The average American has more than $90,000 of debt as debt continues to rise in the U.S. Are you in debt? If so, you know that being in debt can feel like a large weight on your shoulders, but with some smart budgeting, you can get rid of debt.
Keep reading to learn more about debt management and how you can take charge of your personal finances.
Create a Budget
First, you have to build a budget to help with any financial plan. Start writing down all your expenses.
Try creating a 50/30/20 budget. This means your essential expenses, including utilities and housing, should use 50 percent of your income. Then, give yourself 30 percent for your wants like entertainment and clothing.
Keep that 20 percent for your savings and to pay down debt. Since you are focused on paying down your debt, you may be able to cut back expenses from other areas to apply to your debt payments.
Once you create your budget, now it’s time to track it. Try to automate so you can see how you are doing and where you stand.
Try the Debt Snowball Method
This means you should pay more than the minimum required for your debt. Pick one debt at a time to focus on. Choose the debt with the highest interest first (typically these are credit cards).
Place any extra funds toward this debt. You can also make multiple payments a month if possible.
Set aside your credit cards and don’t add to the balance. It’s best not to close your credit cards even if you don’t use them because it can actually hurt your credit score.
If possible, you may want to consider a side hustle for extra money to pay off your debt. You could also sell items you no longer use and put that money right toward your debt.
Track Spending
On top of your budget, you should track your spending. This lets you see where you are overspending, and you can see why you are breaking your spending goals and budget—whether it’s impulse or boredom.
Start analyzing your credit statements and create good habits. Find ways to save money such as meal planning, couponing, ditching expensive memberships, and going to consignment stores. You can find plenty of ways to save money that you may not even notice once you get into the habit.
Consolidate Debt
If you have multiple debt payments, you may want to consider debt consolidation to pay one larger payment. Whether you use a balance transfer on one of your credit cards or get a loan, you want to find something that has a lower interest rate.
Before you can do this, you need to check your credit score. You will need a high score in order to qualify. If you have bad credit, you should look for ways to improve your credit score or get some credit repair quotes to help you improve your score.
Debt Management Is Possible
You can have debt management by following these simple tips. With some smart budgeting and possible debt consolidation, you can get this under control. It’s important to create a budget and stick to it!
Keep checking out our site for more advice on your financial health as you work your way to being debt-free!