Use these tips and strategies to start chipping away at your debt.

Do you have debt you want to start tackling? If so, you’re not alone. According to Bloomberg, the average American has over $5,000 in credit card debt. Student loans come in around $49,000 per household, and the average mortgage debt is around $180,000 - $190,000. On average, an American household has about $132,000 of debt! If you’re ready to start chipping away at your debt, follow these tips to make it less stressful and more achievable.  

How to Start Tackling Debt Today

June 30, 2017

Use these tips and strategies to start chipping away at your debt.

Do you have debt you want to start tackling? If so, you’re not alone. According to Bloomberg, the average American has over $5,000 in credit card debt. Student loans come in around $49,000 per household, and the average mortgage debt is around $180,000 - $190,000. On average, an American household has about $132,000 of debt! If you’re ready to start chipping away at your debt, follow these tips to make it less stressful and more achievable. 

 

Start With Your Budget 

Your budget is your guiding light when it comes to your money and debt. Write down a list of all of your expenses each month, including things like rent/mortgage, cell phone, utilities, insurance, loan payments, health costs, and credit cards. Make sure to include all of your expenses; don't let these budget busters fall off the radar.

Feeling a little overwhelmed? You can get free budget coaching along with helpful worksheets and guides from our partners at BALANCE. They can help you develop a spending plan that allows you to take charge of your financial situation both month to-month and in the long term.

Helpful article: Ways to Cut Back on Spending You Won't Even Notice

 

Review All of Your Debts 

Getting a handle on what your financial picture looks like is the first step towards knocking your debt load down. Take some time to map out all of your debt, including credit cards, personal loans, school loans, mortgage and auto loans. Include the following information in your document: 

-Length of loan
-Interest rate 
-Monthly payment 
-Amount of loan 
-Minimum payment 
-Average monthly balance (credit cards)
-Length until paid off (following normal payment schedule) 

Knowing the above information will help you understand how much you will need to pay each month towards your debt, plus give you a better grasp on a timeline of how long it might take. You can also set up different scenarios, changing how much you pay on different accounts to see how that will effect your overall debt load and timeline. You may want to try a debt snowball approach to paying off some of your debt.

 

Pay High Interest Debt First 

When it comes to debt, it’s a good idea to prioritize. It’s important to make your payments on time to help your credit score, but after that it’s smart to pay off your high interest debt first. Using the document you created in tip one, see which loan has the highest interest rate and try paying that account off first. This will save you lots of money in the long run. 

 

Refinance if Possible 

If your interest rates seem high, look into refinancing. You can refinance mortgages, personal loans, student loans and auto loans. If you have a credit card with a high interest rate, you can perform a balance transfer. Do some research and shop around to find out who has the best offer. But do be aware, sometimes there are penalties or fees for refinancing, so keep that in mind when making your decision. 

Is a balance transfer right for you? Learn more with this free eBook.  

Use Your Resources 

You don’t have to face debt alone. There are many resources out there to help you get a handle on your debt. Contact your financial institutions to discuss options and look into free financial help like BALANCE. You may be able to find a local support group to help you handle the stress and meet others in a similar situation. Talk with your family and friends if you feel comfortable doing so; many may have gone through a similar situation with debt and may have helpful advice to share. 

Find lots of resources for coping with and conquering debt on the Federal Trade Commission website. 

Debt can be very overwhelming and scary, but with a plan you can start making strides towards tackling that debt. Creating a debt management plan will help you make realistic goals you can achieve. Realize that you won’t tackle your debt in one day, week, or month; it will probably take years and many different strategies and plans. But it will get better!  

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