Getting out of the revolving cycle of debt may seem intimidating, but with a little guidance you can breathe easy! According to CreditCards.com, the average American adult has $4,878 in consumer debt. Not all debt is bad and managed properly can increase your credit score ultimately achieving better rates, saving you money in the process. But managed poorly, it can do just the opposite. So before all is lost, where do we start?
Analyze your finances.
Before you can even start thinking about taking on debt, you should become familiar with your finances. How much are you bringing in vs. where is it all going? Make sure you always know how much you owe to what lender, and how much interest you are being charged.
Pay off bad debt first.
The interest on some credit cards grows daily, what! Prioritize your budget to paying off the ones with the highest rates first. Just don’t ignore your other debts in the process. Continue to make minimum payments to the ones with smaller rates, so you can focus on your biggest debt priorities.
Consolidate where you can.
Instead of making payments to several lines of credit with different lenders and rates at a time, it helps to consolidate all your loans with one lender. This makes it easier to track and make payments… meaning you only have to deal with one monthly payment! Talk to an MSC to see what we can do for you. It’s important to know that there are options and sometimes all it takes is to ask the question.
Don’t neglect your savings while trying to pay debt.
It might be tempting to use any extra cash towards paying down your debt, but you NEED the cushion from your savings account. What you don’t need is to accrue more debt in the event of an emergency.
As long as you stick to your budget and keep making your payments, you will be well on your way to knocking down your debt and improving your credit score. Don’t be afraid to ask for help along the way. Our Listening & Lending® program was created to give you a voice in your banking. Tell us your story!