What are the Best Options if I’m Over $20K in Debt?
Americans are saddled with massive amounts of debt. Total debt among consumers was well on its way to surpassing $14B in the latter half of 2019. Not all debt is considered bad. Your mortgage, for example, is not “bad.” However, carrying high limits exceeding $20k in debt, particularly in unsecured debt, is a burden that can bring families to the brink of bankruptcy.
Fortunately, there are many actions you can take to avoid filing for bankruptcy. A few steps can be acted upon today while others will require a bit of leg work. We’ve outlined the best options to take back control and begin eliminating your debt for good.
What You Can Do Now… Getting Rid of $20K in Debt Quickly.
There is no better time than the present to begin taking steps to eliminate your debt. Here are three to help you get started:
We all have good intentions. Each month we begin anew and try to stay within our budget as best we can. But as the days go by, it can be difficult to remember the charges made earlier in the month. By switching to a cash-only approach, you will always have a firm grasp of exactly how much money you have available to spend for the month. Using cash not only forces financial dividends, but it can open your eyes up to how much you are spending on non-essential items.
Pay Your Debt First
Making payments toward your credit cards and other debts must be a fixed line item in your budget. Too many people wait until month’s end to use whatever money is left to put toward debt. Flip the cycle and begin paying your debts before all other non-essential expenses. This makes sure you always meet minimum payments and will restrict unnecessary purchases later in the month.
Get a Side Hustle
Going cash only and paying debt first may help you find additional money to pay towards your debt each month. Searching for a side hustle or second job can drastically reduce how long it takes to pay down your debt. And it has never been easier! Services like UpWork, Takl, and Uber have opportunities for everyone, regardless of the skills you possess.
How to Take on $20k in Debt Head On…
Spending less and earning more are obvious ways to reduce your debt. But there are a couple of strategic approaches to how you pay your debt that further accelerates the chance to become debt-free.
For this strategy, you first pay the minimum payment for each debt you have. Then, throw every extra dollar allocated to reducing your debt to the smallest balance outstanding. Once the smallest debt is paid, then move on to the next smallest balance – and so on so forth. The approach gives you early wins along with momentum and encouragement that yes, you can pay down your debt.
Like the snowball methods, you first pay the minimum payment for each debt you have. Then, every extra dollar you have for debt reduction is to be used to pay down your highest interest debt first, regardless of balance size. This method can speed up the debt reduction process since you are eliminating the higher interest rate debts that are adding to your debt the fastest.
Tactics to Reduce Interest and Eliminate Balances…
Our first five options are all actions wholly within your control. By moving beyond the steps you are personally taking to reduce your debt, you can find more ways to reach your debt-free goal even faster.
High-interest rates are the enemy of being debt-free. The higher they are, the more difficult it is to dig out from under your mountain of debt. Look for opportunities to shift high-interest debt to low-interest credit cards. While your balances won’t shrink, the rate at which they can grow will. Be careful, however, as low introductory balance transfer rates are usually only valid for a limited time.
If you do not have any low-interest credit cards to transfer balances to, there are a few personal loan companies that can help. However, personal loan interest rates still tend to be on the high side. Personal loans should usually be reserved if looking to reduce multiple monthly debt payments into one. Caution is required here to ensure you are not trading multiple low-interest debts for a single higher interest rate personal loan.
Everyone’s financial circumstance is unique. For some, their debt struggle is a roller coaster of getting ahead only to fall further behind. For others, deploying every debt reduction strategy just isn’t enough. Both situations could benefit from a debt settlement program from an accredited and certified organization like Umbrella Debt Relief. Unlike all the options previously explored, debt settlement is the only strategy that can eliminate some or all of your outstanding debt.
Debt happens. And there are millions of Americans just like you struggling to find a way out. Sometimes you need to call in a professional to help. If you’re struggling with high amounts of unsecured debt, like credit cards, give us a call today for a free consultation.