According to Statistic Brain, each American has an average of $2,200 of credit card debt, adding up to a total of $849.8 billion. But credit cards are just one form of debt, accounting for 5.5% of household debt in the United States. Altogether, Americans have about $11.13 trillion in debt.
Those numbers can be overwhelming. But if you’re one of those struggling, here’s some debt management advice that can help you get a handle on your financial situation:
- Find Out Where You Stand
Sometimes, the thought of debt is so stressful that it’s tempting not to add it all up. But using a debt calculator to know exactly how much you owe is a necessary first step. It’s impossible to create a plan without knowing what your goals need to be.
- Prioritize Your Financial Concerns
The most basic strategy is to pay off the debts with the soonest due dates first, so you don’t get slapped with overdue penalties on top of your original amount. But beyond that, take into account interest rates, paying off the debts accruing the most interest the fastest. Also remember that not all debt is created equal when it comes to your credit; of course mortgages and students loans are important to pay off as quickly as possible, but they don’t negatively affect your credit score like credit card debt does.
- Consolidate Your Debt
Several types of companies or financial institutions can offer debt consolidation assistance. If your debt is spread out among multiple cards or creditors, it’s easy to let payments slip through the cracks, meaning you pay your debt off more slowly and less efficiently. Consolidation isn’t the right choice for everyone, but it does ease this concern.
- Get Into Debt Management Programs
If you’re too overwhelmed by your debt to even start making a dent, or if you feel helpless watching your debt grow, debt management programs can help you create customized debt management solutions. Financial professionals, in addition to being able to break down your debt into terms you can understand and tackle, may also know more about debt relief options for your area or income bracket.
Whether you end up needing professional debt management programs to pay off thousands of dollars in debt or you just save up for a few months to pay off a single credit card, use the stress of debt as motivation to make better financial decisions in the future. Make a budget based on your income, borrow moderately, invest wisely and save for emergencies so you’ll never need to go through this process again.