Tactics for a Debt-Free Life and More Control Over Your Money

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Credit Sesame advises on how you can become debt-free and have more control over your money.

Many Americans feel like they’re stuck in quicksand due to increasing debt. Credit card bills, medical expenses, student loans, and other obligations can quickly accumulate and leave you feeling helpless.

But the truth is that you are not powerless. There are meaningful measures you can take to dig out from your financial liabilities, become debt-free and put you in more control of your money.

Recognize That You Have a Debt Problem

Got a stack of unpaid bills and invoices piling up? Chances are, you may be in a more serious debt situation than you realize.

“If you are struggling to keep up with your monthly payments or take out cash advances or short-term loans to make it to the end of the month, you likely have a serious debt problem and may need help getting out of debt,” says Claire Hunsaker, a financial advisor and founder of AskFlossie.

“Some common warning signs include falling behind on payments, facing mounting late fees and penalties, and using credit to cover basic living expenses.”

Your debt-to-income (DTI) ratio is another good metric that can help you determine if your debt problem is severe.

“You are in trouble with debt if your monthly debt payments are more than 40% of your take-home pay,” says Hunsaker. “For example, if you bring home $5,000 per month and have $2,800 in monthly debt payments, your DTI is 56%. This leaves you with only $2,200 to cover your other monthly expenses.”

Why You Want to be Debt-Free Sooner Versus Later

It’s easy to ignore bills and outstanding balances for a time. But sooner or later these liabilities will need to be paid or you risk ruining your credit and forfeiting assets. Letting debt accumulate without a plan of action is a recipe for disaster, the experts agree.

“Debt will not disappear or go away on its own. Left unaddressed, it will only worsen,” says Amy Maliga, a financial educator with nonprofit financial counseling agency Take Charge America. “The longer you wait, the more debt will accrue and the harder it will be to see a path forward. Not addressing your debt can lead to collection efforts, wage garnishments, and other legal action.”

High debt levels can also negatively impact your credit and make it harder to reach financial milestones such as purchasing a car or home. In some cases, it can even make it more difficult to rent or find a new job.

“And it can cause a strain on your health and relationship with loved ones due to constant worrying about debt,” Maliga continues.

Tactics for a Debt-Free Life

Fortunately, you can take steps and follow strategies to help solve your debt problem. These include debt settlement, debt management, bankruptcy, increased income, and getting help from a financial expert.

Debt settlement

Debt settlement is a type of debt relief that enables consumers to pay less than the total amount of the principal debt they owe. Working with a debt settlement company, a consumer who opts for debt settlement will make regular deposits into a savings account until the balance is big enough for the debt settlement company to negotiate lump-sum payments.

“During this process, the debt settlement company may advise you to stop making payments to your creditors – a tactic to get the creditor to accept a lesser amount to settle the debt. Once a creditor accepts a lump-sum payment, the account is considered paid in full,” explains Maliga.

The drawbacks to debt settlement include possibly paying high fees to the debt settlement company and damaging your credit due to missed payments. Also, you may be liable for taxes on the amount of forgiven debt, which is regarded as taxable income.

Debt management

If you have a high level of credit card debt but a consistent income, you may be a good prospect for a debt management plan.

“Nonprofit credit counseling agencies offer debt management plans to eligible consumers. These plans combine non-secured debts, such as credit card payments, into one monthly payment,” notes Maliga. “They also negotiate lower interest rates with creditors so that more of the monthly payment goes toward the principal – allowing you to pay off your debt faster than doing it on your own. Plus, once you are on a debt management plan, you will stop receiving calls and other communications from creditors or collection agencies.”

One downside to participating in a debt management plan is that you’ll likely have to transition to a budgeted, cash-only lifestyle. You’ll also have to work closely with a credit counselor to determine your eligibility based on current income, expenses, and debts.


Bankruptcy is a complicated legal process in which your consumer debt is restructured, either by eliminating the debt or setting up payment arrangements, or a combination of both.

“Although bankruptcy can offer a fresh financial start for certain borrowers, it’s not without its disadvantages,” cautions Maliga. “A bankruptcy stays on your credit report for seven years and can make it difficult to obtain new credit at reasonable rates throughout that time. Additionally, this process can be costly and leave you with debts specifically related to the bankruptcy filing. That’s why it’s best to work closely with a qualified bankruptcy attorney if possible.”

Hunsaker advises that bankruptcy should only be considered as a last resort.

Increasing income

To conquer debt, most consumers focus on better budgeting, debt management, debt settlement, or bankruptcy. But increasing your earnings can make a big difference here, too.

“A short-term second job or side hustle like freelance work, gig work with Uber or Instacart, or selling unused goods online may help you get out of debt more quickly,” Hunsaker points out.

Don’t be afraid to seek help

In addition, it can be worthwhile to seek expertise from a skilled professional.

“Consult with a financial coach, financial therapist, or certified financial planner. Or look for a nonprofit credit counseling agency in your area,” advises Jay Zigmont, a certified financial planner in Water Valley, Mississippi. “The bonus of working with an expert like this is that you can learn ways to improve your money behaviors – good habits you can use the rest of your life.”

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

Erik J. Martin
Erik J. Martin is a Chicago area-based freelance writer and public relations expert whose articles have been featured in AARP The Magazine, Reader’s Digest, The Costco Connection, The Chicago Tribune, Los Angeles Times and other publications. He often writes on topics related to real estate, business, technology, health care, insurance, and entertainment.

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