Get Out of Debt: 5 Ways to Improve Finances

Do your bills just seem to pile up? Does your paycheck never go far enough? Well, you're not alone: an increasing number of Americans are falling into the debt-trap every year and getting out seems harder and harder. There is, however, a light at the end of the tunnel if you follow some basic rules of personal finance. Here are five tips that can help you become solvent again:

1. Win the credit card battle. If your debts have gotten out of hand, most credit counselors will insist that you tear up all of your credit cards and pay cash for everything. That usually eliminates impulse buying because reaching into your wallet for $100 instead of your Visa card makes you think twice about an impulse buy. If you insist on using credit cards, use them wisely. Try to pay them off each month to eliminate interest fees. Take a look at the interest rate each credit card carries. These range from a reasonable 7.9% up to an outrageous 24% and the yearly fees range from free to $75 each. Get rid of the burdensome ones and keep the ones that don't cost an arm and a leg.

2. Consolidate your debts. OK, let's say you've already lost the credit card battle and you have a lot of high interest debt. All is not lost: you can consolidate that debt into a single payment, lower interest loan. The classic method is to get what's known as a HELOC, or home equity line of credit, and use that loan to pay off all your other bills. If you don't have any home equity or your credit rating isn't acceptable to a bank, you can try the Trustee Program run by the U.S. Department of Justice (usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm) or the National Foundation for Credit Counseling (nfcc.org.)

3. Pick your bank wisely. In all probability, your money is earning anywhere from 0% in a checking account to a paltry 1.5% in a savings account at your neighborhood bank. A much better choice is an online bank. Non bricks-and-mortar institutions like capitalone.com and emigrantdirect.com have become safe havens for your funds, offering a healthy 5% on deposits.  Make sure you read the fine print, as some banks have minimum account balances.

4. Use online bill paying. Mailing checks to pay your bills is a time-consuming and costly habit. Nearly all major banks have a system that allows you to pay your bills electronically making the process a click-and-send, paperless and stamp-free endeavor. You'll save time and money, plus your bank will keep an easily accessible, 24-hour record of all of your transactions - a much more accurate checkbook than any of us could keep on our own.

5. Check your credit rating. A good credit rating has become the key to getting lower rates on just about everything. It even determines whether or not a landlord accepts you as a tenant. You should review your credit report at least once a year. Yearly reports are free at annualcreditreport.com. When you examine your report, remember you can challenge any item you believe to be false. Challenging a negative item means that the credit agency will require the reporting company to substantiate its claim. If it can't do so within a short period of time, the item is removed from your report.

Don't forget that certain types of life insurance policies can act as guaranteed savings accounts as well. Let NetQuote help connect you with qualified Life Insurance agents who can answer all your questions and provide you with the best policy for your needs.

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