Since the recession, America’s willingness to incur debt seems to have surged back with too many people accumulating huge credit card bills that might take more than 4 years to pay off, as per a report by WalletHub, a finance website. The reports suggest total credit card debt to have increased by $70 billion last year to $900 billion, which is till now the highest amount recorded since the economic depression. Hence, the average US household now owes more than $8000 on their credit cards.
Irrespective of whether you’ve been left with a holiday debt hangover post your holidays or you’re struggling with your previous debt load, you should make 2016 the year to free yourself of all debt burden. This is the best time to put together an appropriate debt payoff plan and also restructure your budget. If you’ve been looking for ways to pay off debt in this New Year, here are some steps to consider.
- Increase the minimum payments: Provide yourself with a chance of getting out of debt sooner by paying more on the minimum payments which are due on every personal loan and credit card. This way you can prevent the interest charges from accumulating and save money. And if you have a tough time doubling the minimum payment, consider boosting the frequency of payments so that you can bring down the balance.
- Set yourself brand new spending limits: Are you always turning to credit cards whenever you fall short of money? Do you have a tough time staying within your budget? If answered yes, you should know that this is high time that you set some new spending limits. Take stock of current spending habits and recognize some of the main areas where you usually overspend. Create a frugal budget and try your best to follow it throughout the entire month. Also inculcate the habit of saying No to few purchases.
- Downsize your life: Well, the idea of compromising your luxuries is not always a welcoming suggestion but this can help at times. If you think that cutting down some of your expenses won’t be possible, try to downsize and eliminate. Pay for only that you need and not for things that you want. Revise the difference between your needs and wants.
- Consolidate your debt: You can either opt for balance transfer programs or consolidate debt with professional debt relief programs. The debt consultant can help you combine your debts into a single monthly payment and also offer you an alternative debt repayment plan keeping in mind your affordability. Lower monthly payments can ensure easier debt repayment.
Once you take the above mentioned debt repayment steps and gradually start eliminating debt, you should reward yourself. Resolve to pay down debt this 2016 so that you can give yourself a new chance to rejuvenate your financial life. Think twice before saying yes to credit card offers in the near future as they can become nasty debt generators once you start misusing it.