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Pay Down My Debt

Ways to Control Your Spending and Expenses to Reduce Debt

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Updated December 7, 2018

Getting out of debt is a special kind of challenge. Paying down any substantial amount can seem insurmountable, especially in contrast to how easy it probably was to rack up.

Small amounts of overspending can add up fast. Spending a mere $5 more than you can afford every day will result in almost $2,000 in credit card bills after just one year — and that’s before accounting for the sky-high interest rates that will compound your obligation. And of course, big bills can appear out of the blue — an emergency medical expense or a job loss can drive you into debt fast.

Regardless of whether small purchases are adding up or you have a financial emergency crop up, your finances are in hot water if you are spending more than your income. Even if you are able to tighten your spending and pay what you owe, you’ll be back in debt in no time if you don’t fix the underlying problem, which could include:

  • Carelessness with money
  • Unmanageable fixed expenses
  • Unstable income

Here are some tips to help you cut spending and get out of debt by steadily paying down your bills.

5 ways to trim spending and pay down your debt

1. Set up an ‘I love me’ plan

One of the best ways to reduce spending is to get a handle on where all your money goes and set limits on how much you can spend on each of your needs and wants. This may sound like a familiar concept, but it can help to reframe how you think about budgeting.

“I know everybody hates the ‘b’ word,” said Sonya Smith-Valentine, president and financial confidence expert at Financially Fierce, a financial training company. “But I don’t call mine a budget. I call mine an ‘I love me’ plan. In that plan, I’m trying to find every way possible to love me and keep my money in my pocket.”

Not sure where to get started? Check out these strategies for managing your money.

Still, the skinny of it all is this: You need to understand how much money is going in and out of your pocket every month. That means putting down in writing:

  • Your monthly income
  • Your recurring monthly costs (e.g. rent and insurance payments)
  • Your typical spending on extraneous things (e.g. going out for drinks)

Once you have those numbers in writing, you can start thinking about how you’ll approach paying down your debt. You’ll also be able to see which expenses you can start trimming, whether that’s negotiating your bill payments or cutting back on eating out.

2. Identify and trim discretionary expenses

The first and most important way to bring your expenses down below your income is to cut discretionary spending. It’s easy to spend too much without realizing how much is flying out of your wallet. A coffee here, a new pair of shoes there; a movie ticket, a week’s worth of groceries, a car payment.

Some of your expenses are necessary (the groceries). Others are fixed and non-negotiable (the car payment), and even more are discretionary (the movie ticket). Some of your spendings may be downright frivolous (expensive chocolate) or even wasteful (bank fees you can’t account for).

Look for obvious things to painlessly cut. For example, you may consider:

  • Buying generic-brand products instead of luxury products
  • Forgoing a trip to the movies in favor of a home rental
  • Cooking at home more often

With a little-determined effort, you can probably cut your spending noticeably without feeling too much pain.

Keep your eyes off ads and hands off your credit cards
Preventing yourself from making bigger purchases can take some real willpower. Online shopping can be a danger to those who have trouble keeping spending under control. One easy way to reduce temptation on this front is to unsubscribe from marketing emails that stores send you.

“Those emails are effective,” said Smith-Valentine. “Sometimes it’s just, ‘Oh, that shirt is pretty.’ It’s not that you need another shirt; your closet is full. It was 30% off. Unsubscribing from those emails can do wonders.”

It can also be helpful to delete your credit card information that’s stored in the website of stores you buy from often. If it’s more difficult to place an order, you’re less likely to give in to temptation.

Another way to keep yourself from buying when you shouldn’t is to put all your credit cards but one low-limit one in an inconvenient location. Simply deprive yourself easy access to all that juicy, enabling credit.

“The commercial is, ‘What’s in your wallet?’ That’s a good question. Take it out — you don’t need it,” said Smith-Valentine. “If I’m only walking with the $1,000-limit one, not the $8,000-limit one, I can’t get into so much trouble.”

3. Eliminate these ‘invisible’ costs

Nothing’s worse than paying for things you no longer want or need to be paying for, or are paying for by mistake. Keep an eagle eye out for these recurring costs that may be eating into your budget.

Subscription services
Many consumers are signed up for at least one subscription service, whether that’s cable service, a magazine, or the gym. It is particularly easy to sign up for digital services, too, which could put you at a higher risk of forgetting about an unwanted subscription.

