Fortunately, there are a number of ways for a consumer to become debt free, and it starts by being smarter with one’s finances. This often includes setting a budget and keeping close account of one's monthly expenditures. These techniques can help identify areas where extra money can be used to pay off credit card debt, rather than being spent on things that are not necessary. In addition, reducing one’s credit card use, while making more purchases with cash or debit cards, can also aid in becoming debt free.
But many consumers who owe creditors large amounts of money may need more serious measures to become debt free. In this case, they may want to consider a debt consolidation loan, whereby one takes on a new loan that is large enough to pay off all their debts at once. This effectively combines several accounts into one manageable payment which is often lower than the previous combined payments to several creditors. However, this method may only be available to those with good credit scores, as individuals with credit challenges may face steeper interest rates unless they collateralize the loan with an asset.
Consumers may also consider seeking the services of a debt settlement company, which will negotiate with creditors to reduce the balances owed. With this process, professional negotiators contact a consumer's credit card lenders and explain their client's financial situation. Many credit card companies are willing to negotiate a settlement when they know that the consumer is in a state of financial hardship. Debt settlement programs can help consumers become debt free fairly quickly and at a lower monthly payment compared to the alternatives.
Consumers that are working to become debt free should explore all the alternatives that are available and make sure they do their homework to choose the best solution for their financial needs.