Feeling financially trapped? You’re not alone. With the average American household owing at least one credit card with nearly $16,000 in debt, it’s pretty safe to say that when it comes to finances, everyone is experiencing some form of money woes.
But finding yourself in a rut doesn’t mean you have to stay there forever. Getting yourself out of that financial bind is not only tangible, but it can be done sooner than you think if you adopt the right spending and saving habits, in addition to making all-around better financial decisions.
Check out these helpful tips on how you can cut your debt, save and be financially free from those pesky bill collectors.
How Not To Use a Credit Card: Don't use a credit card to pay for things you consume quickly, such as meals and vacations, if you can't afford to pay off your monthly bill in full in a month or two. By doing so, you only fall faster in debt. Instead, put aside some cash each month for these items so you can pay the bill in full. If there's something you really want, but it's expensive, save for it over a period of weeks or months before charging it so that you can pay the balance when it's due and avoid interest charges.
Take Control of Your Spending: Most people spend thousands of dollars without much thought to what they're buying. Write down everything you spend for a month, cut back on things you don't need, and start saving the money left over or use it to reduce your debt more quickly.
Pay Off Your Highest-Rate Debts First: The trick to getting out of debt efficiently is first to pay down the balances of loans or credit cards that charge the most interest while paying at least the minimum due on all your other debt. Once the high-interest debt is paid down, tackle the next highest, and so on.
Don't Fall Into The Minimum Trap: If you just pay the minimum due on credit-card bills, you'll barely cover the interest you owe. It will take you years to pay off your balance, and potentially you'll end up spending thousands of dollars more than the original amount you charged.
Expect The Unexpected: Build a cash safety net worth three months to six months of living expenses in case of an emergency. If you don't have an emergency fund, a broken furnace or damaged car can seriously upset your finances.
Seek Help: If you have more debt than you can manage, get help before your debt breaks your back. There are reputable debt counseling agencies that may be able to consolidate your debt and assist you in better managing your finances. But there are also a lot of disreputable agencies out there.
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