Personal Finance Worries - Debt
It may not be surprising to know that the $84,454 is the
average household's
personal debt in the United States.
Even though you may have more or less than the statistical
average, it may be comforting to know that you regardless of
your financial situation can get out of debt before your debt
goes further.
Pinpoint your spending habits to guide to help you realize what
has damaged your personal finance. For many people it is simple
just spending too much money, for others it might a combination
of bad time, student loans, etc. Whatever your current financial
situation you must be able to stop doing wrong before you can
start healing your credit and finances. A few examples are...
Spending to much Money on Entertainment Spending to much than
your making Cable Internet/TV Eating out
"If you have to use your credit card you probably can't afford
it". Credit Cards are some of the healthiest businesses in
American earning billions of dollars in revenue yearly. Why?
People spend too much money and get in debt to quickly in their
youth. First identify if you are on of these persons. Do you
have more than two credit cards? How often do you use your
credit card? What is your interest rate? How much do you own on
your credit cards? Do you pay your credit card off with another
credit card?
Please realize that the last question, paying off your credit
card is an absolute no-no. You are basically paying off one debt
for an even bigger one. Most people have a lot more than two
credit cards, but why? You can only use one at a time? Or are
you buying more than you can actually afford? The key to get out
of debt is to cut your spending and save 10% of your take home
pay, which you use to pay off your debts.
Get out of Debt
In order to be financial free of debt you need to stop
spending and you need to get lower interest rates. You need to
finance your debt into a debt consolidation loan, or refinance
your home loan. This is the normal situation for most of us;
however loan options will differ on individuals. Say you're
paying 15% interest rate on your credit card, which is low for
most. Lets also that you have the average $8,000 in credit card
debt (National Average). Lets also say you have an additional
$20,000 in student loans, personal loans, etc at a rate of 5%
annually.(Not including mortgage, or car loans). If you were to
get a debt consolidation loan, which offers you a loan to pay
back your current debts normally at a lower interest rate you
would be saving money in interest payments.
Accelerating your Debt
Now to really get out of debt, you need to apply the first
rule. Cut 10% of your take spending right off the top. Lets say
you take home $1,800/Month (after taxes, etc). Most would be
going to see movies, going on dates, eating out, buying clothes.
Well if you can manage your personal finance and save that extra
$180/Month, and you put that toward your debt consolidation
loan. You will be
financially free two-to- three times
faster, and have saved thousands in interest payments than if
you just paid of the debt consolidation loan minimum payment.
About the author:
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