Americans are racking up staggering amounts of debt. The average credit card debt in this country is over $15,000. In 2013, 70% of college graduates came out of school with student loans. The average student debt amount is a shocking $33,000. When you also consider personal loans, car loans, consolidation loans, and other debt, American consumer debt totals nearly $12 trillion! However, you do not need to be the average consumer. You can gain control of your finances, implement a debt reduction plan, and begin saving money. Here are a few tips to help you gain control of your financial situation.
Make a List
First, begin by listing all of your debt. Include any credit card debt, student loans, car loans, personal loans, and any other debts. It is hard to payoff credit cards and other loans without first obtaining a clear picture of what you owe.
Create a Budget
Next, make a plan for each dollar that comes into your household. List your expected monthly income and your monthly expenses. This will give you an idea of how much you have remaining at the end of each month to begin your debt reduction plan. If you find you do not have money remaining at the end of the month to apply to debt reduction, consider ways you can increase your income. For example, this could mean working overtime, picking up a second part-time job, or freelancing.
Form an Attack Plan
Now that you know what you owe and how much money you have remaining at the end of each month, form a plan to reduce your debt. An effective way to do this is to begin with the debt with the smallest balance and put all extra money you have toward it. Once it is paid off, you can then begin attacking your next smallest debt. Continue this debt snowball until you have paid off all your debt.
Monitor Your Progress
A budget is ineffective if you are not tracking your actual spending. Monitor your spending to ensure you do not overspend. Also, keep track of your debt repayments to ensure your balances are updated accurately by the creditor.
Begin Saving Money
When you payoff credit cards, student debt, and other outstanding loans you can then focus your energies on saving money and building wealth for the future. Take control today and change your financial future!