For many Americans, debt is a growing concern. Before the financial collapse, the job market was booming and credit was easily obtained. Now, those who lost their jobs after the economic breakdown are struggling to make the monthly payments on their borrowed money. Foreclosure rates are sky-high and debt collectors are growing more and more desperate as profit margins shrink into non-existence.
It can seem like a hopeless situation but in reality, rising above the debt is possible. debt advice is plentiful, but not all of it is good. Many debt consolidation companies promise a quick fix for those struggling to meet their monthly financial obligations. In reality, it isn’t always that easy. Often, people receive a debt consolidation loan to pay off their credit and then begin running up more debt almost immediately. Now responsible for paying the monthly consolidation loan payment in addition to monthly credit card payments, the cycle of debt begins anew. Consolidation loans should be considered a last-ditch effort and only utilized by those with the willpower to eschew other forms of credit entirely.
When attempting to get out of debt, it is important to have a plan. Know how much income is available to pay down bills and commit to using most or all of the discretionary income strictly for that purpose. Consider a second job and devote that income entirely to paying down debt. Cut out luxuries, vacations and extravagant purchases until the debt has become manageable. Consider that skipping a $5 latte five mornings a week can lead to $1300 in savings over the course of a year.
Budgeting is very important for those wishing to get out of debt. A budget serves as a visual aid which shows where the money goes each month. Budgeting can be an incredibly useful tool when attempting to manage debt. A good budget should include monthly expenses, debt payments and savings for an emergency fund. It is crucial to budget for more than the minimum payments on credit cards and other revolving lines of credit. An extra $20 a month toward a high balance credit card can significantly reduce the amount of interest paid over time.
Struggling with debt is difficult, but with a plan and a good budget, debt can be managed. Although there is no quick fix for debt (and you should be very wary of anyone who offers one), it is possible to get out of debt over time.