Is Debt Keeping You From Your Best Life? — Here’s How to Get Out From Under It

Is Debt Keeping You From Your Best Life? -- Here's How to Get Out From Under It

( – Millions of Americans find themselves in debt each year. Much of it is normal, for example, mortgages and car loans aren’t considered bad debts. After all, you need a place to live and a mode of transportation in most areas. Consumer debt is what overwhelms many, and Americans owe over $14 trillion! It’s easy to rack up thousands of dollars in purchases, but climbing out of it — not so much. If you’re struggling with credit card debt, there is a light at the end of the tunnel, you just have to work for it.

Calculate All of Your Debt

The first thing you need to do is calculate your debt. Don’t leave any out, even if it’s just a small balance. You want to spell everything out in black and white to formulate a plan. The number may astonish you or relieve you, but it’s important to know exactly what you owe and to whom.

Look at Your Budget

Most households have a budget, even if they don’t stick to one. You’ll need to know how much money you have left over at the end of each month so you can decide which bills to pay off first. If you find that you have very little left over after paying for your necessities, debt consolidation might be your best bet.

Pay Down Debts One at a Time

It can be tempting to pay the minimum amount on each credit card bill, but the fact is you’re not going to get anywhere fast with that method. The interest continues to accrue, and on most cards, it will likely exceed your minimum payment. Instead, look to the avalanche or snowball methods, and tackle one card at a time. It’s important to keep paying at least the minimums on your others, to avoid a hit on your credit. But, you can throw more money at a card with either a higher balance or a higher interest rate. This way, you’ll knock down balances quicker. In the meantime, don’t use the cards, otherwise, you’ll end up right back where you started.

It’s a good idea to keep your credit cards even after they’re paid off because emergencies do arise. They’re just not named Sony or Apple. Keeping your accounts open and using them responsibly will actually help your credit as opposed to closing them.

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