What You Need to Do to Get Out of Debt

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Finding yourself buried in overwhelming debt is a feeling that’s far too common in the United States—in 2015, the average American household owed over $7,000 in credit. Want to hear even scarier statistics? The average American household in debt owed $15,609. For many, seeing the amount owed can serve as a deterrent to payment; it seems insurmountable, so the problem is ignored. This may be a feeling you’re familiar with, but it’s vital to work out a plan to pay off your debt as soon as possible to avoid long-lasting consequences.

Find Some Extra Cash

If you really want to work down your debts, you’ll need supplemental income. Whether that means taking on a new, more intensive position that pays higher wages or securing a second job, extra cash flow will see you able to tackle your debts sooner. There are numerous opportunities to make some extra cash online. Just a simple Google search will show you a bevy of possibilities. Whether you want to sign up to write freelance articles for some extra cash, don’t mind answering a few survey questions for payment, or want to sample free items and write reviews on them, some extra money might be only a click away. If you do decide to freelance your personal skills, consider a site like Upwork to get in contact with searching employers. Need cash fast? Consider selling off excess material items that you no longer need or use. Utilize a site like OfferUp to get in contact with local buyers and make some money by the end of the week.

Consider the Two Basic Methods

There are two general methods for tackling debt, and each have their merits.

Snowball Method

The snowball method requires you to put your debts in order of smallest to largest in terms of amount owed. Once you’ve got this organized, set aside enough money for the minimum payment required on each debt, then funnel the rest of available money into the smallest debt. Once that debt is paid off, pay off the next, and so on and so on. This is a great method for those who are feeling overwhelmed by their debt, as a smaller amount of indebted accounts may have beneficial psychological effects and inspire you to continue paying off your debts.

Avalanche Method

In contrast, some of those in debt prefer the avalanche method. This method is ideal for anyone facing extremely high interest rates. It involves organizing debt accounts in terms of interest rate, from largest to smallest. After setting aside money for minimum payments, the rest of the available funds are funneled into the account with the highest interest rate to avoid occurring more debt over time.

Some choose to combine these two methods into a hybrid version of paying down debt, and choosing between the two is all about looking at your individual circumstances. A financial advisor at a company like Pure Financial can help you determine the best fit.

If You’re in Debt with the IRS

If your debt is owed to the government, it’s essential to settle your accounts as quickly as possible. Failing to do so could see the IRS enforcing tax liens and levies, in which your property, bank accounts, and even your wages can be seized, although this won’t occur until after you’ve received and ignored multiple notices. If you’re in hot water with the IRS, your best course of action is to hire a professional that can help you determine a plan to dig yourself out of debt as soon as possible. Experienced tax preparation companies can help you communicate with the powers that be in the government agency, and some of these companies can help you come up with special payment programs to help you sort out your government debts immediately. If you’re in debt with the IRS, check out Community Tax payment plans to see if they might work for your situation.

Finding yourself in debt can be a harrowing experience that causes real mental and physical strain, but with the right advice, assistance, and personal determination, you can see yourself paying off what’s owed sooner than you ever thought possible and living debt-free once again.

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