How To Deal With Debt

Do you feel like you’re drowning in debt? You’re not alone, but there are plenty of ways to deal with it. Whether you decide to consult with a debt relief organization or take out a consolidation loan, knowing your options will help make your decision easier. Below is a guide to how to deal with debt.

Use Cash

Examine your spending habits. Are you overspending on entertainment? Restaurants? On clothes and other accessories? Instead of charging all these purchases to a credit card, use cash. Carry around small amounts each day — $10 or $20 — for everyday spending.

Limit Spending

Achieving your financial goals requires realistic spending habits. First, look at what you currently spend and figure out where you can cut back on nonessential expenses. For example, if you spend $200 per month eating out each month, identify less expensive alternatives like bringing lunch to work.

If you need help keeping your spending in check and bringing down those balances, consider creating a budget to keep track of all your expenses. Then, it’s time to cut back on your spending and look for ways to eliminate unnecessary expenditures from your monthly budget. It may take some careful thought and self-discipline, but it’s achievable.

Debt Relief Services

When dealing with debt, it’s critical to deal with a reputable organization. You can find many options online, including credit counseling and debt settlement companies that offer services online. Because these services are regulated, they have some accountability in place. Still, before you choose one of these options, do your research and make sure you feel confident about your choice.

Credit Counseling

If you’re over your head on credit card debt, consider contacting a reputable credit counseling agency. Credit counselors can help you create a budget, which will (over time) help lower your debt and improve your credit score. Some counselors also offer advice on debt relief options; many have relationships with companies that can provide debt settlement or consolidation services at reasonable prices. Whatever you do, don’t ignore those threatening calls from creditors.

Debt Settlement

A debt settlement company may be able to negotiate a lump-sum settlement with your creditors on your behalf in exchange for forgiving part of your debt. The exact amount will vary, but according to the advocacy group American Fair Credit Council, typical settlements save Americans $1.5 Billion Annually.

Consolidation Loans

Consolidation loans consolidate all of your different types of debt into one loan. These loans typically have a lower interest rate and can be a good option. It’s important to remember that in exchange for a better interest rate on any consolidation loan, your credit gets reevaluated — and your credit score may increase.


Some people turn to bankruptcy as a last resort for eliminating debt. Bankruptcy isn’t for everyone, though, and comes with consequences, like damaging your credit score or losing certain assets. It can also take years to complete a bankruptcy proceeding — and there are no guarantees you’ll be approved. For these reasons, bankruptcy shouldn’t be your first choice when dealing with debt.

Consider Your Options

If you or someone you know is in financial hot water consider these options: self-help using realistic budgeting; debt relief services such as debt consolidation or debt management from a respected organization, credit counseling, or bankruptcy. Which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future. Click here to learn how to reduce your debt and become debt-free.

Debt Relief

There are many options to consider when deciding how to deal with debt. You may be able to solve your problem yourself, or you may need to rely on professional help from a debt relief service.


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