With over $1 trillion dollars in credit card debt, the US is collectively grappling with financial challenges. The economy’s fluctuations and rising living costs have pushed millions of Americans into debt for the first time. If you find yourself in a similar situation, you’re not alone. Many are struggling to navigate their debt levels and are unsure of the next steps.
If debt seems to be taking over your life, there are steps you can take to regain control. By taking action, you can start managing your debt and steering your finances back on track, empowering yourself in the process.
Run The Numbers
Before you do anything else, you must sit down and take a long, honest look at what you owe, your income and expenses, and what you can realistically afford to pay back. Having a grasp of the numbers of your current financial situation will put you in a better position moving forward so that you can climb up and not slowly drown in your debt.
Adjust Your Budget
Not everyone’s circumstances will be the same, and not all fixes will work for every individual in debt. This is why it’s essential to address your debt based on your circumstances and what you can realistically do. Can you cut back on spending in any areas? Reduce your outgoings and increase your income. Look at what you can do and work towards implementing it to help you out.
Look For Help
Debt help is available in many different forms. It might be that you enlist family or friends to help you make sense of your current financial position, or you might want to talk to a financial advisor, debt counselor, or a specific charity or organization that deals with debt to help you out. For example, if you are a member of the armed forces, you might be able to take advantage of veteran debt relief services to help you manage your debt and get back on track. Otherwise, if you don’t qualify for help or can’t get the assistance you need, talk to your creditors and ask if they have any support to assist you with repaying what you owe at a payment schedule you can realistically stick to.
Try The Debt Snowball or Avalanche Method
These are two popular methods people use to get out of debt.
The snowball method is when you meet all the minimum repayments for all your debts and then put any extra funds towards the smallest debts to pay them off. Let’s say you pay the minimum of $10 a month and an additional $10 until it’s paid off. When it’s paid off, you use that $20 towards the next smallest debt on top of the minimum repayment, and so on, until your debt is cleared.
The avalanche method works the same but starts with the highest interest accounts. You pay the minimum on all debts and put all of your extra cash towards the debt with the highest interest rates. Once each one is paid in full, you work down your list.
Remember, these tips are just the beginning. By addressing your debt problems and working through what you owe, you can find a way out of debt and start living your life without this added financial burden. There are solutions, and you can overcome this challenge.