Help, I'm in Debt and Can't Get Out!

Debt overload has become quite common over the years. Many people are taking on more credit card debt than they can handle, or their circumstances are changing in a way that makes debt that was once manageable hard to repay. Does this sound familiar?

Why are so many people in too much debt?

Sometimes people end up in too much debt through no fault of their own. They may incur debt sensibly, but lose their jobs or become ill and unable to work. Unless they can find some way to bring their income back to the level that it was at, they could find themselves saddled with debt that they can no longer afford.

Another reason that people end up over their heads in debt is poor financial management. Credit card companies are often willing to extend credit that the borrower may not make enough money to pay back. And an increasing number of people keep multiple credit cards, which essentially multiplies their debt. Although they may be able to keep up with the minimum payments, interest keeps them in debt for many years.

How to keep your debt manageable

The best way to keep control over your debt is to not let it get out of hand in the first place. Shop around for the best possible interest rates, and keep your open accounts to a minimum. No one needs a pocketful of credit cards. One or two should be plenty.

When paying back your debt, making more than the minimum payment will prevent interest from accruing. The best thing to do is pay the balance in full each month. This will keep your credit in good shape and save you lots of money. If something comes up and you need to charge more than you can pay back in a month, stop charging until the balance is paid off.

How to get out of debt

If you're already in more debt than you can handle, all is not lost. It takes discipline, but you can get yourself out of debt on your own in most cases. The key is realizing that there is a problem before it is too late.

When you realize your debt is out of control, the first thing to do is stop taking on new debt. Then it's time to work out a budget, and start putting all of the money you can into paying off your debts. You'll need to at least make the minimum payment on everything each month, but what works best for most people is putting all of their extra money toward one debt until it's paid off, and then moving on to the next. Paying debts off in the order of highest to lowest interest is the least expensive course of action.

If you've tried to manage your debts on your own but are having trouble coming up with any extra money to put toward them, or even enough to make the minimum payment, you may need some assistance. Talk to your creditors. They may be willing to reduce your interest and payments if you tell them about your situation. If that doesn't work, credit counseling and debt consolidation are options. Bankruptcy is also an option, but it should be the last resort. It is often possible to get things under control without filing bankruptcy.

Getting into too much debt can be a scary thing. But it is often possible to regain control on your own. If not, help is available. Don't be afraid to seek it out.