By: kjmena

Debt. One small word that strikes fear in many people’s hearts and minds. And make no mistake —there are a lot of us tossing and turning at night, worrying about debt. According to the Federal government, total consumer borrowing hit a record-setting $3.24 trillion in June of this year. That’s a lot of sleepless nights.

There are a number of reasons that Americans fall into debt. Sometimes, an unexpected life event plunges a formerly debt-free individual into chaos. A sudden job loss or extended illness makes it nearly impossible to keep up with expenses. All these factors balloon a once manageable debt load into a stress-inducing sum. Or perhaps you have a steady job, but feel uncomfortable with the amount of debt you carry and want to manage your money better. Either way, you want to get a handle on your debt ledger.

Unfortunately, there is no over night cure to debt. But there is good, old-fashioned budgeting and discipline.

These three, easy-to-follow pointers can help you get back on track and live debt-free.

 1. Eliminate Unnecessary Expenses.

Sounds pretty simple, right? Of course, we only spend money on items that are absolutely necessary, right? Wrong. We probably spend more than we think on items we can definitely live without. We’re just not aware of it. That’s why you need a budget. If you’re systematic about it, budging is not difficult

Begin by writing down all your required monthly expenses, items like rent/mortgage; homeowner or renter’s insurance; auto insurance; health insurance (if you don’t get coverage from an employer); and all other necessary household outlays, including gas and electric; Internet service; and even cellphone bills. If you grocery shop weekly, you should be able to estimate how much you pay for food every month. Any loan payments get lumped into this category as well. Those expenses must be paid every month, not matter what. So, whatever money you have coming into your bank account goes to those debts first.

Then, comes the hard part. For a week, chart every dollar you fork over, everything from that Starbuck’s latte and new shoes to a gym membership and restaurant dinners. Be brutally honest, no cheating. At the end of the week, look over those non-essential expenses. You might be surprised how much debt you piled up on those “small” purchases. The good news is, these expenses are easily eliminated. You can brew your own coffee at home. Cook your own dinner. Ditch the gym and walk around the block for exercise. Those dollars saved can be put toward paying down your debt. And this debt management exercise doesn’t need to be time-consuming, labor intensive process.

2. Negotiate with your creditors.

Many times, consumers fear calling creditors, believing they will never get any debt relief. Actually, creditors are quite willing to work with customers. But you have to make the first move.

A lot can be gained by asking creditors for help. For instance, if your credit rating is solid, a credit card company may lower your interest rate. Though it won’t erase your debt balance, a lower rate can shave your monthly payments by a significant amount. Another option: Transfer high-interest-rate card balances onto a card with a lower rate.

Graduates with a heavy student debt load might want to consider consolidating those loans for lower interest payments, or exploring an income-based repayment plan.

Remember, even the smallest cut in debt can help. Over-burdened by too many expenses and too little income, you might occasionally miss a credit card payment due date. Creditors charge for those late payments. However, if you call the company and explain your situation, they will wipe out that extra fee. So don’t be afraid to ask.

The point is, you must be willing to make the effort to take control of your debt. You have nothing to lose by trying, and much to gain by reaching out to creditors.

3. Work With Outside Agencies.

First, the good news: If you don’t want to go it alone, there are third-party options available to help you manage your debt. The bad news? Each comes with pros and cons. Here are two:

Debt consolidation: With a debt consolidation loan, you bundle all your existing loans into one loan with a lower interest rate. Similar to debt settlement, you save dollars in interest costs. However, you may be in debt for a longer period of time. Also, the lender may require you to put up collateral to obtain the debt consolidation loan.

Whether you choose a debt settlement or debt consolidation firm, do your research to ensure you are dealing with a reputable organization. Another option is debt management.

Debt settlement: To lower payments, a debt settlement firm negotiates on your behalf with your creditors. They come come to an agreement on a monthly charge you pay to the debt settlement company that is then distributed to your creditors.

Using a debt settlement firm does lower monthly payments and may even reduce the principal. This is a great way to get help managing your debt as you will only have to worry about making monthly payments to the debt settlement company and they take care of the rest.

Debt Management Programs. These are sometimes within a consumer credit counseling service. As result, their sole motivation is to help you control your debt. DMPs can preserve your good credit standing and have your debt settled in several years.

Bankruptcy. Of course, bankruptcy hovers as a last resort. For some debt-laden consumers, bankruptcy may be the most viable option. However, you can avoid that unpleasant alternative by following some simple budgeting practices, working with creditors or seeking outside help if needed. So stop worrying. You can tame your debt and reduce your stress.