Recent reports that were compiled and published by the United States Federal Reserve indicate that consumer debt has increased at exponential rates in the past decade. There is roughly $3 trillion in current consumer debt whether it is non-revolving or revolving in nature. At the present time, the US economy is in a state of flux and what most financial experts would say reeks of instability with many fingers pointing to the current political administration in Washington, D.C.
Despite such a gloomy outlook and the past 18-month economic track record, this “cloud” does have a silver lining. Where your personal debt is concerned, you can get this under control and maintain things wisely so that you can weather economic hardships. If you are truly in over your head financially, we have some suggestions for how you can get a handle on this and survive your struggles.
8 steps to getting debt under control
There are 8 steps that you can take in order to get your debt under control and we have listed them here:
1. Find out what the real cost of each debt is – avoid the temptation created by the words “low monthly payments.” This is nothing short of brainwashing and has been used continuously in marketing campaigns to dupe consumers into believing that “easy monthly payments” means spending less than what the total cost actually is once you have fulfilled the agreement and paid off the debt.
2. Get off your behind and create a monthly budget – we cannot stress this enough. Additionally, you will want to establish and develop some type of savings plan, especially where retirement is concerned.
3. Dump those high interest credit card accounts – better yet, figure out how to survive financially with a minimal amount of “plastic” money.
4. Always remit more than the minimum payment due on your charge accounts and other credit cards – it will take you decades to pay off a high balance since most of your payment will be eaten up by the interest on the account.
5. Don’t apply for a consolidation loan to generate a better monthly cash flow – this makes no sense as it only creates more long-term debt for you. Consumers have the tendency to do this in order to improve their quality of life when in reality they are just driving themselves further into debt.
6. Don’t be a sucker for credit consolidation advertisements – most of these companies don’t reduce your debt like they advertise, they just restructure it.
7. Never borrow money against the equity in your home – why would you steal money from your retirement nest egg or deplete funds that could go towards a real financial emergency?
8. Never be too proud to seek out and pay for professional help – let’s face it, most of us do not possess a CPA’s or financial planner’s mentality where balancing and maintaining a budget is concerned. Why not rely on the services of an expert? It just makes sense.