What to Do When You Are Drowning in Debt?

Lidia Staron, author at OpenLoans
Lidia Staron   Head of Content
Personal Finance
I enjoy navigating people through important financial decisions.

Debt can be one of the most significant psychological strains in an adult’s life. If you have found yourself drowning in debt after a difficult period, then you can quickly start to feel like there is no way out of it. Debts pile up and continue to grow if they are not dealt with, so what can you do about this stress?

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If you want to avoid bankruptcy and find a way to get out of debt, then you will be pleased to know that you can apply for financial assistance, and you can follow advice to make sure you have the financial support needed in working your way back from debt.

How to Get Rid of Credit Card Debt?

Credit card debt as shown by an empty wallet.

Credit card debt is often the number one debt to get paid off as quickly as you possibly can. If your family budget isn’t stretching, then it can be straightforward to find yourself using your credit card more and never paying it off. The interest is enormous, so it makes far more sense to pay this off first so that high rates don’t continue to cause financial stress.

You may look at personal loans for debt consolidation, which allows you to pay off your credit card debts and have a monthly agreement to repay a specified amount, stopping debt from spiraling. If you have a credit card debt, but you also have money tied up in property, then you might be able to borrow against your equity and use this to pay off the debt.

How to Pay off Debt ASAP?

If you just want to get debts paid off as quickly as possible, you may have to look at what you own and see if a significant financial reshuffle is possible. We’ve already mentioned borrowing against your home, which can make sense if you are in financial trouble.

This could also mean selling off other assets; for example, if you own a valuable vehicle, it could be time to downgrade and use the money to pay off these debts.

Veteran Drowning in Debt

It is sad to see anyone struggling with debt, but if you are a veteran in this situation, then you might be able to get the help you need from specific support systems.

The Military Lending Act protects veterans and explains that you shouldn’t be paying overly high-interest rates. It’s important to know that if a member of the military wants to borrow some money, it may be possible to use personal loans for veterans.

Also, several military debt relief programs exist to help with counseling, as well as grants that can help you get out of debt, even if it can feel like it is all too much.

Drowning in Student Loan Debt

Student loan debt is typical, but there are ways you can get this paid off, too. Plus, in the coming months and years, the debt system will likely change in the USA. Most are in agreement that there is a debt crisis in the U.S. It is the subject of many presidential debates, and there are ideas to help with the repayment of loans. Student aid is the place to go if you are looking to find financial support for student loans.

Grants to Help Get Out of Debt

In some circumstances, there are grants available to help people get out of debt. These can be found on usa.gov.

Depending on what your financial situation is, you might be able to find help and support to reduce debt or qualify for grants. You might be able to get on Social Security or apply for other benefits such as unemployment.

If your problems stem from a lower income than you are used to or a cut in your salary, then these can be ways to try and boost your income and help to get food on the table as well as start to repay personal loans.

Tips to Improve your Financial Situation

There are several tips to try to improve your financial situation so that the stress of debt doesn’t become unbearable. You need money to pay off a mortgage, but you can also be smart about it, invest in paying the urgent debts first, and get out of the financial difficulties more quickly.

It could be that you can find help by talking to the companies and individuals to whom you owe money, as they might be understanding and help you come up with some sort of a repayment plan. They may allow you a bit longer or let you restructure debts because you are struggling. You should never be afraid of speaking with a borrower and know how to deal with debt collectors. It is in their interest to get the money eventually.

Reduce Credit Card Usage

As we’ve already established, credit card debt can be tough to shift. It is also one of the highest rate debts you are likely to have, so make sure you don’t make things worse by piling on the credit card debt. This should indeed be the last resort.

Other forms of borrowing may be preferable to credit card debt, and even if you have a decent credit rating at the moment, if you can’t repay then, your credit rating will drop. This can make it much harder to borrow in the future and leave you looking for personal loans for bad credit.

Cut Expenses

A bit of accounting is essential to ensure that you are going to save the money needed to repay your debts properly. It is vital, therefore, that you manage to cut your expenses. If you are guilty of having a lot of extras that you pay for monthly, such as subscriptions, these should be the first thing to go. Unfortunately, some luxuries may not be an option if you are drowning in debt.

You would be surprised how much you can save, and some planning can also allow you to cut your grocery expenses, for example.

You may be able to cut some expenses on tax, and tax-deductible items or tax benefits may be available, so get some tax assistance if you can, to ensure you are doing everything correctly and taking advantage of any help that is out there.

Try to Get Extra Income

It sounds so easy written on paper. Your salary might not be stretching so far anymore, so it could be time to try and find an extra income. This could mean a part-time job, or it could mean business pursuits or trying to make some money on the side. If you have a valuable skill to share with people, then you might be able to make some money offering services at the weekends, whether this is mowing lawns or tuning pianos.

Other income can be created by selling things that you no longer need, or renting out a room in your home. When times get hard, and you are worried about the debt collector, it could be time to get creative and make sure that you are maximizing your income. If you have to take drastic measures such as moving in with a friend or family member and renting out your home on Airbnb, then this could be a route to pay off debt. Whatever it takes to give yourself a bright and free financial future.

Create a Budget

This is something anyone can do, but so many people do not. It allows you to work out exactly how much debt you can be paying back each month to get out of your issues much quicker. Creating a budget doesn’t have to take forever, just make sure you account for all of your monthly outgoings and get a “cost of living” figure so that you can work out areas you might be able to save and how much you are falling short when it comes to debt.

If you don’t have a budget, then you might not fully understand your finances. What’s more, it is easy to stray and spend lots of money on things you do not need if you don’t know what you will need to spend on everyday living in a particular month. Most of us can make a budget based on monthly expenditure and what is 100% essential, and this should be your building block to start to see where you can save, how you can reduce debt, and what money is being wasted monthly.

Reduce Debt and Stress

A journey to financial wellness can feel like a long and arduous one. Still, many people have been in the position of owing large sums of money and recovered before, and with the right considerations and action plan you can get out of the place where you feel like you are drowning in debt.

We’re not pretending that being able to get out of debt is easy, but bankruptcy is not an option many people wish to take, so finding an alternative way to help get out of debt and back on the straight and narrow is worth doing.

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