Americans seem to have a great ability to get into debt. In 2019, household debt in the United States rose to almost 14 trillion dollars. Average credit card debt per family is $8,500. The average household with auto loans owes just under $28,000. Average student loan debt is $46,800, and average debt for those with a mortgage is $189,600.
Regardless of what stage of life you are in or what your needs are, if you’re like the average American, debt can be a real issue. Resolving your debt can allow you to start putting more away to secure your retirement, take the vacation you’ve been dreaming of, or just provide more financial breathing room for every day expenses. It’s going to take more to accomplish this than occasionally skipping out on your morning trip to the coffee shop or trying to buy things on sale. You need to develop a detailed plan for how to get out of debt and stick to it. Being mindful of your debt is a good thing, but awareness without concrete steps for resolution won’t be very helpful.
Create a budget and stick to it: One important step towards reducing your debt is to create a budget and stick to it. Understanding where all of your money goes each month will allow you to very clearly see the areas you might be overspending. Cutting out unused subscription services and trips out to eat could start freeing up more money for you to put towards paying off your debts. It isn’t a quick fix, but taking this step will allow you to cut out bad habits and improve your financial picture.
Consider refinancing: If you have multiple outstanding debts, one thing that may help is to refinance and consolidate your payments. It is well worth the effort to carve out space in your schedule to analyze whether the rate on your car or home loan is abnormally high. Or, perhaps the payment due date is especially inconvenient. Often it’s as easy as letting your lender know about your situation to get your loan restructured in a way that works for you. Don’t just stand by and assume that nothing can be done!
Know which debts to prioritize: Aside from assessing your budget and knowing where you can cut back, another key step is to evaluate which debts you need to pay off first. Debts that have the highest interest rates should be your primary focus so that you can save as much money as possible by eliminating them early on. This can also help to relieve the stress that comes with having debt, as such a plan will give you peace of mind and a sense of direction.
Reach out for help: An important thing to keep in mind while trying to reduce debt is that you may not be able to handle everything on your own, and that is okay! There are different tools available to you, and many of them are free. The objective with most is to put you on track towards reducing debt. Financial advising, budgeting workshops, debt calculators and debt consolidation loans are all options that could help significantly to reduce your monthly payments. These tools are readily available to you, but you need to be proactive and utilize them! Cutting back and looking to pinch pennies is great, but sometimes it is going to take outside help to push you over the hump. Being knowledgeable about the resources available to you will help take the stress out of reducing debt.
One resource that we highly recommend is Piedmont Advantage’s new SMARTU. This is a web portal that allows you to select relevant learning experiences that can help improve your specific financial situation. The modules are easy to navigate and will give you the knowledge you need to push forward and reduce your debt. Best of all, this experience is free for members and non-members alike. You can check out this great resource at pacu.com.
Stay the course: One of the most important things to remember while trying to get out of debt is that it can be a long process. Don’t get frustrated with yourself when you’ve taken some of these steps and everything doesn’t clear up right away. Develop good habits and keep chipping away at your debts bit by bit. Living within your means and being disciplined will help you become more secure financially. Don’t stress – you’ve got this!
From our new Debt Simplified loan to a variety of educational workshops and webinars, Piedmont Advantage has a wide range of ways to help you get back on track! If you want more information about how to reduce your debt, visit pacu.com or call 800-433-7228. We are eager to assist you on the road to financial freedom!