Digging Out From Debt

It can be extremely stressful to carry a heavy debt burden— especially if it has a high interest rate, such as credit card debt. Such debt can keep you from reaching your financial goals, like saving for a down payment on a home or for a comfortable retirement.

While it might seem impossible to pay off all that debt, it can be done— and the sooner, the better. Here are some tips:

• Start by not adding more debt to your load. Perhaps leave your credit cards at home. Avoid getting new cards, unless you find a good balance-transfer card, such as one that lets you transfer debt at a 0% interest rate for a year or more. Learn more about balance transfer cards at TheAscent.com. (Oh, and opt out of getting preapproved credit card offers in the mail by calling 888-567-8688, or by visiting OptOutPrescreen.com.)

• Call your credit card issuer(s) and try to negotiate a significantly lower interest rate. Many people have had success with this! You might point out that you’ve been a loyal customer, and that you can take your business elsewhere. Some cards hike your interest rate up to 25% or more if you’re late paying bills; that’s a debilitating rate, and you should aim to lower it or move on.

• Always pay at least the minimum amount due— and try to pay much more. The faster you pay off your debt to credit card companies, the less interest you’ll pay.

• Pay off your highest-interestrate debt first, as that will save you the most in interest. (Some people recommend paying off your smallest debts first, to be rid of them, but that costs more.)

• Check out our online community of people paying down debt and supporting each other through the process: Visit the “Credit Cards and Consumer Debt” discussion board at Boards.Fool.com. Some people there have paid off debts topping $100,000. It can be done!