Debt… That four-letter word that most of us dread every time we pick up the telephone and answer an unknown caller…
The current national debt is sitting at $28,220,457,325,440… That’s a heck of a lot of zeroes… and translates to upwards of $85,000 for every single person in the country.
That’s not even the worst part… If you look at the different types of debt that exist which are taken on by us as individuals, then that number is paltry by comparison.
Student loan debt, mortgage debt, and credit card debt … make up the majority of financial obligations still defaulted on by multiple generations from baby boomers to millennials to generation z…The silver lining isn’t always in what you pay off but how you plan to get rid of it.
Take A Hard Look At Your Budget
Yeah, I get it. All of your money is already pre-allocated to pay for all of the essential necessities like food, shelter, water, childcare, etcetera. But taking a few moments each day can help you to see where there may be some wiggle room to throw a few extra dollars at your debts... Adding an extra payment or so every quarter, twice a year or annually can save hundreds or thousands of dollars over the life of the loan.
Order Your Debts From Highest To Lowest
Now there are two schools of thought when it comes to this one. Once you determine how much debt you have and a safe amount to throw at paying down the debt this year— then you can choose the best one for you…
Some experts agree that you should make a monthly payment based on the highest interest rates first …and every other one until you’ve reached the lowest one. Others believe that paying the debt in order of the highest amount then working your way down to the tiniest of debts is easier.
Not only do you save on the amount of time that the debt remains owed by knocking down the balance…but you also potentially raise your credit score and keep more in your pocket for that long-awaited vacation.
Get Honest About Where You Want To Be
Now here’s a fun fact… We have all been in debt at some point in our lives… even those who have successfully paid it off in one form or another. One of the biggest keys to strategize about paying off your debt is to examine (the emotional connection ) how you got there in the first place. And where you see yourself one…two…three…five…ten years from now. Some of the biggest reasons for amassing debt are :
- First time college student
- Buying a dream home
- A fairytale wedding
- The ultimate vacation
- A career change
- Business venture gone wrong
- Shopping addiction
- Friends and family
Once you determine where you fit on the list. Or one of your own. Then you can take action and have the necessary conversations to come out on top.
Get Creative About Avoiding More Debt
It may go without saying but when you’re working on digging yourself out of debt… the worse thing you could do is pick up even more. It’s akin to climbing a mountain with boulders falling down all around you. Not to mention all of the recent progress will basically be ruined.
Sometimes, it requires being creative and doing things like cutting up or freezing your credit cards—setting up automatic payments to lenders anytime there’s a windfall. You could also tell shred or throw away any extra pre-screened credit offers –or freeze your credit report to prevent the solicitations in the first place.
People are going to get into debt no matter what their financial background may be. Debt isn’t always a negative when weighed against the benefits that it can provide either. But for those on the underside of debt—or who have a sticky situation with money, it’s highly recommended to stop the debt train in its tracks… The idea is to use it carefully, don’t rack up too much, and don’t spend more than you can afford to pay back. Making a plan every year and sticking to it can prevent falling into financial ruin.