If you're like most people who have found themselves handling more debt than they're comfortable with, your dilemma didn't happen all at once. In fact, you may not have even noticed that debt was creeping up until you reached a certain tipping point in your finances where you couldn't help but notice that paying off your debt load was beginning to put a substantial dent in your available funds — and this is the point where most people begin to flounder because they feel overwhelmed. They may start missing payments, which leads to being hounded by creditors and debts eventually going to collection agencies.
If this describes your situation or if you feel as if it might describe it soon if your financial picture continues on this particular road, you're probably already started researching various ways to rescue yourself from drowning in debt. You may have already started practicing debt-reduction strategies such as taking a brown bag lunch to work, making coffee yourself rather than stopping at your favorite coffee shop on your way to work, and cutting back on eating at restaurants and other superfluous expenses. However, you certainly can save money by reining in everyday spending, it's also important to take a big-picture perspective when whittling down debt. Following are three strategies designed to help get your head back above water.
Volunteer for Overtime at Work
Debt-reduction strategists usually recommend taking on part-time work or doing odd jobs in order to make extra money to use to pay off creditors. Although it's true that every extra cent can matter when trying to dig yourself out of a financial hole, it's smarter to work overtime at your current job if possible rather than trying to piece together income out of odd jobs and part-time work. You'll save on transportation costs as well as time, so ask your boss if the company could use your services for an extra hour or two per day — you'd be surprised at how quickly this can add up.
Communicate With Your Creditors
One of the biggest mistakes made by those facing crushing debt loads is failing to communicate with their creditors. Although it's perfectly understandable that you're not going to want to answer the phone when you know it's a creditor on the other end, staying in touch with your creditors is a smart move when you're having temporary difficulties making timely payments. If they can't speak to you in person, they may assume the worst about the situation — that you have no intention of paying, and this may result in your account being sent to collections earlier than it might have been if you'd just talked with them. Accounts that wind up being sent to collection agencies will have a negative impact on your credit rating, which will only lead to more problems down the road.
Consider Debt Settlement
Debt settlement may be a good option for consumers who are so far in over their heads with credit card debt that the usual strategies simply aren't enough. For instance, if you've got several credit accounts that are substantially overdue, your creditors may decide they're better off getting whatever payment they can from you and will be willing to accept a one-time lump payment that's less than the total amount due in exchange for canceling the debt. Debt settlement may help you avoid bankruptcy, which has the potential to cast a dark shadow over your credit report for as long as 10 years. Debt settlement only stays on your credit report for seven years, and unlike bankruptcy, it isn't a matter of public record.