« »

Friday, February 7, 2014

Four tips for managing your debt and finances

By Jennifer Dee

People know that the economy is supposedly on the upswing, but people who are grappling with debt won’t see much of a change.

It can be difficult to get ahead financially when you’re drowning in debt, and if you have a bad credit rating paired with it improving your financial situation can seem almost impossible.
Seek out way to reduce monthly expenses to pay off debt faster
Total outstanding consumer debt is over $3 trillion dollars

A study done by the Federal Reserve, Join Economic Committee, Sallie Mae, and TransUnion show that a lot of Americans are in a financial and credit crisis.

The study calculated that the country has $793.1 billion in credit card debt alone, with the average household holding $15,799.  Fifty-six percent of people surveyed had carried an unpaid balance in the past 12 months, and 26% said that their amount of debt had increased over 12 months.

People who have student loan debt aren’t doing much better.  According to the Federal Reserve Board, Chronicle of Higher Education, and College Board, the average student holds $24,301 in debt. Improving your financial situation is difficult when you’re in debt, but it isn’t impossible.  If you’re feeling weighed down with debt and you’re worried about paying your bills each month, follow these tips to gradually but dramatically improve your financial situation.

Don’t fall for scams, and don’t expect a quick fix

If you do a quick search for “fix my credit score” or “get out of debt”, you’re going to see countless websites that claim they can fix all of your financial problems in a few easy steps.  All you have to do is give them access to your bank account, your social security number, and all of your credit card numbers.  You should never give anybody access to any of your finances, even if they claim to be experts.  You also shouldn’t plan on having your situation fixed immediately.  Improving your credit score, getting out of debt, or simply getting yourself to a comfortable place financially are going to take time.  The time and effort you put into it will pay off eventually, so just let yourself know that you’re going to be in for the long haul. 

Analyze your bills

Before you even start thinking about tackling your biggest debts, you need to look at the smaller parts of your financial situation.  Start by looking at your monthly utilities and mortgage or rent payments, and make sure that you take into account what you spend on food and gas.  If your utilities are high, look into finding ways to reduce your monthly costs.  Start to cut out going out to eat (and that includes the occasional cup of coffee and stop at a fast food restaurant, those little visits will eventually add up), and see if you can organize a carpool or start taking public transportation to work.  Any and all of your money that isn’t spent on necessities need to start going towards chipping away at your debt.  And while we’re on the topic of paying off debt, we should take about…

Paying more than the minimum payment

When you start to make a budget for paying off of your debt, aim to always pay more than your minimum balance. Paying only the minimum balance will keep you out of trouble with collection agencies, but they won’t do a thing to actually take care of your debt in a reasonable amount of time.  Even if it’s just an extra $20 per bill, you’ll be adding enough to slowly get rid of your debt and the interest you acquired. 

Find out your credit score

Some people avoid finding out their credit score because they know it’s going to be bad, but it’s something you need to know.  There are so many companies that claim they’ll help you find out your credit score, but some of these businesses won’t be able to give you an accurate estimate.  Look for a place that does a 3 in 1 credit score so that you can get a good credit score that will tell you everything you need to know about your credit situation.

About the author: Jennifer Dee is a writer that enjoys giving simple and easy to follow advice about big problems.

Image license: Simon Cunningham, CC BY 2.0