By Cameron Huddleston GOBankingRates.com.
If you're weighed down by debt, you're not alone. Eight out of 10 Americans have debt, with the average American carrying around $68,000, according to a Pew Survey of American Family Finances.
Debt isn't necessarily bad. In some cases, it can actually help build wealth. But if you're saddled with a lot of high-rate consumer debt, you could be putting your finances at risk.
To help you eliminate what you owe, we asked the finalists of our "Best Money Expert," a competition held in collaboration with Ally Bank, for their top strategies for getting out of debt.
PRIORITIZE YOUR DEBT "When it comes to your debt, you need to prioritize to pulverize," said Nicole Lapin, author of "Rich Bitch: A Simple 12-Step Plan for Getting Your Financial Life Together ... Finally." She recommended paying off your highest interest-rate debt first, which is likely credit card debt. Afterward, tackle your car loan because your vehicle is a depreciating asset. "There's no sense paying more interest on it as it decreases in value," she said.
Then, focus on wiping out any student loans you might have. Paying off your mortgage can be your final priority. She points out, however, that this is merely a guideline and isn't the only way to pay your debts.
"For example, if you have already paid off your credit card debt but are still working on your student loans (like a lot of us), it would be a good idea to ramp up your retirement savings while tackling the debt so you don't miss out on your peak saving years," Lapin said. "The important thing here is to make sure that you're tackling your debt first, and as aggressively as possible, so that debt doesn't eat into future savings."
PUT WINDFALLS TOWARD DEBT "Treat newfound money like you never had it. If you get a raise or a year-end bonus, don't start spending more _ put it directly toward your debt," said Jeanette Pavini of Coupons.com. "You were able to live month-to-month without it, so you should be able to get by without it now."
Pavini also said that paying down debt requires keeping tabs on how much you owe, setting short-term and long-term goals to pay it off and tracking your progress toward reaching your goals. "If something is not working, reassess those goals and brainstorm how you can do better," she said. "Don't give up or get discouraged. Always remain proactive."
EARN EXTRA CASH TO PAY OFF DEBT "We all know that you've got to cut unnecessary expenses from your budget, but too often we forget to think about the other side of the ledger _ our income," said Kyle Taylor of ThePennyHoarder.com. "People who are most successful in paying off their debt usually pick up a few side gigs."
Taylor said that if you don't have time for a side business, there are other simple, quick ways to make money. For example, you can use the Swagbucks app to get cash back on purchases or pick up small gigs on Field Agent. "These things add up, so don't forget that the small things count," he said.
INVEST IN YOURSELF Entrepreneur Josh Felber also advocated finding ways to earn more to wipe out debt. But he said you should focus on big ways to increase your income:
"Take action, start investing in yourself to grow and obtain the knowledge to start a business, add multiple streams of income and make sure your financial output is not more than your intake," he said. As you grow into new work opportunities, maintain your current lifestyle, keeping unnecessary expenses to a minimum. If personal finance is not a strength of yours, take online personal finance courses.
LEARN TO NEGOTIATE "Negotiate," said Whitney Johnson, author of "Disrupt Yourself." "Even when you think you 'shouldn't,' else you will earn too little or spend too much." When it comes to your debt, talk to lenders to explore repayment options, to get lower interest rates or to have your debt reduced. No matter the type of debt you're facing, call in to your lender and see if they have options that can help you get your finances back on track. The worst that can happen is they say no.
AVOID DEBT-SETTLEMENT FIRMS "If you watch bad late-night TV, you've probably seen those ads being run by the debt-settlement outfits. Their promises scream out in the night about reducing your outstanding debt to just pennies on the dollar without making you file for bankruptcy _ no matter how much outstanding debt you have," said Clark Howard, host of popular radio show and podcast "The Clark Howard Show." But you shouldn't trust those promises.
Howard said that these firms typically require you pay an upfront fee, plus a monthly retainer. They then tell you to stop paying your bills, stash the money you would have used to pay bills into a bank account and just sit on it. "The idea is to make the credit card companies so desperate that they'll cry uncle and want to settle with you at a reduced rate," he said. "The reality, however, is that too often you wind up just damaging your credit."
He added that consumers have even complained that some debt-settlement groups collect fees, and then ignore them when they try to initiate further contact. "It's so easy to want to believe that somebody has a magic bullet to solve all your problems," Howard said. "But that's simply not the case."
No matter how you approach your debt, look for new avenues for paying it off faster. If you're overwhelmed by multiple bills, start with the lowest balance first and work your way to the top. Don't be afraid to call in to debtors and explain your financial situation either, you might find they are more willing to work with you than you initially thought. ___ GOBankingRates.com is a leading portal for personal finance news and features, offering visitors the latest information on everything from interest rates to strategies on saving money, managing a budget and getting out of debt.