6 Things to do if You’re Overwhelmed by Your Debt

overwhelmed by your debtPaying off debt is hard and very emotional. That's something I've definitely touched on before. It's even more difficult if you've got a large amount of debt that you are trying to pay off.

I also know firsthand that it's even possible to be overwhelmed by your debt because you don't know how much you have or how to get started paying it off. I've been there!

When you start to feel overwhelmed by your debt, here are 6 steps and things to consider to start making a dent in your debt.

Make a List

Gather all of your invoices and bills to see just how much you owe and to whom. Make a list as you go so you can get a grand total of all of your debt and bills.

Create a Budget

Based on the list you made, create a monthly budget of what you owe. Is your income enough to cover the monthly expenses you have? If the answer is yes, you should be in pretty good shape. However, if the answer is no, you have two choices: Increase your income, or decrease your expenses. it sounds simple, and to a point it is. But decreasing your expenses when you've grown accustomed to your lifestyle can be a hard pill to swallow.

Reduce Your Spending

If your monthly budget is greater than your income, take a hard look at where you are spending your money. Do you really need to have extra channels on your cable television bill? Maybe you could cancel your gym membership and exercise on your own instead. It’s time to make the tough decisions and get your expenses down to a manageable level.

Contact Your Creditors

Let’s face it. If your expenses are greater than your income, it’s time to take some drastic action. Give each creditor on your list a call and ask if they are willing to take lower payments. Or, if you have the means, maybe you could reach a settlement to pay the entire bill at a discount. It can’t hurt to ask, and you would be surprised at how many are willing to work with you to get a portion of the amount they are owed rather than nothing if you end up filing for bankruptcy.

Consider a Debt Consolidation Loan

A debt consolidation loan could be an option to help you if you are overwhelmed by your debt. A consolidation loan will combine several monthly payments into a single, lower payment. If you are thinking about using a debt consolidation company to accomplish this, ask about the fees they charge so you are not hit with unexpected expenses that only add to the problem. Find out how long they have been in business. You want to work with a company that has been around for a while rather than a new one you know nothing about. You also need to make sure the company you choose is reputable. You can do a search with the Better Business Bureau.

You could also try to take out a personal loan at a bank to refinance your credit card debt into one monthly payment with a lower interest rate. But if you've missed payments or have a low credit score, it could be difficult to qualify for a loan.

Remember, combining your bills to create one lower payment probably sounds like a good idea. However, it could also increase the amount of time and overall amount you will pay on what you owe, so consider this choice very carefully before signing anything.

Debt Relief

There are debt relief companies out there to help you if a debt consolidation loan is not the answer for you. Once again, you need to check each company carefully before choosing one. Find out how long they have been in business. Be wary of promises that sound so good they are nearly unbelievable. In addition, if you are not comfortable with them, move on. You could be working with them for some time, so you want to build a relationship with a company that you can trust. Always find out what fees they charge, if any.

Being overwhelmed by your debt isn't a good feeling. Taking the steps above and making some difficult choices when it comes to your spending can help you get back on track with your finances.

Have you ever felt overwhelmed by your debt? If so, what steps did you take to overcome that?

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