Going to a debt consolidation agency should be avoided if at all possible. Millions of people all around the world who were in debt manage to climb out of debt – without the help of such agencies. Here are some techniques you can and should try before resorting to debt consolidation.
Cut Up Your Credit Cards
Before you embark on any journey to reduce your debt, you need to first stop adding to your debt. From this point on, commit to not spending any money you haven’t already made.
Cut up all of your credit cards. If you really must keep one card just in case an emergency comes up, give it to a family member instead.
Instruct them not to give you the card unless you explain the emergency to them and why you really need to take out that extra cash. Apart from real emergencies, from now on you only spend money you’ve made.
Use Cash Budgeting
Make a monthly budget that’s significantly less than your total income.
At the beginning of every week, take out the same amount of cash as you’ve budgeted for the week.
Throughout the week, resolve not to take out any more cash. Don’t use your debit card either.
This makes budgeting much more powerful. You can’t go over budget, because your budget is being held in cold, hard cash.
Use the Debt Snowball Method
The debt snowball method involves paying off your credit cards one at a time, starting with the smallest amount (rather than the highest interest).
Once that amount has been paid off, you can add the amount that used to be the minimum payment on that card to paying off the next card.
Always, always, always pay more than the minimum balance.
Use EBay to Take a Chunk Off Your Debt
One great way to kick-start your debt relief program is to raise some extra cash on eBay.
Take a walk through your house, including the garage, the attic and any other storage area. Take an inventory of everything you actually have.
If something hasn’t been used in six months or more, sell it. You can sell just about anything on eBay. Some items won’t fetch much, but you might be surprised at how much you can get once you put a whole batch of items up for auction.
Put all the money you raise towards paying off your debt.
These are a few things to try before seeking professional help. Doing it yourself is always cheaper and better for your credit than having someone else do it for you. If all else fails, however, seeking professional help is still often a better option than filing for bankruptcy.