by K.D. Saffron

Created on: August 30, 2008   Last Updated: September 15, 2008

Overwhelming debt is a risky situation that further compromises ones security, therefore increasing the potential for blackmail and other undesirable behaviors. If you are in overwhelming debt, like many Americans today, the day is driven by trying to figure out where to get the next dollar to pay this bill or that bill, while all the while, we are simply "robbing Peter to pay Paul". Without a definite goal of being debt free in a number of years, nothing is likely to change. However, if a commitment is made to be debt free, then the following suggestions may work for you. It is possible to be debt free in a number of years regardless of how dismal the situation. The following are steps to take in order to get on the road that leads to a debt free life.

1. Make a comprehensive list of every debt owed and exactly how much is owed.

2. Make a complete list of all credit cards, the percentage rate, and amount owed.

3. Add all of the figures together to get a total of debt owed...that is now your personal liability.

4. Try if possible to balance transfer to the lowest percentage rate card, eliminating the higher ones...this may be accomplished by a personal loan to pay off in a lump sum. It looks far better to have one personal loan at a higher percentage rate than five or six credit cards that are "maxed out".

5. Investigate the possibility of using your home equity if you have it. Once you take the personal loan to consolidate all of your existing debt, then turn around a pay that off with a home equity loan if possible. The home equity loan will not count against you, but for you. By doing this you will also increase your credit score and show that you actually have zero debt. As well, the home equity loan interest will be tax deductible in most cases.

6. From now on, if you need to buy something or pay for something or a repair, then try to use home equity or a personal loan, that way you are using your own money to pay off that debt.

7. As a final check, contact all three of the credit reporting companies and request copies of your credit reports. Go over them carefully and make sure that they are portraying your information correctly. If you find items being reported that should not be on the report, follow all of the steps to get that information removed. That will lower your credit rating. Once you've cleaned up your credit reports, paid off the credit cards in a lump sum and paid down all of the other separate debts, request new copies of the credit reports, as

• 1
• 2
• Next Page >>