And don’t forget about subscription services that offer a free trial period. Signing up for one and then forgetting to cancel your subscription could spell trouble for your budget.

Bank fees
There’s no good reason to be paying fees on a checking account, whether they’re monthly fees, overdraft fees or ATM fees. But these can be hard to spot and remember.

Smith-Valentine described to MagnifyMoney her own bank fee experience. “I noticed a fee going back a couple months and I was like, ‘Why am I being charged this $25 per month fee?’” she said. “I called the bank and they said, ‘Oh, we’ll eliminate the problem.’ It would have been about $300 for the year.”

That said, a quick call to your bank could have the fee reversed — but do you really want to be forced to keep your bank on a short leash? You may instead want to consider switching to a free checking account instead.

High credit card rates
It can never hurt to call your credit card company to see if they’ll lower your rate, especially if you’ve made on-time payments for the last year. They’ll be more likely to oblige if you pay a bit more than the minimum each month. For example, if the minimum is $25, pay $35 or more.

You may be able to secure a rate as much as a percentage point lower than your current rate, or potentially even more. One percentage point may not sound like a lot but, according to Smith-Valentine, “that’s still quite a bit of interest, depending on what kind of balance you’re carrying.”

Smith-Valentine also said that she’s seen people get their credit card company agreeing to rate reduction as high as 5%, just by asking.

4. Tackle these fixed expenses

Of course, not all expenses can be so easily managed. Most people have quite a few fixed expenses that they need to handle every month — mortgage payments, car payments, and student loan payments, for example. Some of these you won’t be able to budget, but others might have some wiggle room. You can even overhaul some of these if you’re willing to do what’s necessary.

Mortgage
One way of reducing your mortgage cost is refinancing your mortgage. Are current loan rates favorable? If your interest rate is at least a half-percentage point higher than current rates, it may make sense to refinance. Keep in mind that refinancing comes with fees usually totaling $3,000 to $5,000, so you’ll want to do the math to make sure it makes sense for your situation.

It goes without saying that if you can’t afford your monthly mortgage payment, refinancing isn’t an option, and there’s no way for you to increase your income, you may need to reconsider your living situation. That could mean getting a roommate or downsizing.

Rent
It’s a good idea to limit your rent payments to 25% of your gross monthly salary. One of the advantages of renting is that it gives you more flexibility than a homeowner, so if you’re spending too much, find out what’s required to break your lease and start looking for a place you can afford. If you lose a security deposit or have to double up on rent for a month in order to move out early, it may still be worth it if you’re able to secure far lower rent that you can keep for the long-term.

Car payments
It may be difficult to get rid of an automobile you can’t afford. A car depreciates substantially the minute you drive it off the lot, so if you financed the entire car you likely owe more than your car is worth for a while right after you buy it. Once your loan amount is just a bit below the possible sales price, you can sell it and find a cheaper option.

Until then, if you have good credit and your loan balance is less than your car’s value, you can look into auto loan refinancing. Credit unions often have great deals in this space — they are often easier to deal with, and they tend to have incredibly low interest rates and none of the junk fees.

“Most people don’t realize you can refinance car loans as well,” said Smith-Valentine. “People should look into it especially if they have a higher interest rate.”

Insurance policies
Are you overpaying on your insurance? That’s a question you need to consider. There are so many insurance purveyors out there that shopping around can bring you quite a lot of savings, especially for auto insurance. Progressive, for example, could be a good option for comparing auto insurance rates.

Regarding life insurance, if you have a whole life insurance policy, you are almost certainly paying too much. The purpose of life insurance is to make sure that people who depend on you can pay for their needs if you die. Life insurance is not designed to be a way to save for retirement or to give your children an inheritance. That means term life insurance is almost always the best option.

Student loans
There are a few things you can do to change the amount you pay on your student loans. Look into getting on an income-driven repayment plan, which will match the amount you pay to how much you make. You can also refinance your student loans with a private lender if you have a relatively high interest rate.

If you have multiple student loans with different interest rates, it may be possible to combine them into one federal or private student loan. But while you may be able to qualify for a lower rate by refinancing or consolidating with a private loan, you’ll miss out on federal benefits. On the other hand, you may only consolidate federal student loans with a federal Direct Consolidation Loan, and the rate you get will be the weighted average of the loans you consolidate. Further, the Department of Education does not offer refinancing.

