Do-It Yourself Solutions to Difficulty with Debt

  • By Jillian Taylor-Mancusi

If you’re struggling with your debt, there are a number of things you can do yourself to get back on track. Difficulty with debt, especially finding the money to make timely payments, can keep you up at night worrying.

Instead of tossing and turning, try some of these time-tested DIY solutions to debt problems.

Take a new look at your old budget.

Budgets should never be set in stone; they must be audited and revised frequently. The reason behind your difficulty with debt and paying your bills on time might be as simple as an outdated budget. As a general rule, it’s a good idea to revisit your budget when you:

  • Are planning a purchase
  • Gain or lose income
  • Are considering new debt such as a credit card, auto loan, or mortgage
  • Experience health or job-related problems
  • Are planning for expenses like school, vacations, or holiday gift giving
  • Are having difficulty making monthly payments

Re-check the figures you are using to determine your income and outgoing expenses. Make sure you have included all of your expenses. Next, subtract your total expenses from your credits (income). If the answer is greater than zero, you can solve your problems by readjusting where you spend your money each month. Pay your debts first, and use the rest for your other expenses. Make debt elimination your highest priority.

If your answer is a negative number, you need to either make cuts or add income.

Consolidate multiple debts into one.

Several credit cards can nickel and dime your budget into the red. For example, if you have three maxed-out credit cards that carry a high interest rate, you could easily be paying over $600 a month.  That’s just the minimum payment! If you continue to make minimum payments, it will take you over ten years to pay off your debt and cost a whopping $20,000 in interest charges.

However, if you consolidate your cards into one, you can pay off your credit cards in a much shorter amount of time, save on interest charges, and cut your payment amount by at least $100. You can also consolidate credit card debt into one card and take advantage of a no-interest period. (Note: if you do this, make sure you have a solid plan to repay the amount before the promotional period expires.)

Refinance your home or car

If your difficulty with debt can only be solved by paying off your creditors, you might want to consider refinancing your home and using the cash you receive to pay off your debts. Refinancing your home to eliminate debt is a big step and you should consider this solution carefully. Like a consolidation loan, you will being paying less and saving on interest. Also, most home refinance loans carry a much lower interest rate than consolidation loans, making a refinance a cheaper way to get rid of your debts. However, if you fall behind again, your home could be at risk.

Catching money problems before they need the help of a financial expert allows you deal with your difficulty with debt on your own. These DIY solutions can help you get your personal finances back in control.

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