What is Personal Loan Debt?

The average amount of debt for an American Gen X is $135,841.

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Baby boomers are not too far behind at an average of over $96,000 and Millenials, on average, hold over $78,000 in personal loan debt.

Maybe you got tricked into getting a new credit card because they were offering a lower interest rate or a free gift for applying. Or maybe you purchased a few too many things on credit and did not realize that the balance was getting much too high.

Regardless of how it happened, your balance never seems to shrink even though you are making your monthly payments and you need a way out from under this personal debt. Is there relief for you? Read ahead to find out if there are some programs that can help you out.

What Can Help?

• Go over your monthly budget and figure out if there is some spending that you can cut down or eliminate altogether. Use those savings to pay extra on your card payment every month to get the principal down quicker.
• If you owe more than one company or have more than one credit card, another method you can try to pay down the debt as soon as possible is called the “debt snowball”. With this method, look at the account that has the lowest balance and pay as much as you can towards it first while only making minimum payments toward your other accounts. When the smallest account is paid off, pay as much as you can towards the next smallest account and so on. This method helps you feel really great about paying off the lower balance accounts so that you feel even better when you get the bigger ones paid off.
• If you feel like you can commit to paying off your personal debt without incurring more, transferring your high interest rate accounts over to a “balance transfer card” might be the best option. You can typically find a card that will offer you 0% interest for a limited time for transferring over your debt to their company. This could be a huge savings if you are paying over 20% APR on a credit card. This requires much self discipline to ensure you are not adding to your debt load.
• Commit any windfall to your debt. If you get an unexpected bonus at work, use at least half of it on your personal debt. Optimally use all of it, but you can also put half of it towards something fun that will make you feel awesome when you are able to afford it. Any time you get money that you were not expecting (tax refund, stimulus check, inheritance, etc.), use at least half of it to pay off debt.
• If you owe money to a credit card company, or any company that is charging you a high interest rate, call them and ask if you can settle the debt for less than you owe. This is usually only an option if you can pay the full amount of the settlement immediately. Unfortunately, you cannot usually ask to pay a substantially lower balance and ask for a payment plan as well.
• Another option to explore is using a nonprofit credit counseling organization. These organizations can help you manage money and your debts, develop a sustainable budget and offer you free educational materials and workshops. Be careful, though, because “non-profit” status does not guarantee that the services provided are free, affordable, or even legitimate. This route will require you to do some research on any organizations that you are considering using for debt assistance. The U.S. Trustee Program has a list of approved organizations here.

Conclusion

Getting out of personal loan debt can seem like an incredibly daunting challenge. With a little help and some dedication, you can get out of personal debt and live your life free of those burdens. If you only have a moderate amount of personal debt, then see if there are some quick, easy changes that will free up funds for paying off your debt quicker. If you have a higher amount of debt, look for an organization that can help or call creditors for a lower payoff settlement. You can do it; you can dig yourself out of the hole called personal loan debt.