Other debt payments
If you took out a personal loan or charged up your credit cards to cover medical expenses or other costs, you may be frustrated by the interest you’re paying. High rates could make it harder to get out of debt.

In these cases, you may consider refinancing your debt or taking out a debt consolidation loan. Both refinancing and consolidating debt could help you get a lower interest rate and other more favorable terms. Consolidating debt has the added benefit of combining multiple debts into one. That means you’ll have just one monthly payment to handle instead of multiple monthly payments.

LendingTree, which owns MagnifyMoney, offers a debt consolidation loan tool you could use to explore your options for debt consolidation. You’ll need to enter personal information before seeing whether you qualify for any loan offers. Still, the tool could help you see what rates and terms you qualify for from reputable lenders.

5. Address the core issue

This last tip may be the hardest of the bunch: It’s all about ensuring you have long-term success with your finances.

Many people change their spending habits in minor ways or only temporarily and then expect their debt problems to resolve. But if your spending goes right back up after your short-term belt-tightening, or your income can’t cover recurring expenses you can’t negotiate, your problems will continue unabated.

That means you have two good options for ensuring long-term:

  • Increase your income (asking for a raise, for example)
  • Tightening your budget — and really sticking to it

This latter option may be the hardest to digest.

“It’s truly a mindset issue; you’ve got to truly shift your mindset,” said Smith-Valentine. “You’re not going to be successful at getting out of debt and reducing your spending if your mindset is still of the belief that you’re going to live your life exactly the way it is now.”

Despite the reams of information available out there to help people deal with their finances — including this post — millions of people are still in financial trouble. Obviously getting out of debt takes more than information; the mindset shift about how to approach spending is the missing ingredient for many.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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College Students and Recent Grads, Pay Down My Debt

Sample Goodwill Letter to Remove a Late Student Loan Payment from Your Credit Report

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’ve pulled your credit report recently and discovered that there’s been a late payment reported on your student loans, you might be wondering what you can do to recover. Late payments can damage your credit, especially if you stop paying your loans for an extended period of time.

We’ve already gone over the repercussions of delinquency and default, but now let’s take a look at another method of repairing your credit report — sending a goodwill letter to your creditor.

What is a goodwill letter?

A “goodwill letter” is a simple way to repair your credit report, and it can be used for both federal and private loans. The purpose of a goodwill letter is to restore your credit to good standing by having a lender or servicer erase a lateness on your credit report.

Typically, those who have experienced financial hardship due to unexpected circumstances have the most success with goodwill letters. They allow you to ask if your student loan servicer can empathize with the situation that caused the lateness and erase it from your report.

It can also be used when you think the late payment is an error — for example, if you were in deferment or forbearance during the time of the late payment and weren’t required to make any payments, or if you know you’ve never been late on a payment before.

What makes a convincing goodwill letter?

If you’ve been looking for a goodwill letter that will work well, we have some tips on what you should include in your letter:

1. An appreciative tone

It’s important that the entire tone of your letter comes off as thankful and conscientious. If you were actually late on your payments due to extenuating circumstances, taking an angry tone probably won’t help your case.

2. Take responsibility

You want to be convincing and honest. Take responsibility for the late payment, and explain why it happened. They need to sympathize with you. Saying you just forgot isn’t going to win you any points.

3. A good recent payment history

Besides sympathy, you want to gain their trust that you will continue to make payments. If your lender sees payments being made on time before and after the period of financial hardship, it might be more willing to give you a break. When you have a pattern of late payments, on the other hand, it’s more difficult to convince them that you’re taking this seriously.

4. Proof of any errors and relevant documents

If you’re writing about a mistake that occurred, still be friendly in tone, but back up the errors with documentation. You’ll need proof that what you’re saying is true. Unfortunately, errors are often made on credit reports, and it may have been a clerical error on behalf of your servicer. If you have any written correspondence with them, you’ll want to include it.

5. Simple and to the point

The last thing to keep in mind is to craft a short and simple letter. Get straight to the point while telling your story. The people reviewing your letter don’t want to read an essay, and the easier you make their lives, the better.

Sample goodwill letter No. 1

Below is a sample goodwill letter for student loans to give you an idea of how to structure your own:

To whom It may concern:

Thank you for taking the time out of your day to read this letter. I just pulled my credit report, and discovered that a late payment was reported on [date] for my account [loan account number].

