Debt is a way of life for many Americans. We owe money on our homes, our vehicles, our belongings (from furniture to clothes), and our education. Many Americans are so hooked in debt they are not even sure just just how much they owe and to whom -- even worse they occasionally do not even keep in mind just what caused their debt.
Some debt is good for you. For instance, what you owe on your house can provide a nice way to balance out your income tax. A little debt is not a bad thing either as making regular payments to numerous creditors helps build your credit rating which makes it easier for you to obtain loans at great rates. Nevertheless the truth is that most Americans have more than a little debt -- and numerous owe far too much money and are already, or soon will probably be, in financial trouble as a result.
Finding yourself owing a lot of money isn't the end of the road and you can stop your cycle of debt by taking 4 positive steps to break the cycle.
First, attack your high-cost debts. This likely includes credit cards where you might be paying high minimum payments and high interest rates. Pay off the balances on credit cards carrying the highest interest rates first. Continue making your minimum payments for lower-interest cards however focus on paying off the highest interest. When the high-cost cards are paid off then work to eliminate the balances on your other cards.
Second, reach out to your creditors. If you're going to be late or have a problem paying your minimum payments then contact the credit card company. Even if you can make all your payments in a timely fashion there are 2 advantages you can reap from contacting the card issuer. First, you may be able to negotiate lower rates or more favorable terms. Second, they may be able to suggest options that will minimize damage to your credit rating.
Third, consolidate your debts as much as possible. You are able to make this happen a number of methods. One possibility is simply transferring balances from one credit card to another with a lower rate, but be aware of transfer fees before choosing this option. Another possibility, in the event you own your own home, is to take out a home-equity loan or credit line which ought to have a lower interest rate than most credit cards can offer as well as offering tax deductions. Finally, you can also think about a secured loan providing the worth in another type of property, your vehicle for example.
Fourth, don't compromise your retirement savings. Clearly paying off your debt ought to be a high financial priority but cutting what you save for retirement to do so may not be the best course -- especially if that becomes a long-term habit or if you're losing out on your employer's matching funds as a result. Perhaps you might be able to borrow against (or from) your retirement funds at a lower interest rate which will allow you to continue to save for retirement while also getting out from under your debt.
While owing money may well be the American way it can also be a tremendous burden to deal with. You can shed the weight of your load or at least trim it down to a more manageable level by taking these four steps.
Some debt is good for you. For instance, what you owe on your house can provide a nice way to balance out your income tax. A little debt is not a bad thing either as making regular payments to numerous creditors helps build your credit rating which makes it easier for you to obtain loans at great rates. Nevertheless the truth is that most Americans have more than a little debt -- and numerous owe far too much money and are already, or soon will probably be, in financial trouble as a result.
Finding yourself owing a lot of money isn't the end of the road and you can stop your cycle of debt by taking 4 positive steps to break the cycle.
First, attack your high-cost debts. This likely includes credit cards where you might be paying high minimum payments and high interest rates. Pay off the balances on credit cards carrying the highest interest rates first. Continue making your minimum payments for lower-interest cards however focus on paying off the highest interest. When the high-cost cards are paid off then work to eliminate the balances on your other cards.
Second, reach out to your creditors. If you're going to be late or have a problem paying your minimum payments then contact the credit card company. Even if you can make all your payments in a timely fashion there are 2 advantages you can reap from contacting the card issuer. First, you may be able to negotiate lower rates or more favorable terms. Second, they may be able to suggest options that will minimize damage to your credit rating.
Third, consolidate your debts as much as possible. You are able to make this happen a number of methods. One possibility is simply transferring balances from one credit card to another with a lower rate, but be aware of transfer fees before choosing this option. Another possibility, in the event you own your own home, is to take out a home-equity loan or credit line which ought to have a lower interest rate than most credit cards can offer as well as offering tax deductions. Finally, you can also think about a secured loan providing the worth in another type of property, your vehicle for example.
Fourth, don't compromise your retirement savings. Clearly paying off your debt ought to be a high financial priority but cutting what you save for retirement to do so may not be the best course -- especially if that becomes a long-term habit or if you're losing out on your employer's matching funds as a result. Perhaps you might be able to borrow against (or from) your retirement funds at a lower interest rate which will allow you to continue to save for retirement while also getting out from under your debt.
While owing money may well be the American way it can also be a tremendous burden to deal with. You can shed the weight of your load or at least trim it down to a more manageable level by taking these four steps.
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