Solutions for Debtors

If your debt is overwhelming-if you cringe when you get your mail-it's time to start taking control of the problem.

Every day is full of temptation, with those 0 percent financing offers, the latest phone/television/camera commercials, and those shoes that you can't live without. Unless your surname is Trump or Hilton, you probably can't afford the latest and greatest item without increasing your credit card balances to unmanageable levels. Sure you have to eat and put gas in the car-but it's critical to analyze your outflows. If you're spending two new dollars for every dollar of debt that you eliminate, you'll never achieve your goal of getting out of debt. Here are some solutions to help get your financial situation under control.

Home equity loans equal favorable debt

If you own your home, you might be able to use it to consolidate your debts and reduce your interest rate by taking out a home equity loan to pay off your high interest credit cards. You'll have a lower interest rate, and simplify your life by paying only one bill each month. Talk to a tax professional, since the interest paid on a home equity loan may be tax deductible.

Don't toss the balance transfer offer

Another solution is to use a 0 percent balance transfer offer and move your high rate balances to this new credit card. Before you do anything, though, get out the magnifying glass and read the fine print. Most of them have a transaction fee that's a percentage of the amount transferred. Learn what you'll be charged, as it can be costly. Also, understand what will happen if you use the credit card for new charges. Any payments that you make may go toward the 0 percent transfer, not the new charge.

Home is where the equity is

Refinancing is another option if you've built up some equity in your home, or it has appreciated in value. You may be able to refinance a larger amount and use the extra cash to pay off the high rate credit cards. Depending on what the current mortgage rates are, your new monthly mortgage payment may be higher or lower. But, the critical thing is that you'll be paying a lower rate than the credit card companies were charging.

Seek professional help

If you're really in over your head, or you know you don't have the discipline to tackle your debt problem on your own, a credit counseling firm can help. They may be able to negotiate with creditors on your behalf, and lower the amount you owe or the interest rate you're paying. There are some less than reputable firms out there, so be sure to do your research with the Better Business Bureau and get referrals before you sign up.

It's easy to accumulate too much debt, but much harder to whittle it back down. If you stop using your credit cards and implement some of these solutions, you can look forward to seeing what's in your mailbox again.