If you are reading this, I’m guessing that you are looking for the fastest way to get yourself out of debt. The best method for achieving this goal is not always the same for everyone, the most efficient path to a debt free life depends on your current financial situation.
Here are a few ways to cut your debt down much faster. You will not be able to take advantage of all of these options, but you should be able to use at least one or two to chop down the time it takes you to get out of debt.
Increase your debt payments. If you have the money to do so, send more than the minimum payments on your debt. And I mean A LOT more. Try to triple your credit card payments, and watch the debt plummet. You could cut 20 years or more off the time it would take you to pay off your debt compared to making just the minimum payments.
Get lower interest rates. Whether you have great credit or terrible credit, you may be able to get lower rates on your debt. Your situation will determine what method you will need to take (read the linked article to learn more). Lower interest means more of your money goes towards the principal (what you owe) rather than going to the creditor’s pockets in the form of finance charges.
Speak to a credit counselor. A credit counselor can help show you the fastest possible path out of debt. The counselor may even suggest a debt management plan, which will help you pay off your debt in as little as 3 years, get you lower interest rates, and even lower monthly payments. Be sure to find a reputable, accredited credit counseling agency. If you have no income or if you have plenty of extra money to put towards your debt (see option 1), credit counseling may not be the best option for you.
Settle your debt. Debt settlement is a controversial option, and is not for everyone. You should not consider settlement unless you are already at least 3 or 4 months behind on your debts. Even then, you may want to consider speaking to a credit counselor first. However, if your debts have already been sent to collection agencies, settling may not be a terrible option for you. Just be sure to research the pros and cons of settlement, and be prepared for everything that comes along with it.
Bankruptcy. Bankruptcy should be used only as a last resort. You should not ever file bankruptcy just to avoid having to pay your debt, because the consequences will outweigh the benefits. However, if you are out of options and have no other choice, bankruptcy can provide the clean slate you need to get a fresh start on your personal finances. If you are not eligible to file chapter 7 bankruptcy and must instead file chapter 13, then you may be better off working out some other means of paying the debt on your own.
These 5 methods are by no means your only options, but the majority of people could benefit from at least one of the above. The most important thing to remember is that, if you are in debt, take ACTION today. Procrastinating or doing nothing is choosing to slide farther and farther into debt.