During that time, my mother fell terminally ill, and I was the only one left to care for her. As such, I had to leave my job, and my savings went toward her health care expenses. I fell on very rough times after she passed away, and was unable to make my student loan payments.

I realize I made a mistake in falling behind, but up until that point, my payment history with you had been spotless. When I was able to gain employment once again, I quickly resumed paying my student loans, making them a priority.

I’m not proud of this black mark on my record, but it’s the only one I have, and I would be extremely grateful if you could honor this request to remove the lateness from my credit report. It would help me immensely in securing other lines of credit so that I can further improve my credit score.

If the lateness cannot be removed entirely, I would still be appreciative if you could make a goodwill adjustment.

Thank you.

Sample goodwill letter No. 2

If you’re writing a letter because the lateness on your credit report is inaccurate, then try something similar to this:

To whom it may concern:

Thank you for taking the time to read this letter. I recently pulled my credit report and found that [Loan servicer] reported a late payment regarding my account [loan account number].

I am requesting that this late payment be assessed for accuracy.

I believe this reporting is incorrect because [list the supporting facts you have]. I have included the documentation to prove that [I made payments during this time / that my loans were in forbearance/deferment and didn’t require any payments].

Please investigate this matter, and if it is found to be inaccurate, remove the lateness from my credit report.

Thank you.

Make sure you provide as many personal details as possible — without making the letter too long, of course. You should also include your name, address and phone number at the top of the letter in case your loan servicer needs to reach you immediately.

Where to send your goodwill letter

Now that your letter is written, it’s time to send it. This can be done either by fax or by mail. Most student loan servicers have their contact information on their website, but you can also look on your billing statements to see if they specify a different address.

Additionally, you can try calling the credit bureau where the lateness was reported to see if they can give you the contact information you need.

It’s important to mention that goodwill letters are not a means to immediate success. Unfortunately, it often takes several attempts to correspond with servicers and lenders to get them to acknowledge that they received a letter from you.

Your best bet is to get a personal contact at the company who has the power to erase the late payment from your credit report.

If all else fails, try as many different communication methods as possible. Phone, mail, fax, live chat (if your servicer offers it) and email them. Several people who have tried this report that it’s possible to wear your servicer down with a decent amount of requests.

Addresses and fax numbers to try

Here are some addresses and fax numbers for several of the larger servicers, as listed on their websites. Again, it may also be worth phoning your servicer to get the name of someone there that can help you. If you have federal student loans, you can also check this Federal Student Aid page for more contact information.

Nelnet

Documents related to deferment, forbearance, repayment plans or enrollment status changes:

Attn: Enrollment Processing

P.O. Box 82565

Lincoln, NE 68501-2565

Fax: 877-402-5816

Great Lakes

Great Lakes

P.O. Box 7860

Madison, WI 53707-7860

Fax: 800-375-5288

Sallie Mae

Sallie Mae

P.O. Box 3229

Wilmington DE 19804-0229

Fax: 855-756-0011

Navient

For anything other than federal loans, check here

Navient – U.S. Department of Education Loan Servicing

P.O. Box 9635

Wilkes-Barre, PA 18773-9635

Fax: 866-266-0178

Cornerstone

P.O. Box 145122

Salt Lake City, UT

84114-5122

Fax: 801-366-8400

FedLoan

For letters and correspondence

FedLoan Servicing

P.O. Box 69184

Harrisburg, PA 17106-9184

Fax: 717-720-1628

EdFinancial

For FFELP and private loans, check here

Edfinancial Services

P.O. Box 36008

Knoxville, TN 37930-6008

Fax: 800-887-6130

Documents to include with your goodwill letter

Don’t let your efforts go to waste by forgetting to send documentation with your letter. Here’s a quick checklist of what you should include:

  • The account number for your loan
  • Your name, address, phone number and email
  • Statements showing proof that you paid (if you’re disputing a late payment)
  • Documentation showing that you’ve paid on time at all other points aside from when you experienced financial hardship (if that’s the case)
  • Identifying documentation so your servicer knows you sent the request

Also note that if you’re mailing anything, you should send it by certified mail with a receipt requested. This way you’ll know whether your letter made it to the servicer.

