Three years ago, the average U.S. household carried more than $15,000 in credit card debt alone. In 2017, it can be expected that the average national debt per household will reach record heights.
Debt reduction is becoming more important every day. It is time to take a firm grasp on debt. Here are a few of the most efficient ways to gain control of mounting debt and experience financial freedom.
Find out what is owed.
Before anyone can begin chipping away at his or her debt, it is necessary to figure out just how much is owed. Pull together everything that is owed and create a comprehensive list. Too often, individuals just continue to build their debt because they are not even sure who and what they owe. The first step to gaining control over mounting debt is to take a thorough inventory.
Debt consolidation professionals.
If the debt has progressed to a level of complete disgust, then it may be time to call in the professionals. There are several different agencies available to the public that will save a person hundreds (or even thousands) on their overall debt.
Debt consolidation companies excel in communication. They will contact all the different organizations with outstanding debt and pull everything together into one lump sum. One payment per month is much more manageable than 15 or 20.
Create a fixed budget.
Once the exact amount of debt has been determined, it is important to gain a sense of control over spending habits. Where does the money go each pay period? What expenses can be minimized?
An extensive monthly budget will help to maintain healthy spending habits, but only if the individual sticks to the plan. Self-sabotaging will never end well when it comes to personal finance.
Pay down outstanding debts.
After a stable budget has been set into motion, it is time to begin chipping away at outstanding debts. Pay down the debt with the highest interest rate first. Pay more than the minimum monthly payment.
While in the midst of paying off the highest interest rate, it is vital to continue paying at least the minimum amount on other credit card debts. Otherwise, the vicious cycle of debt will just move to another source and continue to build.
Balance transfers can be helpful.
If possible, take advantage of balance transfers. Sometimes it is possible to transfer the debt of a high rate credit card to another card with a lower interest rate. If the opportunity presents itself, do not be afraid to capitalize. Typically, individuals are given a set amount of time to pay the debt before being penalized with even higher interest rates, so it is crucial to pay the transferred debt down quickly.