Are you behind on your bills? Have you tried cleaning up your debt, but it still feels like an insurmountable goal? If so, hopefully, I have some new tips on how to get out of this messy situation.

First, you need to understand that being in debt and being in heavy debt is two different things. People who are in debt have an outstanding balance, but the situation is manageable because they are paying off their debt regularly.

However, when you are in heavy debt, which many people are, you can’t see how to get out of it. This is the group that needs the most help as they have no answers.  Their heavy debt has consumed them to the point that they are not doing anything about it, which is making the problem worst.

Understanding how you got in this level of debt is just as important as learning how to get out of it. If you don’t grasp this essential part of reducing your debt, you will be back in this position down the road and you don’t want that.

For many of us, our heavy debt was caused by the 2008 recession, in which thousands of people lost their jobs.  As a desperate option, people were living off of their credit cards just to get by but planned to pay them off as soon as they got a new job.  However, when they couldn’t find a job and their unemployment ran out, the debt snowballed and so did their plan to pay it off.

I don’t have to tell you that being in debt is unwise, as you already know that for yourself.  I don’t know anyone who likes debt except for the people on the other side who profit off of your debt. The people like the bankers, the credit card companies, the department stores, the financing companies and you know the rest. These companies are thrilled that you are in heavy debt since that is how they are able to make billions of dollars from consumers like you and me.

“How do I get out of this messy situation?” you may ask.

Before I give you specifics, it’s important to understand that you have to make some major mental changes “right now” and not later.  Also, once you start working on cutting your debt, you can’t go back to your old routine. There are people who will buckle down temporarily to clear up their debt, but shortly after that, they will be in heavy debt again.  Making a mistake the first time is one thing, but doing it over and over again is just unwise and careless.

Also, you need to know upfront that going through this process will involve some pain and some sacrifices, so get ready. You can do it, just focus on the end result.

Now that we have cleared the air on that situation, let’s work on moving ahead.  Below are five approaches that you can use to reduce your debt:

  1. Go to one of your rich relatives (my imaginary one is Uncle Bruce) and ask him or her to give you the money and make a deal to pay them back using friendly terms. However, if you don’t have a rich relative, as most of us don’t have an Uncle Bruce, this plan won’t work.
  1. Make a list of all your debts and put them in order by the amount you owe. Then, start to pay them off by paying the smallest bill first until it is paid off. By using this strategy, you will see progress as you will have one less bill to worry about each month. To some people, progress is judged by a number of bills that they have to pay each month, and when it’s down to a smaller amount, progress is being made.
  1. Alternatively, make a list of all your debts in order of the interest rates. Many financial experts suggest that you use this approach. The highest interest rates should go to the top of the list and work your way down. First, pay the minimum due on each debt, then use whatever money you have left to increase the payment to the debtor that has the highest interest rate. If you use this strategy, you will reduce your most expensive debt first and that will also allow you to establish a good record with your creditors.
  1. This approach is difficult to accomplish, but it has worked in the past. Make a list of each of your debtors and approach them separately to see if they are willing to accept a payment arrangement. For example, ask them to freeze your debt and give you a low-interest rate for a certain period, which would allow you to pay the debt off in installments. If you get them to agree to this arrangement, you won’t be able to use your credit line until the debt is paid off. This will serve as a deterrent from impulsive spending, which is most likely how you got into this predicament in the first place.
  1. Have a debt consolidated agency take care of paying off your bills for you. They charge you a management fee for handling this responsibility for you.  Some people prefer to use this method, but you have to be careful because the debt is still in your name.  This point is important because if this company fails to make the payments for some reason, you are still on the hook for this debt. In other words, you have to periodically check on them to make sure that your bills are being paid to your creditors.  I have heard some horrible stories where these companies have collected people’s money but have not paid their debtors as promised. As such, this is my least favorite option that I have used of these strategies at some point in my life.  All of them have worked for me, but they did require me to make some changes in my spending habits and it will require you to do the same.

In closing, don’t let anyone tell you that reducing your debt is an easy process because it’s not. As a matter of fact, it’s hard as hell and I hated the process every day until it was completed. I guess it’s supposed to hurt you so you don’t forget how hard it is.  When you do get your debt under control, you will feel a great sense of relief. I hope that this article helps you achieve that feeling. I wish you good luck, and remember that after you get out of debt, don’t let it happen again.