Debt (I am in constant overdraft)

The sooner you admit to yourself that you have a serious debt, the sooner will you be able to do something about it. Continuing with your habits that caused your debt in the first place, will do you no good. Stop it immediately and start thinking what can be done about it.

If your financial issues cause you anxiety, depression or insomnia, deal with them as quickly as possible so they don't prevent you from getting your finances in order. Check solutions for anxiety, depression, and insomnia.

Make sure you even know how much you owe, to whom, and what is the interest rate of a certain loan, credit debt or anything else. When you have a clear picture of all your debts, it will be easier for you to decide your next step.

Make a list everything you spend your money on. Food, clothing, going out, subscription, utilities, rent, everything. It will serve as a reminder that you can't continue like this, that your lifestyle is not synchronised with your earnings, and also as a tool to determine what expenses are not really that necessary.

DMP can be a great solution for you if you don't know how to deal with your debt. When you enroll in DMP, you receive free education, repayment plan, budgeting, intermediation between you and your creditors, and many other things. Check if you are eligible for DMP at credit.org.

Assess all your income and expenses. Hopefully, you will have something left after you pay for food, rent, bills, and any other expenses you cannot avoid. Everything that's left should go to debt repayment. When you know how much money you can use every month to repay your debt, you will also know how long will it take you to get rid of it and when can you start repaying your other debts, if you have them. This is good for you to know. And for your creditors as well.

If you are a compulsive debtor, a person who can't stop spending money it doesn't have, you might consider Debtors Anonymous. It's a 12-step program in which you will learn how to control your finances and develop more reasonable spending habits. For more information, visit debtorsanonymous.org.

Managing a debt can be an overwhelming experience. Your whole lifestyle has to significantly change for the next several months, or even years. If you don't have a clear goal in mind, your discipline might not be strong enough to sustain those changes as long as needed.

Start with a small goal you can easily achieve. And then another. And another. And so on. This will give you a sense of progress. As your debt decreases, your confidence and happiness will increase.

You might think this doesn't need to be stated. But surprisingly, lots of people start paying off smallest debts first, regardless of the interest rate. They feel that a psychological effect of clearing your small debts in a short amount of time will help them stay on track with their debt management.

While this argument has a certain merit, you should not ignore the interest rate. You should not focus on your $500 dollar debt with 6% interest rate while your $10.000 debt with 10% interest rate keeps piling up interests. Always pay the one that has the highest interest rate, no matter how big or small it is.

For solutions how to cut down on your expenses, check solutions for saving money.

Consider replacing everything you have with a cheaper alternative. That includes everything:

• house/apartment
• car
• electronic devices
• furniture
• clothes

For solutions how to generate extra income check No money problem.

Every time you decrease your total debt for $1000 (or any other amount you pick) reward yourself with a treat. It will make you feel good and give you an incentive for further debt decrease. Just make sure it's not something that will cause you even more financial issues.

You got some money you didn't expect as a birthday gift, work bonus, tax return, etc. Don't squander it on something unnecessary. I know it's tempting to use it on something else since this money is not a part of your repayment plan, but remember that your goal is to get rid of your debt as soon as possible. So stay disciplined and use this money to reduce your debt.

Depending on how long have you been with a certain bank or credit company, and how good of a client you've been, you might be able to lower your interest rate simply by asking your bank or credit card company for a lower interest rate.

There is usually a free phone number you can try or you can go to your bank or credit card company personally. If at first you don't succeed, don't give up. Ask to speak to a manager and explain your situation. Again, if you've been a good client so far, they just might lower your interest rate for a couple of percents.

To prevent your debt growing out of control, ask your bank or credit card company to freeze your interest rate and charges for a certain amount of time. The longer, the better. Explain to them that you are not able to pay your debt at the moment but after a certain period of time, you will be. If you have been a long-term client who never had any problems so far, they just might freeze your interest rate to make you happy.

If asking your bank to lower your interest rate didn't work, you might consider switching to another bank that offers better terms and lower interest rate on your overdraft. Shop around and see what other banks are offering. Just make sure there are no hidden fees.

Depending on how long have you been with a certain bank and how good of a client you've been, you could ask your bank to waive overdraft fees.

There is usually a free phone number you can try or you can go to your bank personally. If at first you don't succeed, don't give up. Ask to speak to a manager and explain your situation. Again, if you've been a good client so far, there is a high possibility that your bank will waive overdraft fees.

If tackling your debt all on your own proves too difficult for you, you might want to try talking to a professional. A credit counselor can help you with managing your debt, setting up your budget, and providing you with various options. 

To find a respectable counseling agency, go to justice.gov.

Always take care of your credit score. No matter how bad your financial situation is, if possible, try not to do anything that will destroy your credit score. You will need it for managing your debt and for any loans and credits you might take in the future. For maintaining your credit score, check credit score solutions.

Debt consolidation means taking one big loan, with an interest rate as low as possible, to repay all your other loans. That way you could save lots of money due to lower interest rate and go from having to deal with several creditors, to dealing with only one creditor. Talk to you credit counselor to see if this is the best option for you.

Debt settlement is one of the last options for getting rid of your debt as it will seriously damage your credit score. But, sometimes it is the best option for you. Basically, your creditors and you agree that you will pay a certain percentage of your debt and it will count as if you repaid your entire debt.

Before using this option, talk to your credit counselor to see if this is the best option for you.

It's not the most pleasant thing to do, but it certainly beats getting a high-interest loan from a bank or credit card company. Explain your situation to your friends and family and if needed, make an official agreement, with notary public present, so the person who lends you the money knows you are serious about repaying your debt to them. If needed, offer a collateral.

While repaying your debts should be a priority, spare a certain amount (as much as you can) for your emergency fund. You never know when will you need it for medical bills or some other situation that requires lots of money right away. Otherwise, you will further increase your debt.

This book will explain all you need to know about managing your debt. You can order it at Amazon.