Did you know that the average American has more than $5,000 in credit card debt? That’s not counting personal loans, student loans, medical expenses, and other balances. It’s frustrating to see that you have more liabilities than assets, but there are thousands in the same boat as you are – working their way toward being free from debt.
It can be frustrating and slow-going, but you can do it no matter how deep you are into debt. Cutting down on bad habits, emphasizing self-discipline and working with your creditors are all important elements in addressing your situation. If you ever feel that your finances are getting out of hand, you might want to consider following these tips to get you back on the right track:
- Get Organized
The first step in managing debt is to know the extent of your financial troubles. Gather all your latest billing statements – scour the bottoms of your drawers and file cabinets for any bills you may have missed or been ignoring for the longest time.
Next, list how much you owe each creditor; include the interest rates for each for your reference and guidance in computing for payments. It’s also helpful if you organize your bills – keep them in one place so they’re easier to track. Create a personal system to monitor and remind you of bills that you have and haven’t paid for the current pay period.
- Ask for Help
Whether you choose to seek assistance from professional debt relief services and credit counselors, or from your family and friends who have experienced dealing and getting out of debt, make it a point to get some help.
Not only do you get sound advice on how to deal with and manage your debts, you’ll also receive a psychological boost. This is important in conditioning yourself in continuing with your budget plan and reducing your debts.
- Prioritize Payments
Based on several considerations, like interest rates and payment deadlines, choose a debt that you want to get rid of first. This is so that you’re not overwhelmed with the monthly payments and you can easily see your progress.
If you can’t decide on which of your debts to prioritize, focus on secured debt such as car loans and mortgages that are anchored on property. You can also prioritize debts you can’t discharge, like student loans. Once you pay these off, adjust your payment priorities again and continue the cycle until you complete all payments on all your debts.
- Switch Cards or Negotiate
If you have multiple credit card debts, do some research on 0% balance transfer credit cards and move your debt on to your preferred bank. These transfer credit cards disregard interest for a certain introductory period – say 18 months – so that every payment you make goes toward reducing your balances. What you have to remember is that initial offer: you must ensure to repay your debts within the said time period. If you need a longer time to repay your debts, however, you can choose a long-term, low-rate transfer credit card.
Another option is to negotiate your debts – you can even do this on your own, though credit counselors can certainly give you a leg up in debt negotiation. Call your credit card company, know your history with the creditor, be polite, and try asking for a lower interest rate. If they won’t budge, ask when you can negotiate to lower your annual percentage rate (APR) again and stick to that date. You’ll save hundreds of dollars should your APR adjustment be approved.
- Save, Save, Save
Even if you’re in debt, you can still save cash. Try aiming for a savings rate of 10% — if that seems a little daunting, think of it simply as a dime per dollar you earn. If you aren’t saving anything at the moment, start with 1% and then increase it gradually, say every three or six months.
Unless you find a way to make more money, every dollar saved will feel like a dollar earned. Cutting down on unnecessary expenses allows you to pay back more of the money you owe. It can also serve as an emergency fund that you can use when you’re in a pinch to help you avoid acquiring new debt.
Financial freedom is less about what you earn than it is about your lifestyle. Just by applying a few crucial adjustments, you can make some headway in your debt reduction program. Stay focused and disciplined – and don’t forget those habits even when you‘re free from debt.
Debt Relief programs eliminate your debt in the best possible way. At CreditAssociates we have a special team of experts to help you break the debt cycle and provide you the tools and knowledge to secure your financial future.