Millions of Americans are stuck under a considerable amount of debt. They have credit card debt, underwater mortgages, and a shocking amount of student loan debt. These debts consume a considerable portion of their paychecks each month. Thankfully there are many strategies at an individual’s disposal to help fight back against these debt levels. Such strategies make it easier for individuals to reduce both their principal and their interest payments in a wide variety of instances.

Embrace debt laddering

Debt laddering is a technique that everyone who is in debt should start using as quickly as possible. It is a way to have an individual’s payments go as far as possible. This theory is applicable to individuals who have debts from a number of different sources. In many instances, different debt sources have different interest rates. Debt laddering involves reducing all payments to their minimum level for every debt except the one with the highest interest rate. 

Individuals then send over as much money as possible to their debt with the highest interest rate until that debt is paid off. They then move on to the debt with the second-highest interest rate and so on. This strategy reduces the amount of interest that high-interest debt sources can pile up on an individual’s overall debts. It can be a strategy for reducing payments over time that takes almost no time and no extra effort on the part of an individual. 

Look for low-interest loans

There are a handful of plans for consolidation that individuals should pursue while trying to get out of debt. Perhaps the most common plan is to secure a loan from a bank or credit union at a lower interest rate than an individual’s existing debts. The individual can then use that money to pay off their other debts and only focus on paying back the one loan from the bank or credit union. This approach has become popular in recent years as the internet has allowed individuals to shop around for the best bank loan rates. It can greatly simplify the debt payment process as well. Individuals only have to worry about one account to send money to and one set of parameters.

Explore repayment plans

Individuals may look at cheap repayment plans as an easy solution to their debt woes. However, these individuals should steer clear of any plan or company that offers to consolidate and forgive all of their debts instantly. Instead, they should lean towards debt consolidation companies like Mountain Ridge Associates that help individuals navigate their consolidation, repayment, and settlement options.

Debt consolidation companies help individuals learn which repayment and settlement plans can and cannot harm an individual’s credit score. Repayment plans rarely harm an individual’s credit score. They are most often used to ensure that an individual has the time and means to pay off a particular debt. In some instances, they can use a repayment plan to secure at least a modest level of loan forgiveness. This approach is part of the federal government’s student loan forgiveness/repayment plan. 

The repayment plan requires debtors to pay a portion of their income and not enter into delinquency for a period of years. Individuals who have federal student loans can enroll for an even more generous forgiveness plan by working for a company or organization that performs a public service as identified by the federal government. In the forgiveness plan, individuals pay a portion of their income towards the debt for ten years and are then able to have the rest forgiven.

Settlement plans are significantly different from repayment plans. These plans can often harm an individual’s credit score, but not all settlement plans are created equally. For instance, IRS settlement plans are some of the most generous to an individual’s credit score. They provide minimal impact at a level far lower than the hit an individual’s credit score takes when they continue to owe a considerable amount of money to the IRS. 

Other repayment plans may be much more detrimental to an individual’s credit report. A settlement plan from a credit card company may result in a severe hit to a person’s credit. In many instances, settlement plans for considerable debts are only available after some sort of bankruptcy proceeding. Bankruptcy devastates an individual’s credit score and his or her ability to gain credit for up to seven years. In most instances, individuals need to go through every potential alternative that they can before even considering settlement plans.

Expand income

Expanding one’s income is a part of combating debt that is often ignored. Many individuals focus on cutting costs and expenses when they look at how to reduce their deb, but increasing the money coming into a household is often just as effective as reducing the money leaving that household. Individuals can increase this income in a number of different ways. They can utilize opportunities to make money working tech support or doing transcription tasks on the internet. Individuals can take advantage of the opportunities provided by the gig economy. 

Driving, design, and transporting packages are all part-time jobs that individuals can adopt in their time away from their full-time jobs. Finally, individuals can consider taking on an official part-time job. Temp agencies can provide them with positions that have flexible hours and give them an opportunity to do something they enjoy. A temp job may also reduce stress by limiting the hours and parameters of a job. Individuals and employers will therefore know that they are only at this job until their debts are fully paid off.

Conclusion

Escaping debt can be a harrowing proposal. Some individuals live their entire lives under a significant amount of debt. The best step to take is to work with a debt consolidation partner and formulate a plan that uses as many legitimate debt-fighting tools as possible. Such a plan can be applicable for most levels of debt and income. No matter the problem, having a plan and implementing it over a period of time can ensure that individuals tackle and eventually solve their debt problems.