How to Keep Your Head Above Water When in Debt

How to Keep Your Head Above Water When in Debt
Mike Randall
By: Mike Randall
Posted: November 26, 2013's popular "How-To" series is for those who seek to improve, rebuild or better understand their subprime credit rating.

Being deep in debt can feel a lot like drowning. The anxiety can feel like physical pressure and can make it hard to breathe.

The stress can make you feel exhausted, just as if you were treading water to keep yourself afloat. All you can think about when you are so deep in debt is keeping your financial head above water.

This guide is intended to help you better manage and prioritize your debt so you do not go all the way under. Think of it as a life ring to hold on to until you can once more get your feet on solid financial ground.

Remember, however, that every financial situation is different and that these suggestions are intended to act as a guideline in helping you identify possible steps to take.

With that said, let’s take a look at how to keep your head above water when you are deep in debt.

1. Prepare yourself.

The first thing to remember is things are never as bleak as they may seem. Every financial problem has a solution, even if it is an uncomfortable one.

The key is to stay positive and address the situation head on. Take some deep cleansing breaths and realize you are not physically drowning. There is a way out and you are going to find it.

If avoidance has been your style to this point, then you need to change your ways. Only by dealing with the reality of your debts can you hope to stand on solid ground again.

Now that you are in the right frame of mind, sit down and start listing all of your debts.

Avoid the temptation to worry – just write them down. Categorize them by the type of debt depending on whether the debt is from your mortgage or rent, credit cards, loans, utility bills or another source.

The idea is to prioritize them so you can make a decision about where your money is best spent.

2. Make a plan.

With your financial condition now clearly defined, it is time to formulate a plan. This can involve a number of strategies, including:

  • Balance transfers
  • Debt consolidation
  • Debt negotiation
  • Even bankruptcy in the most serious cases

If you have not done so already, it is time to create a budget. This involves eliminating all nonessential expenses from your life.

Look for way to cut back, and then search even harder. Some people go as far as only shopping at thrift stores, buying food in bulk and eating lots of leftovers, selling their cars and buying a clunker or going without cable or any other outside entertainment.

It all depends on how serious you are about getting out of debt.

Make the commitment to look at

your debt from a realistic viewpoint.”

3. Take action.

Begin to act on your plan by talking to your creditors and coming to an agreement you can live with. Also consider talking to a debt adviser or an attorney to ask about your options.

The most important thing is to begin addressing the problem in a tangible way and start paying down your debts.

Get creative with ways to save and even earn more money. Sell off assets if you have them. Free up money that may be available in investments.

Look at things that are costing you money each month and ask whether you need them. Think outside of the box.

Perhaps the most important step in this process is to commit to not taking on more debt. One of the best courses of action you can make is to work toward eliminating debt and staying debt-free.

For most people, this is also the most difficult thing. It involves changing your habits and living within your means, but if you have gotten this far, it is worth keeping at it.

Only by permanently changing your financial habits can you hope to keep your head above water for good.

Getting your head above water permanently is a life-long commitment. Once you are there, you have to maintain good financial habits. It is easy to get into debt and very hard to get out.

If you are drowning in debt now, remember there is hope. With hard work and commitment, you can find your way out.

Photo Source: