U.S. consumer debt jetted to around USD $3.9 trillion in 2018, and if you average that per household in the country, it would be around USD $139,000 each. This surge of debt is a parting gift, or curse, from the 2008 recession. Credit card debt, for one, had an annual increase of 6 percent.
Around 72 percent of individuals in the country are under pressure from money, with 22 percent in extreme stress; a major reason being they are in debt. Being in constant stress affects a person’s life in many aspects. These stressors include personal, career, and relationship.
It can make life feel more like surviving, than thriving and living. But it is not the end of everything. Anyone can rise up from debt and here are some ways to get you out of the black hole of debt.
Pay More than the Minimum
Whether it’s credit card or auto loan debt, paying more than the required minimum sets you up for a more advantageous position. Apart from a potential rebate and less interest rate, increasing your monthly payment will get you out of the situation faster.
It will relieve you of the stressor quicker than anticipated, therefore giving you significant space to breath every time you make a payment. The habit of paying more than the required minimum will allow you to see significant progress and development in your situation.
Don’t Incur More Debt
Stop using your credit card, and take better control your lifestyle. Incurring more debt will keep you from making any progress. Do not make any purchases using your credit card… freeze it or cut it. Do anything that will stop you from swiping. It’s understandable to think that you still have the purchasing power, but in this situation you truly don’t.
Create a realistic budget that can change your lifestyle. Revisit your budget, and identify which expense is a want and which is a need. Identify which costs you can cut to save money. Maybe you don’t need cable if you have a monthly Netflix subscription.
Creating a well-thought budget will give you a clearer understanding of your cash flow. It will make you realize that if you have a surplus, then you have extra money floating in your system. Now if you have negative cash flow, then this would mean that you spend more than you earn.
Manage Your Debt
Manage your debt in a way that it does not overwhelm you. It could mean paying them all simultaneously at the minimum due, or paying your all to one specific debt that incurs high interest rates.
There are two common ways to manage your debt. The ladder method and the snowball method. The ladder method is when you choose to pay off high interest rate debts first, while making minimum payments on smaller debts.
The snowball method is when you give your best effort and focus on smaller debts, while making minimum payments to the high rate debt. If you feel like paying multiple accounts is better, then opt for loan consolidation. Be sure you know the factors that make you creditworthy. Loan consolidation will allow you to pay the majority, if not all, of your debtors, so you can just focus on one responsibility.
Increase Your Income
If your salary can’t meet your means, then that should urge you to look for other ways to increase your income. There are many ways to increase your cash flow, including taking on side jobs, and selling unused or barely utilized items. You can also participate in your company’s incentives.
Negotiate With Your Creditor
Talk to your creditor. They are most likely willing to help you out with your situation. Negotiate your payment scheme or your interest rate. Opening up to them does not take anything away from you, it actually gives them a better understanding of how they can help you.