By Samantha Seiffert
Are you a slave to your debt? Many people are. I saw a study recently that said 30 million Americans now have debt that is subject to collection. This means they are so far behind in their payments – probably on credit cards – that their accounts could be turned over to debt collectors.
I have also seen stories of people who were $100,000 or more in debt. In fact, there was one story of a couple that was $125,000 in debt and paid off every cent though it did take them five years and they both had to get second jobs. You can pay off debt without borrowing more money.
Debt consolidation
One of the most popular ways to deal with big debt is through debt consolidation. The usual way to do this is through a debt consolidation loan. However, it is also possible to consolidate debts by moving high-interest credit card debts to one that has a lower interest rate. Almost all the credit card networks now offer 0% interest balance transfer cards whereby you could transfer your credit card debts to one of their cards and not pay any interest for six or as many as 18 months – depending on the card you choose.
You can’t borrow your way out of debt
The problem with these two alternatives is that you’re basically borrowing money to pay back the money you already owe. One wise man commented some years ago, “You can’t borrow your way out of debt”. And this is the problem with these alternatives. You’re not solving your debt problem. You’re simply moving it from one place to another.
How To Pay Off Debt Without Borrowing More Money
Many financial experts, including the financial guru, Dave Ramsey, are totally opposed to debt consolidation loans because they won’t eliminate debt. The sad fact is that the only way you can eliminate debt is to pay it off. How might you do this?
Extra income – Put your thinking cap to work and you can probably come up with some creative ways to earn extra income. You might be able to take on a second shift or part-time job, sell your services on the Internet, become a handyman, or sell stuff on eBay. You could then use this extra money to pay off your debt.
Trim your spending – Do you know how much you’re spending each month and for what? If not, you should track your spending for about 30 days, then sit down and see where you could make cuts. If you’re typical, you should be able to reduce your spending on food and entertainment by several hundred dollars or more and then use this money to pay down your debt.
Cut deals with your creditors – You could contact all of your creditors, explain why you’re in trouble financially, and try to negotiate reductions of your interest rates or even your balances so that you could pay off your debts within a reasonable amount of time. Some lenders might even be willing to give you a timeout for several months to help you get organized and get your debts under control.
It won’t be fun
No, these alternatives won’t be fun. They all require hard work and patience. But paying off your debt is just a better alternative than borrowing more money and think how good you’ll feel when you have paid off all your debts and can get your life back under control.
Photo: babble.com
