FIVE STEPS TO GET OUT OF DEBT
Posted on: May. 03, 2017 in Uncategorized

Do you have debt? The 2016 Consumer Financial Literacy Survey by the National Foundation for Credit Counseling (NFCC) says you’re not alone, as 33% of American households carry credit card debt. Small amounts of consumer debt don’t necessarily hurt your credit score, so long as you’re making all payments on time. However, if you’re only making minimum payments and you continue to use your cards, there is a good chance that small balance will become a big one. Also, one big expense can likely send you over the edge.

Here are some tips eliminating debt once and for all.

  1. Stop using your credit card. You have to stop accumulating more debt.
  2. Set a goal. Whether it’s a $1,000 emergency fund, a down payment for your next vehicle, or buy something you need for your household, create a plan for how and where you’ll put money aside for a rainy day.
  3. Start budgeting. You must know what you have coming in and going out each month to avoid debt. Living below your means will help you funnel extra cash toward your debt. Find what expenses you can lower, even temporarily.
  4. Pay down your balance. You can start with the card with the smallest balance or the one with the highest interest rate, but pay the minimum on all other cards and put every available cent toward the balance you pick to pay off first. When you finish that card, move on to the next in line.
  5. Explore other options. Call your creditors to see if you can get a lower interest rate. Look into balance transfer options (be careful, sometimes the fees aren’t worth it).

You don’t need to do these steps in order. In fact, most of them can be done at the same time. But by reducing your spending and make a plan for saving (so you don’t need to resort to your cards in the future), you can focus your time and money to digging out of the hole. Once you do, you’ll have a habit that will help you avoid falling into the debt trap again!

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