Debts can be hard to control once you’ve incurred a decent amount. It is one of the growing pains of living in the US. But financial experts have found efficient ways to pay debts.
A decent amount of the American population is in serious debt. The Federal Reserve estimates that about 77% of the 320 million people living in the US have an accumulated debt of over $14 trillion. That’s a lot of money and can pay for more than half of the country’s GDP. But why do Americans get to this point?
Many Americans blame the economy and the recent pandemic for their accumulating debts. However, the reality is that money management seems to be the main problem that leads to debts. In addition, financial experts believe that reckless spending is increasing the overall household debt in the US as material consumerism seems to become the common tradition to alleviate stress.
If you have accumulated a decent amount of debt in your life, it’s time to start paying it off one by one.
Stop Credit Card Spending
It’s been found that credit card debt is one of the most accumulated debts by Americans. In addition, it’s estimated that credit card debt represents the majority of consumer debt of American households, with the average amount being $6,270. This is why you should first stop using your credit card if you want to start paying your debts.
Credit card spending is so common because of its accessibility and comfort. You don’t need to withdraw money, and most e-commerce shops offer credit card options. Furthermore, installments are now widely available. However, these are the main reasons why you’re in debt as well. Start using your money when purchasing things, and develop a schedule for how much and when to withdraw.
Pay Your Most Expensive Debt
When paying for debt, financial experts agree that you should pay your most expensive debt first. This gives you leverage over most of your cash flow and gives you the flexibility you need to pay for your other debts. In most situations, the most expensive household debt comes in the form of a mortgage. Paying this debt can give you the essentials you need to have more time to pay for your other debts.
Refinance Your Mortgage
Refinancing your mortgage should be a priority if you have more time to pay for your debts. You can refinance your mortgage by contacting your local independent mortgage broker. You can negotiate a deal with them that’s favorable for you, and considering that mortgage rates are pretty low this year, you should proactively do this strategy. You can get a decent amount of money out of this, enough to pay your other bills, and because of the flexibility of a refinanced mortgage, you should be able to live a much easier life.
However, it’s important to remember that you still have to pay for your mortgage yet again. But the good thing about this is that you’re paying at a lower rate and a longer amount of time. This means that your payments will be negligible, and considering that you can pay most of your debts through this simple strategy, it’s certainly worth looking into if you have the time.
Apply for Auto-debit Payments
Next up is getting your other debts in order. These debts can be minor, but they can certainly burn a hole in your pockets once they have accumulated.
One way you can start paying for these debts is by applying for auto-debit payments. Your debit account uses the money you have, so you’re not getting more debt. In addition, the auto-debit process means that you can pay for your debts in time, so you don’t incur penalties. Penalties can be devastating if you have a reasonable amount of debt, and they can easily keep you in debt if you don’t do something about it.
Keep your calendar updated as to when you have to pay for your debts so that you don’t get caught off-guard when the automatic system makes debt payments during that pay period.
Have a Debt Repayment Strategy
The ones we’ve mentioned above are just one of the many debt repayment strategies that exist out there. It’s a mix and match of debt repayment processes that can help you pay your debt day by day. These strategies also center on what you are comfortable with, and there is a unique strategy for each household out there.
Consider doing a consultation with a financial advisor to get your assets checked. You might actually have more than enough to pay for your debt right now. You’re just not seeing it. This will help you develop a debt repayment strategy around that and start living a debt-free life.