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Tips for getting out of debt

• If at all possible, don't get into unmanageable debt.

• Debt Consolidation
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  This is the first thing that comes to mind to quicken debt pay-off. This usually involves taking out either a second mortgage or a low-interest debt consolidation loan by which you exchange high-interest debt for lower-interest debt. See your local bank about getting a loan that fits your needs.
  Pros
  

  • May substantially decrease your interest payments- and allow you to apply more money to your debt principal.
  • Current low interest rates favor seekers of loans.
  Pitfalls
  
  • The lower monthly payment often encourages the debtor to accept additional expenses, and drives the debtor even further into debt than before the loan.

• Refinancing

  The largest debt load on an individual typically comes from a home loan. Refinancing a mortgage is only effective when interest rates are low, and your credit rating allows you to obtain lower interest rate.
  Pros
  

  • Like debt consolidation, it decreases your interest payments and allows larger payments on principal.
  Pitfalls
  
  • Like debt consolidation, the additional cash available often yields itself to creating a greater debt load. On average, those who refinance do not end up getting out of debt any faster than those who don't.

• Credit Counseling

  Usually only sensible when you are unable to pay your monthly bills. This involves hiring a company to re-negotiate your interest rates with your debtors so that you are able to pay-off the debts instead of going bankrupt.
  Pros
  

  • Helpful to those of us who are desperate for help. Can save money.
  Pitfalls
  
  • It is like attaching a red flag to your credit report inviting creditors to qualify you as a 'high-risk'. Not as bad going bankrupt, but still damaging to your credit.
  • Your future loans will likely carry a higher interest rate- costing you more money in the long run if you are not careful.

• Pay more
  Click here to find out how much you can save with the HealDebt Calculator

  The more money you pay now, the more you will save later. Whatever you can do to increase your payments on the principal of debts will yield greater returns in the future. If cashflow does not permit you to increase payments, you may be able to "roll over" your payments from one debt onto another as they are paid off.
  Concerns

  • It requires a lot of discipline and planning not to use extra cash to pay for other things.
  • Usually if you have enough discipline to use this approach, you have enough discipline to stay out of unmanageable debt.