What to expect after submitting your goodwill letter

Once you submit your goodwill letter, you should hear back from your creditor with a decision in a few weeks. If two to three weeks have passed without word, follow up via email or phone call.

As you know, there’s no guarantee that your goodwill letter will work. The decision to remove a negative mark from your credit report is entirely in the hands of your creditor.

If your creditor rejects your petition, you’ll have to accept the ding on your credit report and take other steps to boost your credit. But if they agree to repair your credit, you should see the delinquency removed from your report and your credit score increase as a result.

A higher credit score can make life a lot easier, whether you want to take out a loan, open a credit card or, in some cases, even rent an apartment. For student loan borrowers, a strong credit score also opens the door to student loan refinancing, a savvy strategy that lets you restructure your debt, possibly changing your monthly payment and potentially saving money on interest.

If your credit score rebounds and you want to take proactive steps to conquer your student debt, refinancing could be the answer you’ve been looking for, so long as you no longer need the protections that come with federal loans.

Either way, though, make sure to keep up with student loan payments so you don’t end up with a delinquent account dragging down your newly repaired credit score.

Resources

If you’re interested in exploring goodwill letters further — and the results that others have had — check out these websites:

  • Ed.gov: They cover disputes, what to do about them and how to go about rectifying them here.
  • ConsumerFinance.gov: If you have loans with a private lender, and your lender had reported you as late when you weren’t, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) to see if they can help you.
  • myFico Forums: The forums on myFico are populated with helpful individuals that might be able to give you contact information for certain servicers. There are some people reporting success with goodwill letters, and they may be willing to share their letters with others upon request.

It’s worth the time to write a goodwill letter

If you’ve discovered that a late payment has been reported on your credit, and it’s because you fell on hard times or is inaccurate, it’s worth trying to get it erased. These dings on your credit are there to stay for seven to 10 years. That’s a long time, especially if you’re young and hoping to buy a house or a car in the near future. It’s a battle worth fighting.

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Debt, Its Emotional Toll and How to Tackle It

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Debt can feel overwhelming, and studies are increasingly showing that it can lead to a decrease in happiness and life satisfaction, anxiety and even physical symptoms like headaches or loss of sleep.

A study of more than 1,000 student loan borrowers — conducted by Student Loan Hero, which, like MagnifyMoney, is owned by LendingTree — found that:

  • More than 61% of respondents admitted that they’re afraid that their student loan debt worries are spiraling out of their control.
  • More than 70% said they suffer from headaches because of their debt concerns.
  • Some 64.5% of respondents have lost sleep over their debt.
  • 67% reported physical symptoms of anxiety that stemmed from the stress of their student loans.

The study showed a direct correlation between having debt and detracting from happiness. In fact, results revealed that carrying student loan debt is nearly as significant as income when it comes down to predicting financial concern and evaluating life satisfaction.

What studies show about how debt affects your health

Indeed, money can buy happiness, but how much debt one has also weighs heavily into the equation, according to a study from Purdue University. An online college alumni sample of 2,781 individuals from the United States revealed that student debt could take a significant toll on one’s life satisfaction over the long term.

Another survey conducted by the Harris Poll on behalf of the American Institute of Certified Public Accountants (AICPA) showed that 56% of Americans with debt admitted that it negatively impacted their lives. Twenty-eight percent of the 1,004 American adults surveyed said their debt caused stress about their everyday financial decisions, and 21% said it caused tension with their partner.

It may be that such accomplishments as a promotion at work may be marred by knowing your debt is eating up your higher earnings. High debt may also be such a financial burden that borrowers are unable to save for retirement, for emergencies or even such pleasures as a vacation.

High-rate debt can be particularly difficult to carry. Seeing your monthly payments largely going toward fees can make you feel as though you’ll be trapped in debt forever. And if that debt isn’t allowing you to save money, your stress may only grow if you’re suddenly struck with a financial emergency that causes you to take on new debt.

6 tips to dealing with your debt

If you’re dealing with debt and it’s taking a toll on your health, what can you do?

“The first thing a person needs to do is take a close look at how they got into debt in the first place,” advised Carolyn McClanahan, M.D., CFP, who began her career as a physician and is now founder of a financial planning group called Life Planning Partners LLC, based in Jacksonville, Fla. “They should identify what triggered the situation or any bad habits that might have led to their debt, so that they don’t repeat those things going forward. Then, they need to make an actionable plan to figure out how to get out of debt.”

