Debt Management: How to Take Control of Your Finances

Thursday, January 23, 2014, 1:00 AM | Leave Comment

As of 2012, the average household debt in America is $54,000, with nearly $16,000 of that being unsecured credit card debt. In 2012, the median household income was $51,017, which means on average, Americans owe more than they make in an entire year.

With those figures, it is easy to see how debt can become difficult to manage.

Debt Management How to Take Control of Your Finances

If you are struggling to get control over your finances, these steps can help you take back your life, save money on interest and free yourself from the oppression of big debt.

  • Know Your Money

    Starting a budget is almost always the first piece of advice you will hear, with good reason. If you have not been budgeting, you might be very surprised at how much you actually spend.

    Start tracking every outflow from cash, bank accounts, and credit cards. At the end of one month, look at the results and see where you can make improvements.

    Saving money on monthly expenses can give you more to put toward debt.

  • Decide What to Pay Down

    There are two trains of thought for deciding which debts to pay off first. Paying off higher interest rate debts first, or paying off low balances first.

    Consider the interest rates, and total debt for each of your obligations. It might be cost effective to pay off higher rate balances first, but there can be immense satisfaction in paying off smaller debts and freeing up time and money to focus on a few larger debts.

    Whichever method you choose, it helps to create a written action plan for your bills and stick to it each month.

  • Know When Debt is Unmanageable

    If you have been struggling under the weight of large debt, and are not seeing real progress, or if there simply is not enough left in your budget after living expenses to pay down your debt, it may be time to consider another option.

    Though rarely desirable, bankruptcy can help you start fresh by erasing most of your debts, and allowing you to begin anew with little or no debt and a tremendous weight off of your shoulders.

When you have exhausted your other options and are ready for a fresh start, your Chicago Bankruptcy Attorney, or a group like Prime Bankruptcy by Bizar & Doyle, LLC can walk you through the process, providing you with understanding, compassion, and expertise to help you realize freedom from the crushing weight of overwhelming debt.

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