Dealing with debt is not easy. It can be completely debilitating. But, in most cases, there are solutions available, even if the situation is hopeless.

First off, it is very important to understand that debt is not something rare. It is much more prevalent than you think. In the UK, in 2016, the average household debt was around 10,000 GBP. In the US, in 2021 the average mortgage debt was $220,380. In Denmark, the household debt is of 256.67% of the annual net disposable income.

Simply put, debt is common.

Unfortunately, the natural temptation is to ignore it. This is not a solution since it leads to more debt. All up until we cannot really deal with it anymore.

Fortunately, you can take steps to deal with your debt. Start with those highlighted below.

Face The Reality And The Facts

The reality is you are in debt. You have to face it. Denial is not an option. I know I am repeating myself but everything starts with acknowledging you have a problem.

Then, it is time to make a list. Include all the debts you have. Arrange the debts based on consequences. For instance, if a debt might lead to you losing your home or ending up on the streets, it has to be at the top of the list. The bottom of the list would include things like overdrafts.

The list helps you to understand how much you owe and what you have to deal with first. It is so much easier to manage debt if you prioritize, which basically means take it from the top down based on the list you created.

A special note: Always make sure you consider consequences too. It is a good idea to deal with the debt that has the highest interest rate first. However, if you do not pay electricity bills, you would end up without something that is vital for you to live so you need to pay the bills.

Create Your Budget

After you become aware of your debt, the best thing to do is to create a budget. This can be tricky.

You basically need to take into account all the money that comes in and goes out. Then, you can figure out how much money remains, after you pay the big bills. What remains can be used to start paying off your debt. But, at the same time, make sure you also save, even a little. It will help you in the long run.

Research Your Balance Transfers

Borrowing costs can be reduced with your credit card balance transfers. You do this when you transfer the credit card balance you have to a new card, one with a lower rate. This helps clear your debt faster and you avoid the extra charges.

If your finances are good, you can repay the amount in a specific limited time frame through a credit card with a 0% interest rate. But this should only be done if you are absolutely certain you can repay since interests can be higher after the 0% interest rate is over.

Consider A Personal Loan

This might seem like a bad idea. However, it is one of the most effective things to do when you try to reduce your debt.

The most important part is to analyze all the available options. You want to find a personal loan that has an APR (annual percentage rate) that is lower than what you are faced with right now.

To put things into perspective, average interest rates for credit cards are around 21%. If you have patience and you shop around, you can find an interest rate of half that with a personal loan.

In addition to having to pay less each month, you might also be able to consolidate all the debt you have into a single repayment you do per month. This increased structure and stability can help you to gain more control of your finances.

Get Help

Being in debt is overwhelming. It can bring depression, anxiety, and so many other bad emotions.

What you have to remember is there is always a way out. There are people who can help and organizations designed to give you financial knowledge.

The big problem is it is not natural to talk about money for most of us. It is difficult to admit problems. Managing debt is difficult but after facing the problem, everything becomes simpler.

Just take that step and ask for help.