Are you feeling overwhelmed by debt? Follow these steps using our free resources to finally become free:
Step 1. Evaluate Your Debt Situation
The first step in eliminating debt is figuring out exactly how much debt you have, what your interest rates are, and calculating your total monthly debt payment.
To help you do this, we’ve created a set of spreadsheets that are designed to organized your debts. Simply plug your personal debt information into the spreadsheets and they will calculate your total debt automatically. To download the free debt evaluation spreadsheets and learn how to use them, visit the Debt Evaluation page.
Step 2. Calculate Your Monthly Living Costs and Income
After you know exactly how much debt you have, the next step is calculating your monthly living costs and income. The amount of money you make and spend each month is a major factor in deciding the best strategy to reduce your debt.
We’ve also created spreadsheets you can use to calculate income and monthly living costs. Download them and read the instructions on our Debt Evaluation page.
Step 3. Examine Your Options and Make a Plan
Now that you know how much you owe each month on your debts and the amount of money you have left over after your monthly expenses are paid, you can determine if paying off your debts as they stand is a viable option.
Option 1. Make Your Payments as Agreed Upon
If you can afford to make your debt payments, we strongly suggest that you do so. Not only is it morally right to honor your obligations, but failing to pay will seriously damage your credit score and could possibly lead to legal judgements against you and liens on your wages and personal property. If you want to borrow money in the future for a large purchase such as a house or a car, you will have to pay a significantly higher interest rate, if you can get credit at all.
If you can’t afford to make your monthly debt payments, then you should consider alternative debt relief strategies. Although there are tradeoffs with every option, debt relief can help you reduce the amount you owe, negotiate lower interest rates, and get debt collectors off your back.
The biggest downside to debt relief is that it will have a negative impact on your credit score. This is because when you negotiate a lower interest rate or principal amount, you are breaking the agreement you made with your creditors. On the other hand, if you can’t afford to make your debt payments, you will almost certainly be making late payments or failing to pay entirely, so your credit score will be damaged either way.
Another potential downside of debt relief services is that they sometimes come at a high price. The debt relief industry is known to have bad actors who charge their clients high upfront fees and provide little value in return. When considering a debt relief company, it’s extremely important to do your research and make sure you are working with a reputable organization. Perhaps the best option of all is foregoing a debt relief company and negotiating with creditors yourself.
Debt Relief Options
There are 3 primary debt relief options:
- Debt Management – Debt management focuses on creating a plan to pay and negotiating lower interest rates from your creditors. Learn all about debt management from our library of debt management articles.
- Debt Consolidation – With debt consolidation, the debtor takes a debt consolidation loan which is used to pay off all their other debts at once. This allows them to eliminate high interest debts and consolidate all they owe into one payment at a lower interest rate. Learn all about debt consolidation from our library of debt consolidation articles.
- Debt Settlement – Debt settlement involves negotiating with your creditors to accept a lower amount of principal and/or lower interest rate. This can dramatically reduce your debt and get your creditors to end their collection attempts. Learn all about debt settlement in our library of debt settlement articles.
What Else Should You Know?
In order to make the best the decision with your debt, it’s important that you understand how debt and credit work. This will give you a broad understanding of how the system works, what your creditors’ motivations are, and how you can arrive at the best result.
Important topics include:
- Credit Scores and Credit Repair – Learn how lenders evaluate potential borrowers, how you can damage your credit, and how to improve your credit if it has been damaged.
- Debt Collection – Learn about how debt collectors think, what they want, and what they can and cannot do when attempting to collect a debt.
- Bankruptcy – Bankruptcy is the option of last resort, but if your debt is so staggering that you believe you have no other alternative, it’s important to understand how bankruptcy works and the different options available to you.
If you have specific questions, we encourage you to search our website, which contains nearly 300 articles on debt and credit topics. If you can’t find what you’re looking for, then contact us and we’ll see if we can help.
Looking for more information? Browse our library of debt and credit articles to find the answers you need.
Debt Management Articles
- What is a debt management plan?
- Debt Management Services
- Debt Management Programs
- Top Debt Management Companies (For Profit)
- Analyzing a Sample Debt Management Plan
- Avoiding Shady Debt Management Companies
- Credit Card Debt Management: An Overview
- Credit Card Debt Management Plans
- Credit Counseling vs Debt Management
- Debt Management Counseling
- Debt Management Solutions: An Overview
- Debt Management Tips
- Debt Management vs. Debt Consolidation: What’s the Difference?
- Finding Debt Management Online
- Getting Trustworthy Debt Management Help
- How Does Debt Management Work?
- Non-Profit Debt Management Organizations
- Debt Management Advice: Who can it benefit?
Debt Consolidation Articles
- Best Debt Consolidation Companies: Which kind is right for you?
- Business Debt Consolidation: The Basics
- Consumer Debt Consolidation: The Basics
- Debt Consolidation Help: The good and the bad
- Debt Consolidation Loans – The Basics
- Debt Consolidation Programs: An Overview
- Debt Consolidation Reviews: Where to Find Them
- Debt Consolidation Services: A Guide
- Debt Consolidation vs. Credit Counseling
- How to Evaluate Debt Consolidation Companies
- Non Profit Debt Consolidation: The low cost way to pay off debt
- Online Debt Consolidation: A Guide
- Personal Loans for Debt Consolidation
- Secured Debt Consolidation: An Overview
- Secured vs. Unsecured Debt Consolidation Loans
- Will Debt Consolidation Lead to Bad Credit?
