Six Steps to Tackling Debt

Debt can easily get so overwhelming that you don't even know how to begin to pay it off. Here are six debt management steps to guide you as you tackle your high-interest debt.

1. Try it on your own. Self-help debt management programs don't cost anything, and they don't put your financial fate in someone else's hands. If you haven't already, try to tackle your debt on your own first. Make your debt a financial priority and develop a plan to pay it off. You can always move on to more intensive solutions if your self-help efforts fail.
2. Devote the maximum amount possible to debt payments. Your high-interest debt is costing you a bundle, so it's all right to put savings and investments on hold until you're back on track. A successful debt management program will require you to devote ever penny possible to your debt, so clean out your savings and non-retirement investments to boost your payments.
3. Be wary of high-risk debt management programs. Debt consolidation or management programs that require you to raid your retirement portfolio or put your house at stake are very risky. Debtors are often drawn to these programs because they offer very attractive interest rates. In the long run, however, these so-called solutions may actually result in additional financial turmoil. If you get behind on payments, you will incur devastating losses.
4. Focus on improving your rates. You can't manage your debt if you are plagued by excessively high interest rates. Fortunately, you can improve your interest rates in several ways. First, talk to your bank or credit union to see if you qualify for a personal loan with a decent interest rate. Chances are, a personal loan will have much lower interest rates that what you're currently paying on your credit cards and other unsecured debts. Alternatively, call your creditors to try to negotiate better rates. You might be surprised by how responsive your creditors are.
5. Be skeptical. There will always be someone trying to take advantage of you when you're besieged by high-interest debt. Debt management programs are often expensive schemes that will only put you deeper in debt. To avoid this, make sure you read all of the fine print that comes with every debt solution, consolidation program, and/or loan you sign up for.
6. Simplify your payments. You're less likely to get discouraged in the midst of your debt management efforts if your plan is a simple one that is easy to stick to. If you can streamline your debts and payments in any way, try to do so. For example, if you opt for debt consolidation, your various accounts will be joined into one payment, which can greatly reduce your stress.