4 Tips for Getting Out of Under Debt to Take Charge of Your Finances

You probably know already that the United States has a massive debt problem and it is no longer news that U.S. national debt is more than $19 trillion. In fact, Congress must find a way to raise the debt ceiling when it reconvenes next month. However, what many people don’t know that is that the U.S national debt roughly mirrors the debt problem in the American citizenry.

The total consumer debt in the U.S. is currently around $12.73 trillion and it continues to rise at an alarming rate. Americans are struggling with massive personal debts and a 2016 study revealed that 73% of American consumers die in debt with an average unpaid balance of about $61,554 in mortgage debt, student loans, auto loans, credit card debt, and personal loans.

Interestingly, Americans are not the only people struggling with massive personal debts and bankruptcy. In 2015, BBC reported that more than 19,638 people went bankrupt in England and Wales in the third quarter alone. In fact, about 3,539 companies entered insolvency in the UK within the same period.

The pervasive nature of the debt cycle is overwhelming and most people would just give up the fight on debt. However, before you throw in the towel, here are four things you could do to take charge of your finances.

1. Know how bad your debts are

The first step towards fixing your debt problem and getting control of your finances is to confront your demons and know how bad your debts are. Many people shy away from confronting their debt but the size of your debt is not the problem, what matters is your debt in relation to your ability to pay it back. For instance, if your non-mortgage debts are bigger than a year’s worth of after-tax salary and you are in a serious financial mess.

2. Stop borrowing more

The second step is to stop borrowing money to fund your lifestyle; a lifestyle built on debt will only worsen your financial mess. Many financial experts say that it is practically impossible to borrow more money and hope to get out of a debt problem that way; you’ll only end up digging a deeper hole. However, if you can find a place where you can borrow money at a cheaper rate to pay off your high-interest rate debt, a well-thought out plan could help you get out of debt faster. More so, lower interest rates can let you have money left over to pay down your debt.

3. Seek help in dealing with your debt

Some debts are just bigger than you and no amount of cutting expenses and improving your credit score will get rid of them. If you are buried deep in debt, you may way to talk to your lender about getting a debt settlement agreement especially if you want to prevent yourself from bankruptcy. If you have huge student loan debt, you may also want to pursue debt forgiveness options especially if your student loans are from the government.

4. Cut the cost of your debt

Another handy tip for getting your finances back on track is to check out your credit reference files and correct duff data. When you want to apply for new cheap credit (see 2 above), checks on your credit history could turn up those errors, which could in turn lead to your application being rejected. The worst part is that such checks and rejection on your credit report could further destroy your creditworthiness.

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