You Can Deal With Your Huge Debt

If you are overwhelmed by debt, you aren't alone. Millions of your fellow consumers are in debt and the U.S. government itself is reeling in big debt due to uncontrolled spending. No, I won't ask you how you got there. Instead, let's take a look at ways you can reduce your debt and take back control of your financial picture.

Debt problems are on the rise but personal bankruptcy is much more difficult to do thanks to changes in the U.S. bankruptcy code. Likely, you weren't planning bankruptcy as you know what that move can do to your credit rating for years to come. Instead, a step in the right direction is to start controlling your debt before it consumes everything that you own.

There are several ways you can reduce your debt including:

HELOC - If you own a home and are up on payments, then you are in fairly good shape. Even better is if you have owned your home for several years and have built up enough equity in it to consider a loan against its worth. A HELOC - home equity line of credit - is one method you can use to get out from underneath debt. By paying off loans with the proceeds of your equity line you can transfer high interest unsecured loans into a single low interest secured loan. Shave hundreds of dollars off of your bills every month by using a HELOC, if eligible.

Let It Snowball - You can attack your debt one bill at a time. For example, if you have three credit card payments make the minimal monthly payment on the two with the highest balances but start making bigger monthly payments on the one with the smallest outstanding balance. Once you have paid off the smallest debt, take that monthly payment amount and add it to the minimum of the next largest debt. Keep making minimum monthly payments on your largest outstanding balance. Once the second debt has been paid off, take that monthly payment and add it to the third and largest debt. Sooner than you think, all three cards will have been paid off as you used a "snowball going down the hill" effect to wipe out debt.

Refinance, Where Possible - Refinancing is more difficult to do if your credit score is low. Let's face it: you won't be approved for a loan. Instead, consider refinancing your three outstanding credit cards to one lower rate credit card. No, you may not get zero percent financing or free balance transfer but you could be eligible for a low, fixed rate that will stay constant until the debt is paid off.

No, there is no easy way to get out of debt. Putting the brakes on your spending combined with taking on a second job may be what you need to break the debt spiral. Examine your options but take action quickly to overcome your debt.