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We are all free to choose how much debt we take on, but at one point or another the debt one assumes may become overwhelming or seem unmanageable whether it be due to layoff, a rise in interest rates or unforeseen expenses. Regardless of how one gets into debt, and why the debt may be out of control, getting out of debt is possible at least in part if not entirely through the steps illustrated in this article.

Request Lower Credit Card Interest Rates :

Many people assume credit card interest rates are non-negotiable. While this may be the impression credit card companies would like to convey, it is not the whole truth. Credit card companies will often consider verbal and/or written requests to lower interest rates for the purpose of debt relief, competitive interest or client retention. Making use of this option one of many important steps to reducing and eventually eliminating debt.

Consolidate Loans into one Low Interest Loan:

If an individual or household has accumulated a number of different loans and debt obligation over the years, the total interest being paid on these loans may be able to be reduced through a loan consolidation. Loan consolidations can include car loans, home loans, credit card loans, medical debt and other contractual forms of debt. Since the total debt on these loans can get quite high, even 1 or 2 percentage points can lead to hundreds if not thousands of dollars of savings every year. Those savings can be then be reapplied to pay off the remainder of the debt. Methods of consolidating can be achieved through refinancing mortgages, obtaining second mortgages or renegotiating loans that fall under specific categories such as multiple car loans.

Refinance Home Mortgages:

Home mortgages may include the option to refinance within the mortgage contract terms. If this can be done without penalty the choice to refinance may be prudent. Not only can this amount to lower monthly payments and less total interest paid over the life of the loan, a mortgage refinance can also be used to consolidate other loans into one mortgage loan. It is important to note that when a home is refinanced, the amortization can reset meaning the interest payments will begin as though it is a new loan. While this may not affect the size of the monthly payments it can reduce the total amount of monthly savings in comparison to existing mortgages with higher interest rates and monthly payments.

Budget:

A good budget can be a pillar of personal financial integrity whether it be individual finances, business finances or household finances. Budgets can be thought of as the guidelines and maps from which savings, expenditures, and asset allocations are managed. Strong budgeting can assist one in managing money wisely and soundly leading to potential benefits such as avoiding unnecessary fees and charges, controlling spending and maximizing savings and retained income. All these benefits can directly and indirectly be applied to the process of reducing and getting rid of debt.

Utilize Fiscal Discipline:

Another way to lower and cancel debt is fiscal discipline. Fiscal discipline is the drive behind the budget and is what motivates budgets to be implemented, adhered to and maintained. Fiscal discipline is a financial attitude that perseveres in all financial climates, situations and outcomes with the goal of optimizing financial circumstances through ongoing financial mindfulness. With consistent fiscal discipline the motivation and actions that lead to less debt can be facilitated.

Organize Financial Records and Processes:

Without organized financial records and well managed finances, bills, assets, costs, overhead expenses, and investments can go neglected to leading to un-optimized financial management scenarios. Out of control debt is one such scenario that can arise out of neglected financial record keeping because one may simply not realize how much debt one is in due to poor record management. Keeping track of records and organizing them with a good financial software or home office financial records system can be vital to staying on top of one's debt.

Lower Cost of Living :

Sometimes it may be necessary to cut costs, trim living expenditures and/or reduce luxuries for the purpose of increasing savings and lowering debt. By cutting costs one can not only reduce debt but also apply more funds to paying off any existing debt. There are many ways to cut costs with the effect of lowering cost of living including budgeting energy consumption through energy conservation techniques, eating out less, comparison shopping, canceling unnecessary services and/or memberships, driving less or adjusting one's driving behavior and so on. Reorganizing debt as mentioned above is another way to reduce the cost of living. Once one has significantly lowered the cost of living, for example by 5%, that 5% reduction in costs can be applied to eliminating debt and lowering the cost of living even more.

File for Bankruptcy:

In the worst case scenario, debt may be so out of control or unmanageable, bankruptcy may be the only option. Two types of bankruptcy used by individuals include chapter 7 and chapter 13. In the former type the debtor may be unable to pay any debt requiring a complete discharge of debt and the latter involves legally restructured debt for the purpose of facilitating manageable debt pay off. Bankruptcies can be filed independently, but the assistance of a bankruptcy attorney can greatly facilitate the paper work requirements. So long as the debt restructuring fee doesn't end up putting one in greater debt than one had been in before seeking bankruptcy assistance, then seeking legal help may be worthwhile.

Getting out of debt can be accomplished by following the right steps, and taking proper action. The more debt removal techniques are used and in conjunction with one another, the greater the potential to maximize and do away with the debt in its entirety. In most cases debt does not just vanish over night and involves some kind of debt elimination plan. A high-quality debt elimination plan may make use of several of the methods described in this article over a course of several weeks to several months with the possible end result of being debt free.

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Sources:

http://www.bankr ate.com/brm/news/financial_lit eracy/Feb07_credit_card_lower_ rate_worksheet_a1.asp

http://ww w.nolo.com/definition.cfm/Term /88378A56-EBE1-40E2-B0B399B6CC 553444/alpha/L/

http://www.inve storwords.com/4115/refinancing .html

http://fiscaldisciplinebl og.com/

http://www.businessdict ionary.com/definition/cost-of- living.html

http://financialpla n.about.com/cs/budgeting/a/Bud geting101.htm

http://abcnews.go .com/business/mellodyhobson/st ory?id=145399

http://www.uscour ts.gov/bankruptcycourts.html

Learn more about this author, A.W. Berry.
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