Consider these tips that could help you better handle your debt.

1. Thoroughly research your options

When tackling your debt, it pays off to research your options for dealing with debt. For example, federal student loans come with borrower protections that may help you if you’re struggling with money. You may be eligible for an income-driven repayment plan, which would adjust your monthly payments based on your income. You may also qualify for student loan forgiveness or have the opportunity to defer payments for a period of time.

If you have a mortgage, you could extend your repayment term without refinancing. This is known as mortgage recasting. By extending your repayment term, you could lower your monthly payments, freeing up cash to deal with debts that are a higher priority.

Credit card debt doesn’t have to be such a burden, either. If you lost your job, it may be beneficial to call up your credit card issuer. You may be able to get on a hardship program that reduces your payments for a time. Or, if you have decent credit, you may qualify for a balance transfer credit card with a promotional 0% APR. For a fee, you could move your credit card debt onto your new card to avoid interest charges for a period of time. Pay off that debt before the promotional period ends and you could save a lot of money on interest.

2. Don’t be afraid to negotiate

Many people fail to recognize that there are many instances where you can negotiate and in turn, lower your debt. Take medical bills, for example.

“It can really help to negotiate with the medical provider,” said McClanahan. “If you’re willing to pay them real money over time, you can end up paying pennies on the dollar of what you own,” she said. In addition to negotiating, McClanahan suggested asking hospitals or health centers whether they have any financial assistance programs that you might qualify for.

Furthermore, if you’re accepting a new job offer, don’t be afraid to negotiate a higher starting salary, which in turn could help you windle your way out of debt faster. Research the job market and consider making a compelling case as to why you deserve a higher salary.

3. Take it one debt at a time

If your debt is stretched across multiple credit cards or loans, you may be overwhelmed just by the thought of them. But if you can focus your attention on making extra payments on just one debt, it could help you see some quick wins.

“You ideally want to start by paying off the debt with the highest interest rates first,” McClanahan said. Repaying the debt with the highest rate helps you reduce how much interest you pay over time. Often, this means you’ll focus extra payments toward a credit card balance. Once that debt is paid off, you start making extra payments on your debt with the next-highest rate.

However, you may instead choose to pay off your debt with the lowest balance. This would result in a fast win that will motivate you to keep making extra payments on your debt.

4. Consider therapy

Seek the help of a psychologist or another mental health expert if your concerns about debt are negatively impacting your day-to-day life. A licensed health expert can help you confront your anxieties head on and offer strategies for dealing with them effectively. Also, reach out to your personal network and let those close to you know that you could use their support. It helps to know that you’re not in it alone.

Low-income individuals may want to seek the help of a sliding scale therapist, who will adjust their fees to make therapy more affordable. This can be found on mental health directories like GoodTherapy.org. There are also clinics that provide low-fee or free mental health services. To find a clinic near you, visit MentalHealth.gov.

5. Enlist the help of a credit counselor or financial planner

Sometimes, it helps to get an outside perspective on your debt, or at least talk to someone who can reveal your options. A credit counselor or financial planner can help you take steps toward getting your finances in order or develop a game plan for getting back on track, McClanahan said.

The National Foundation for Credit Counseling is a nonprofit financial counseling organization that provides a variety of free services, including counseling on credit and debt, bankruptcy and student loans. If you’re interested in hiring a financial planner, you could use the National Association of Personal Financial Advisors to find one.

Outside help could help you better weigh the pros and cons of your options and guide you as you work on your debt.

6. Focus on improving your credit score

Take steps to rebuild your credit and improve your credit score, which in turn, could give you access to more credit in the future. For starters, focus on implementing a plan for paying off debt, and work to keep your balances low on credit cards. Keep in mind that improving your credit score requires small, responsible actions over time, so be patient and set long-term objectives. For more tips on how to improve your FICO score, take a look here.

Indeed, accumulating debt can certainly take an emotional toll and negatively impact your overall life satisfaction. However, you can take simple steps to pay down debt and turn your financial situation around. No financial situation is permanent, and with some patience, persistence and implementing of best practices, you can find yourself back on the path to financial recovery. So take a deep breath, keep your emotions at bay and work on tackling your debt in a practical manner.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Renee Morad
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Won’t impact your credit score