Taming the Debt Beast
Americans are carrying a larger personal debt load than ever before and savings rates are at an all time low. The percentage of disposable income used to make debt payments is at record high levels and the number of bankruptcies and foreclosures are at record levels as well. Part of the problem is our spending habits. Lenders have also done their part by offering easy loans, often to people with poor credit.
To begin tackling your debt, you need to take some basic steps first. Most people only pay attention to the amount of their loans and what the monthly payments are. To fully understand your debt situation, you need to be aware of all the details: balances due, interest rates, whether that interest is deductible, whether your rates can change, and whether there are any prepayment penalties for paying off your loans early.
Once you know the details, you should prioritize your debt. All non-deductible loans should be paid off first, leaving loans such as your mortgage, home-equity, and some student loans for later. These non-deductible loans should be listed from highest to lowest interest rates, or you may choose to pay off the smallest balances first, if you want to wipe out several small bills quickly. Either way, you should pay the minimum on all your other debts, and pay as much money as you can to the first bill on your list. Eventually, this debt will be paid off. You can then tackle the next bill on your list, sending that creditor the amount of money you sent each month to the previous bill along with the amount you were paying for your monthly minimum payment. Eventually, you will be paying a larger and larger amount to each subsequent bill, erasing your debt more quickly than trying to pay off several creditors at once.
Of course, this only will work if you stop adding to your debt. Continuing to use credit cards while trying to pay off your debt only compounds the problem. If you find that you are using your credit cards for emergencies, plan on adding a set amount each month to an emergency savings plan. You will then have the means to cover your emergencies without having to pull out those credit cards. By making a plan and remaining committed to it, you will have a chance to pull ahead and begin saving for your future.
It’s not unfair for us to say that life will never be better than when you’re living at Glades Diamond Apartments in Belle Glade, Florida! To further improve your day-to-day routine, we bring you these lifestyle-enhancing tips that will help you revamp your lifestyle in a variety of ways.