You use the same approach for other lenders.

Now asking for a lower rate won’t always work for you. But if you are sincere, contrite and have been a good customer there is a good chance that you will win your negotiation for a lower rate.

Imagine saving hundreds of dollars in interest with only one phone call. So it is worth conquering your fear and giving it a try.

There is another way to get a lower interest rate – debt utilization. You can use this method to lock in a lower interest rate.

This method is particularly useful for a person who is having difficulty with multiple debts. By combining all the accumulated debt into one payment with a greatly reduced interest rate you can save money and have only one payment.

Paying Off Debt With A Payment Plan

If you have negotiated a lower interest rates, it’s time to think out of the box a little.

Something you can try is to ask for a deferment on your payments, or craft a new payment plan with the financial institution.

You lost nothing by asking and you will find many institutions happy to get any amount of money versus not receiving anything.

There are also balance transfer options with credit cards that will help you decrease your monthly debt payments.

It is likely you’ll to pay a balance transfer fee -usually 5% of the total balance. This is often a lot lower than the 20% or more you’re currently paying in interest for your debts.

Direct Money To Paying Off Debt

When you have lowered your overall debt interest payment and you have stabilized your minimum payments, it’s time to take a look at your budget and see what you can adjust to direct more money toward to paying off your debt.

It goes without saying that the faster you pay down what you owe, the sooner you will be debt-free and have financial freedom.

It sounds easy, but I know from experience that allocating a certain amount of your income every month to your debts isn’t easy.

You need to take a long honest look at your budget, access your situation, create a plan and figure out a way to view your progress each month.

Make sure you read books or seek advice from experts in helping others take control of their finances.

Pay Off Debt by Curtailing Spending

Now that you have finally come to that jumping off place, got your interest rates lowered and created a do-able plan to take back control – you have to stick to that plan no matter what temptation comes your way.

You need to create a spending plan or budget if you don’t have one – right now! This will help you limit your spending to only the essentials, and prioritize paying down debt at the top of your list.

And as Dave Ramsay says make sure you allocate money for yourself for retirement and emergencies.

I suggest creating a simple budget spreadsheet or checklist In order to see what the essentials are. Here is a sample budget spreadsheet that you can use for ideas.

By using a budget you can plan and gather real data about your spending and expenses to help you adjust and pay down that debt.

Dig Deep and Get Inspiration To Pay Off Debt

If you have a lot of debt and it will take you a long time to pay it off – going for months or years is going to be a grind.

Make sure your reach out to your loved ones and friends for support. You can help yourself stay motivated by building in some gamification to your goals – giving yourself a little reward for reaching a milestone.

You can also find other support groups to help with accountability and motivation.

If you try the above suggestion and still find yourself struggling you can look into getting further help from a professional.

No matter what, you can get through this and become debt-free.

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