You Can Get Out of Debt Without Harming Your Credit

After the madness of a holiday, an anniversary or a wedding, a vacation, even a birthday party, reality sets in when the bills start pouring in. There will be more than a little lingering regret when you realize you overspent just to be sure everything turned out nice. If you had spent a little less, probably no one would have ever noticed. Think about that the next time an event is on the horizon.Monthly Budget StrategyYour first step toward getting out of debt without hurting your credit, is to make a list of each of your monthly commitments. It would be a good idea to have your bank statement because we humans have a knack for not remembering certain things, like important monthly debts. Once you are sure you have everything listed, start going over each line item with an eye to slashing costs, even if just temporarily. Magazine subscriptions and cable TV could be primary targets. The more money you can free up, the more money you can apply to the really important debts. You will also want to consider items that may not be a line item on your budget – eating out once a week or going to the movies twice a week.Debt Consolidation StrategyAfter scrutinizing your monthly spending habits you may find that you really do not have enough to cut to make a substantial reduction in your important debts. What happens with debt consolidation is that you find a lender to cover your debts so you have one payment, due at one time of the month, at one interest rate, with one creditor. This not only simplifies your book keeping, it can probably lower your payment so that it is less than the sum of all the payments you were making previously. Also, look for the shortest pay term you can handle, that way you can get out from under the debt sooner and pay substantially less in interest.Savings Accumulation StrategyThough it will not help you now, it would be wise to put some of the money you save with the debt consolidation loan into a rainy day or emergency savings account. That way you will not have to rely on high-interest credit cards or the largesse of friends and family to cover costs when you are in a jam. No matter how little you put aside, it starts you on a financially healthy habit and you will be pleasantly surprised at how quickly the amount grows.One Last StrategyThis is a tough one. Why not consider destroying your credit cards. Or keep just one and give it for safe-keeping to a trusted friend or relative. You thereby remove temptation and future regret. It is all too easy to fall back onto credit cards and the high-interest mire they make. Getting into debt is easy. Getting out of debt is not so much so. But you can get out of debt without hurting your credit. Just do it before it is too late and you have to start considering bankruptcy – never a good way to get out of debt, and it does harm your credit.