Credit Scores and Credit Reporting
- Annual Credit Report Scams
- Business Credit Report: An Overview
- Credit Report Monitoring
- Credit Reporting Agencies
- Credit Score Scale: Find out where you stand
- How Credit Scoring Works
- How To Calculate Your Credit Score
- How to Check Your Credit Score
- How to Dispute a Credit Report
- How to Get Your Free Annual Credit Report
- How to Improve Your Credit Score in 4 Steps
- What is a Good Credit Score?
- What is Your Personal Credit Report?
- Online Credit Report Information
Credit Card Debt Articles
- Consolidating Credit Card Debt
- Credit Card Consolidation Services
- Credit Card Debt Consolidation Loans
- Credit Card Debt Forgiveness
- Credit Card Debt Negotiation
- Credit Card Debt Reduction
- Credit Card Debt Relief: Know your options
- Credit Card Debt Solutions: Know your options
- Get Rid of Credit Card Debt
- Getting Help with Credit Card Debt
- How Bankruptcy Affects Credit Card Debt
- How to Eliminate Credit Card Debt
- How to Pay Off Credit Card Debt
- Non Profit Credit Card Debt Consolidation
- Settling Credit Card Debt
- Getting Out of Credit Card Debt
- Credit Card Debt Consolidation Companies
- Credit Card Debt Counseling
- Debt Collection Agencies: What you should know
- Debt Collection Laws – An Overview
- Debt Collection Letter Template
- Debt Collection Tactics
- Debt Collection Techniques
- Debt Collection: Statute of Limitations
- Tips for Dealing with Debt Collection
- Understanding the Fair Debt Collection Practices Act
- Debt Collection Guidelines
- Consumer Debt Negotiation
- Debt Negotiation Advice: Top 5 Tips
- Debt Negotiation Attorney: Should you hire one?
- Debt Negotiation Companies
- Debt Negotiation Letters: Tips and Examples
- Debt Negotiation Services
- Tax Debt Negotiation
- Credit Card Debt Negotiation
- Debt Negotiation Programs
- Business Debt Relief: An Overview
- Consumer Debt Relief: Know your options
- Debt Relief Grants: Understanding the basics
- Debt Relief Order: Understanding the basics
- Debt Relief Programs: A guide
- Debt Relief Scams: What to watch out for
- Debt Relief Services: A Guide
- Debt Relief Solutions: Know your options
- Emergency Debt Relief: How to get help
- National Debt Relief Initiative: How can it help you?
- National Debt Relief Program: A guide
- Non Profit Debt Relief
- Tax / IRS Debt Relief
- Top Debt Relief Companies
- Debt Relief Counseling
- Choosing a Credit Repair Business
- Choosing a Credit Repair Program
- Credit Repair Advice
- Credit Repair Attorney: Finding the right one
- Credit Repair Companies: What you should know
- Credit Repair Help
- Credit Repair Letters
- Credit Repair Services: An Overview
- Credit Repair Specialist: What they do
- Credit Repair Tips to Improve Your Credit Score
- Fast Credit Repair
- Free Credit Repair: Know the truth
- Online Credit Repair
- Do It Yourself Credit Repair
- Credit Repair Guide: Tips and Advice to Improve Bad Credit
- Credit Repair Scams
- Bankruptcy Attorneys: Do you need one?
- Bankruptcy for Businesses
- Chapter 7 vs Chapter 13 vs Chapter 11 Bankruptcy Rules
- Declaring Bankruptcy: Do you need to?
- Do It Yourself Bankruptcy
- Getting Bankruptcy Help
- How to File for Bankruptcy
- Top Alternatives to Bankruptcy
- Understanding Bankruptcy Laws: The Basics
- Using Bankruptcy to Discharge Debts
- How Filing Bankruptcy Affects Your Credit Score
- Business Debt Settlement
- Consumer Debt Settlement: The basics
- Debt Settlement Advice
- Debt Settlement Attorney: Do you need one?
- Debt Settlement Companies: An overview
- Debt Settlement Help
- Debt Settlement Negotiation: Tips and Guidelines
- Debt Settlement Program Information
- Debt Settlement Scams: How to protect yourself
- Debt Settlement Services: An overview
- Debt Settlement Solutions: An Overview
- Do It Yourself Debt Settlement: A great idea
- Example Debt Settlement Letter
- IRS / Tax Debt Settlement
- Unsecured Debt Settlement: A Primer
- Pros and Cons of Debt Settlement
- Non Profit Debt Settlement
- Credit Card Debt Settlement
- Consumer Debt Reduction
- Creating a Debt Reduction Plan
- Debt Reduction Companies
- Debt Reduction Loans
- Debt Reduction Negotiation Tips
- Debt Reduction Programs
- Debt Reduction Services: What you should know
- Non Profit Debt Reduction
- Tax Debt Reduction
- Debt Reduction Strategies
- How to Reduce Credit Card Debt
- Credit Card Debt Elimination
- Debt Elimination Companies: A Beginners Guide
- Debt Elimination Help
- Debt Elimination Plans
- Debt Elimination Programs
- Debt Elimination Scams: What to watch out for
- Debt Elimination Services
- Debt Elimination Strategies
- Business Debt Advice: What should you do?
- Dealing With Credit Card Debt Problems
- Debt Free Helplines: A Guide
- How to Become Debt Free
- How to Live Debt Free
- How to Solve Your Debt Problems
- I Wannabe Debt Free – What Should I Do?
- IVA Debt Advice: Using helplines to your benefit
- Where to Get Debt Advice Online
- Where to Get Debt Advice You Can Trust
- Debt Consolidation Advice
- Free Debt Advice: Where you should turn
- Credit Card Debt Advice
- Student Loan Debt Consolidation
- Student Loan Debt Relief
- Student Loan Forgiveness: What you should know