Did you know that the average American household has over $16,000 dollars of debt? If youre suffering with debt, you can take comfort in one simple fact: Youre not alone. The neighbor who always drives the nicest car and pulls out from the newly-remodeled house probably carries as much debt as you, or more. But the difference between you and him is that youre going to get educated about your choices. To learn how to get out of debt, you have to know your options. And there are a lot of options. But what do those options mean? Can you do it all yourself, or should you seek professional help? What is debt counseling? Whats the difference between debt consolidation and debt settlement? Lets find out.

Option 1: Going it Alone

There are two basic options to getting out of debt: you can go it alone or you can seek professional help. As you can imagine, the lone cowboy approach takes real discipline, patience, and resolve. Here are just a few things you have to practice religiously if youre going to do it yourself.
Tighten Your Belt Lifes little luxuries, like that imported cheese you cant live without, will have to sit on the backburner. You cant expect to start whittling away at your debt without giving up at least some of those luxuries. The peace of mind that comes with cutting down that oppressive debt will be worth the sacrifice.

Create a Debt Payment Account If youre able, creating a dedicated debt-payment account could serve as both a reminder and a source of discipline to help you master how to get you out of debt. Take care of the necessities and then put the rest into your dedicated account.

Pay More Than the Minimum This one is hard. But it really is a must-do if you want to get out of debt. You see, creditors want you to pay the minimum payment, and nothing more. That minimum covers interest and fees and chips away very little of your actual principal. Creditors implement tried and proven methods to keep you paying the most interest and fees for the longest period of time. And the minimum payment is one of their tools.

Option 2: Calling in the Professionals

You may find that even paying minimums isnt possible right now. If your income is not quite high enough to meet the mounting debt, fear not. Its time to call in the big guns. But lets understand them first.

Debt Counseling Debt counseling is exactly what it sounds like - financial professionals giving you advice on how to deal with your debt. This term is sometimes used interchangeably with credit counseling or included under that umbrella, but the two are usually different services. Debt counselors give you advice on how to handle your debt. Credit counselors give advice on how to build and protect your credit, and may recommend staying out of debt to do so. Professional debt counselors are usually knowledgeable about financial laws and regulations and can help you navigate your rights (without giving direct legal advice). They can also help you create a budget, come up with a plan for paying off your debt, and negotiate with creditors. But beware of their allegiances. What you may not know is that many debt counselors are paid by credit card companies to keep you on the lifetime plan. And the tactics they recommend in handling your debt can have a negative impact on your credit rating.

Debt Consolidation Debt consolidation is a service that helps you combine all your debts into one, so that youre left with a single payment to make each month. This may lower your interest rate and your minimum payment. But you should know that this usually involves putting up some kind of security, like your home or another asset. And, if you end up not being able to make your payments, your new lender has a claim on that asset. In the end, youre putting more than your credit score at risk. Youre also risking your possessions. Debt consolidation can also be a lengthy process, requiring you to extend out the duration of your debt obligations in order to achieve a lower monthly payment.

Debt Settlement Debt settlement services help you negotiate a settlement amount with creditors, usually a lump sum you pay to terminate your obligation. In the end, you will end up paying a lot less than what you owe if you follow the programs guidelines. How much less depends on the quality of the debt settlement service. Outstanding debt negotiators can consistently achieve settlements of 40% of the original debt. This is often the fastest way to get out of debt, and you can be assured that the debt settlement company is working for you and not for your creditors. A good debt settlement professional will support you through the process of paying down debt and keep you encouraged as you work to complete the program. But you should know that this process can have a negative impact on your credit score by resulting in delayed or late payments.

The sooner you explore your options on how to get out of debt, the sooner you can start to live again.