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overcoming debt

Using loans and credit cards as financial tools isn’t a bad thing. However, sometimes, debt can become troublesome.

If you’re ready to free yourself from debt, these tips can help you bounce back and get on the path to financial freedom.

Tip #1: Get Serious About Debt Management
When facing debt, the first step is to confront it head-on. Start by looking carefully at your budget. Identify exactly where your money is going and pinpoint problem areas where you can cut back or reallocate funds to prioritize your debt repayment. This process not only helps you understand your financial habits but also empowers you to make intentional decisions in the future.

Next, gather all the information about your current loans and credit cards. Include statements, interest rates, balances, and payment schedules. Use this information to create a comprehensive overview to serve as the foundation for your debt management strategy.

Here are some tactics you may consider incorporating into your overall debt management strategy:

Give your credit cards a break until you can get back on track. It can be challenging if you rely on them to make ends meet. Focus on creating a more realistic budget and be intentional about cutting unnecessary expenses.
Hold off on making any large purchases for the time being. Wait until your finances rebound and you’re on better financial footing.

Tip #2: Seek Help to Explore Your Options
Don’t hesitate to contact your lenders and financial institutions to ask what options may be available. Contrary to popular belief, most financial institutions are willing and able to help borrowers facing economic hardships. The trick is that you must be proactive and ask for assistance – waiting until after a loan or payment due date can restrict the options available.

Here are some solutions that may be available from your lender or financial institution:

  • Restructure Your Loan: Loan restructuring involves modifying the terms of an existing loan agreement to make it more manageable for you. Modifications can include extending the repayment period or reducing the interest rate, both of which would leave you with a lower monthly payment.
  • Personal Loan: A personal loan allows you to combine multiple debts, including loans and credit cards, into a single loan. It makes managing your finances much easier as you are left with only one monthly payment, typically at a much lower interest rate. As a result, you immediately save money and can reduce your reliance on credit cards.
  • Credit Card Balance Transfer: With a balance transfer, you move the balances from one or more of your current credit cards to a new card, ideally at a much lower interest rate. This option allows you to streamline your credit card obligations into one solution and instantly reduces your monthly interest charges.
  • Home Equity Loan or Line of Credit: Both options allow homeowners to borrow against the equity in their property. With a Home Equity Loan, borrowers receive a lump sum upfront, while a Home Equity Line of Credit (HELOC) provides a revolving credit line that can be accessed as needed. Both tend to have lower interest rates than other forms of borrowing, as they are secured by the value of the home.
  • Skip-a-Pay: Many lenders and financial institutions offer the option to skip one monthly payment on eligible credit cards and loans – as long as the account is in good standing. Taking a break from your payments for one month can allow you to funnel that extra money elsewhere to help you get back on track.

Tip #3: Prioritize Your Credit Score
If you’ve been struggling with debt, your credit score has likely taken a hit. But don’t lose hope! Stay focused on the bigger picture. The best step you can take to decrease your debt is to secure the lowest interest rates possible – especially when applying for a debt consolidation loan. Improving your credit score will help you qualify for lower rates and ultimately reduce your debt burden.

You can view your credit score by logging into your Reliant account in online banking or the Reliant app.

Tip #5: Stay Focused and Optimistic
It’s essential to remain focused on your financial journey and maintain a positive mindset throughout the process of debt management. Keep your eyes on the prize, and don’t get discouraged. Celebrate small victories along the way to keep yourself motivated, whether it’s paying off a good chunk of your balance or sticking to your budget for the whole month.

Embrace the journey to financial freedom and remember that the goal is progress, not perfection. Each step forward brings you closer to your goals.

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