If you think that your amount of debt is becoming unmanageable, or you feel that you won’t be able to pay off a credit card bill, then it might be time to explore ways in which you can control your debt. The average American household with at least one credit card has about $15,950 in credit card debt, so if you feel like you’re alone, you certainly are not. Read on for a list of tips on how to help manage your debt!
- Figure Out How Much You’re Spending: If you keep track of how much money you end up spending in a month, and what you’re spending it on, it will allow you to cut back on unnecessary spending and you can start saving money with what’s left over. Or, you could use that money to reduce your debt.
- Know the Difference Between Good and Bad Debt: When you borrow money for a home or for college, it tends to make plenty of sense. It will build your credit rating quickly and it is money that will be put to good use. Just make sure you don’t take more money than you can afford to pay back. On the other hand, it’s important not to use your credit card to pay for things you consume quickly. Saving for something you really want but don’t need right away is a good way to avoid bad debt.
- Be Prepared for the Unexpected: It’s a wise decision to have a three to six month cushion of cash for living expenses in the event of an emergency. If you don’t have anything saved up, a car repair or broken appliance can really cause a problem for your finances.
- Know Where You Borrow From: While it might be convenient to borrow money against your house or your 401(k) to pay off debt, it could be an incredibly risky move. If you don’t plan accordingly, you could lose your home or end up missing your retirement investment goals.
The most important thing to remember for controlling debt is that it’s perfectly OK to seek help should you need it. There are plenty of reputable debt counseling agencies that might be able to help you manage your finances.