The thought of addressing debt can be intimidating no matter what because it means facing financial reality head-on and potentially making major lifestyle changes. This is true at any level—but especially when you’re standing at the base of what feels like a literal mountain of debt. The more money you owe, the harder it is to take the first step on your journey toward freedom. The good news is that no amount of debt is impossible to tackle, provided you have a strategy in mind and are committed for the long haul.
Here are a few real-life examples of people who have defeated large debt loads and lived to tell the tale—plus an overview of several strategies you may want to consider as you decide the best way to eliminate your debt.
How Much Debt Is “Too Much” to Tackle?
Trick question! There’s really no such thing as having “too much” debt to tackle. While consumers with more debt have a longer road to relief, there are ways to address all levels of debt, from $500 to $50,000 and beyond.
Business Insider outlines one case of a 29-year-old man who did just that after deciding to end his business after the economic crash of 2008. Unfortunately, he was left with nearly $50,000 in credit card debt he’d used to finance his business over the course of four years. As he says, “Seeing this balance made me sick to my stomach. I never knew I could accrue so much debt and have so little to show for it.”
Here’s exactly how this individual paid off this balance:
- Canceled cable and chose a less-expensive internet option.
- Worked freelance jobs on the side.
- Switched from expensive central air to a window A/C unit to reduce bill by 40 percent.
- Conducted balance transfers between credit cards to get more favorable interest rates.
Conducting a balance transfer allows consumers to shift their balance from a credit card with a higher interest rate to one with a lower interest rate—or none at all. The fee for doing is usually 3 to 5 percent of the total amount, but it can ultimately make repayment more manageable since interest accrues much slower.
Bankruptcy Often Isn’t the Only Option
One prevalent misconception about large debt loads is that bankruptcy is the only option at some point. Some consumers do decide to opt for Chapter 7 or Chapter 13 bankruptcy, likely surrendering some of their assets in exchange for this “blank slate.” But other consumers find success with less drastic measures, like debt settlement.
As the New York Post writes, one 50-year-old man found himself carrying $60,000 across 13 credit cards after a divorce. To add insult to injury, most of these cards came with interest rates between 20 and 25 percent. Needless to say, this consumer felt overwhelmed by debt. Ultimately, he resolved the situation by enrolling in Freedom Debt Relief, an organization that eventually helped him negotiate with creditors for a settlement of just $8,000. He’s since repaired his credit and pays his credit card balances in full each month.
Another option to explore is debt consolidation, in which a consumer takes out a loan to cover multiple debts then pays back that single loan over time. As Smart About Money notes, this option only makes sense if the “monthly payment, interest and payback terms offered are less than your current payment.” For instance, it’s easier to pay off a low-interest loan in fixed installments than it is to pay back a growing heap of high-interest credit card debt.
The point here is that no amount of debt is technically impossible to tackle; you just have to find strategies that work for your specific financial situation, then act.