Wrestling with debt for years with no success? It certainly is an exhausting thing to struggle and keep your head above water. A debt isn't something you can brush off. It is like a recurring nightmare where Freddy Krueger keeps on haunting and chasing you even on dreams. And now, it is time to take back your life and follow these debt escape plan I prepared for you.
Seek help from family and friends
This will be my first suggestion. Talk to a friend or relative that has a financial capability to help you pay your debt. But make sure to have a formal agreement on paper regarding payment terms and conditions so that it wouldn't cause arguments and disputes in the future.
Pay higher than the minimum monthly payment
One of the faster ways to escape your debt is to pay higher than the minimum monthly payment. Paying only the minimum cash required each month will just lengthen your misery so pay as much as you can afford. If you have spare money allotted for your dine-outs then why not try eliminating that luxurious thing and add it up to your debt payment? Sacrificing such luxuries to quickly pay off your debt is not a bad thing.
Sacrificing savings and investments
Why not withdraw your savings and investment in order to slowly pay off your debt? It isn't a bad thing if you'll consider it carefully. If your savings and investments are making less than the cost of your debt, it might appear unwise but it isn't bad to pay off your debt first using any possible source of money you have.
Snowball method for credit card debt
A credit card is such a great help with many benefits. It can help you in buying and save money but the constant uncontrolled use of it can ruin your finances. Here are two credit card debt escape plan recommended for you:
Plan #1: First, pay the required monthly payment on all of your cards except for one. Then pay as much as you can afford on that one card so you could easily settle your balance in there quickly. Don't settle on paying for the minimum required payment only, it will just prolong the agony. Once the balance in that particular card reaches zero, try the same method for the next credit card balance you have on your list.
Plan #2: Credit card balance transfer is one alternative way you can use to wisely pay your debt and save money. This involves the transfer of the balance from one credit card account to another. Many credit card companies allow this process in most cases. All you have to do is choose the lowest interest rate you have on your cards and transfer the remaining balance from other cards into that one. Transferring a higher interest bill to a low-interest card is one excellent move that will surely save you a lot of money in interest. If the outstanding balance is too large for that low-interest card, consider Plan #1.
Using cash value life insurance
Nowadays, life insurance is a must have especially if you have a family that relies on your income. This will become of great help to you and your family if you accidentally die. However, having a debt can also become a burden to you and your family in the future. If your life insurance company provides cash value, why not borrow from your own money? In this case, you'll have longer terms to pay for the loan with interest rate to avoid interest scams less than commercial rates.
Apply for a Home Equity Loan
Owning a home is one potential source of extra cash. You can apply for a Home Equity Loan (HEL) to pay off your debts. The maximum loan amount you can acquire will be based on the current market value of your home assessed by an appraiser. Don't be a reckless borrower and make sure that you'll repay the loan or else your home could be sold to pay off the remaining debt. Your house is at stake here!
Apply for a loan using your 401(k) retirement savings plan
401(k) plan loans are one of the better ways to pay off your debt. If you have taken part in your company's 401(k) retirement saving plan then you may benefit from its loan feature where you could borrow roughly half of the accounts value. Consider this carefully though loaning using this plan is much more reasonable as it gives low-interest rate and that every dime in interest paid on this loan goes directly to your 401(k) account, it also has some downsides. Make sure to do some research and raised any questions before applying.
Nothing works for you on the early escape plans above? Want to file a bankruptcy? No, not yet. There's one more solution, try to renegotiate terms. Use your ace card which is to threaten them of filing bankruptcy since you don't have any other solution to repay your debt. This will force them to work things out with you – ask for a lower repayment term or even lower interest rate. Oftentimes, they prefer this kind or settlement rather than filing a bankruptcy.
Bankruptcy is your last resort
File a bankruptcy. This is your last and only resort if renegotiation wasn't become an option and if you really don't have the resources to pay your debt. However, you should be fully aware that filing a bankruptcy has some drawbacks.