If you have a ham sandwich and a fiver, and no debt, you are luckier than most American families. The average American family has well over $15,000 in credit card debt alone. When you factor in the $40,000 in school loans and several hundred thousand dollars in mortgages that most families take on, it’s no surprise that more Americans than not live from paycheck to paycheck. Just making minimum payments to all of your creditors might eat away at all of your income.
If we just described you, don’t lose faith. There is help managing debt available to you. No matter how far you are under the sea of debt that has accumulated, there is always hope. We’ve put together a guide for help paying off your debt.
Four Tips to Take Charge of Your Debt
- Don’t Assume You Can’t Take Advantage of Credit Counseling
Maybe you think you don’t have enough debt for it to apply to you. Yes, people who are hundreds of thousands of dollars in debt benefit from credit counseling; but so do people who just have too many small bills to stay on top of.
Maybe you think that you can’t afford the additional cost of credit counseling. The truth is, debt management programs wouldn’t stay afloat if they didn’t charge you something for their services. So yes, there is a cost involved for debt relief assistance. However, it is not really costing you. Think about it: If you owe the $129,000 in debt that most Americans owe, you pay an average of more than $6,000 in interest every single year. You’re basically working your butt off just to have debt. Your professional debt management program will get in touch with your creditors and work out a bargain. They’ll consolidate your bills into one, manageable amount that you make a single payment to. You will literally save thousands of dollars per year with this type of program. In reality, you can’t afford to not use credit counseling. - Pay a Name on Every Dollar That Comes Through Your Bank
Many people make enough money to live within their means, but they’re still struggling to get to the end of the pay period without whipping out the credit card to cover all of their living expenses. This happens when you don’t know where your money is going, so you can’t make intentional and strategic choices with it.
To make the best decisions with your finances, it’s important to look at your bank statements and understand where you spend your money. Calculate how much income you have hitting your bank, and what goes to which bills. After the “have to haves” are paid for, calculate how much money you have left. Then make a plan for how you’ll spend the expendable income (we know, you probably don’t feel like you have expendable income… you’ll be surprised at this number when you actually see where your money goes). You should give yourself “fun” money, but you need to be intentional about it. Maybe you’ll give yourself $20 per month to spend at Starbucks and $15 to go to the movies with. Every dollar you spend is intentional. This helps you make better choices and will leave more money at the end of the pay period. - Set Your Bills Up on Auto-pay
You might want to throw as much extra income as you can towards your debt, but when you actually have to press the “pay now” button, it’s downright discouraging. When this happens, it’s very very easy to decide to get on track with your debt next month instead. When you set your bills up on auto-pay, you are removing the risk of human nature from the equation. Now, the money you intended to pay your credit cards off with goes to them without you thinking about it. - Slow and Steady Wins the Race
Maybe you feel like you just can’t scrape together enough to make any difference in your debt. The truth is, one small step in the right direction at a time will eventually get you where you need to go. Making slow progress is better than ignoring the mountain and pretending like it will go away on its own.
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