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The average American consumer owes about $30,000, according to recent statistics, making household debt an all-time high. While it’s true that most people need to borrow money occasionally, carrying a balance that’s too high can be costly, stressful, and even detrimental to your credit score.
It is possible to take control of your debt situation; the key is to get started right away. We’ve included some useful advice to get you started on the path to debt management and reduction. Read on to find out more.
Increase Your Debt Payments
Since most credit card companies only require you to pay roughly two percent of the outstanding balance each month, putting at least ten percent of your paycheck (or any other kind of income, such as your pension or Social Security) toward credit card debt and loans would help you pay them off much faster.
If you’re only able to make the bare minimum payments each month, interest will continue to accrue on your outstanding balances as time passes. Interest savings alone can be substantial if you can pay off a sizable portion of your debt in a matter of months.
Look For Your Hidden Money
Paying off debt is the only way to eliminate it and avoid damaging your credit. Consider all of your options for putting extra money toward debt repayment if you really want to see that balance go down.
It’s amazing how much spare cash you can find. Increasing your insurance deductible could save you hundreds each month on rates while still providing enough protection. Use coupons to save money on groceries and other household supplies. To get the best bargains, simply print coupons on the internet or cut them out of the Sunday paper. Finally, make use of handy apps that analyze your spending and contact providers on your behalf in order to negotiate cheaper rates.
Use Your Savings
Don’t be afraid to use some of your savings to pay off debts with high rates of interest. Using your cash reserves to pay off debt is a smart move because you won’t have to pay interest on those big balances anymore. Even though it may feel good to have some extra cash in your bank account, the truth is that those funds aren’t doing anything, not with today’s record-low interest rates. Don’t spend all of your savings as it’s worth having some safe for emergencies, but if you can, use some of it to pay off or reduce your bills.
Get Some Outside Help
If you don’t pay your debt, your creditors may take aggressive steps to get their money back. Collectors might one day be able to force your employer to take money out of your paycheck before you even get to see it. This is called “wage garnishment” and happens when a debt collector gets a portion of your paycheck directly.
If you are really behind on your bills, you might want to consider talking to a credit counselor or a bankruptcy lawyer to explore all of your options.
just make sure you do your due diligence before committing to your debt elimination strategy. Remember, there is light at the end of the tunnel.
