Americans hold trillions of personal financial debt. The Federal Reserve Bank of New York released a debt analysis report in November 2022. Mortgage loan debt was at $11.67 trillion collectively for the nation in September 2022. American credit card balances skyrocketed by $38 billion compared to 2021.
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1. Get a Debt Consolidation Credit Card
Do you have more than two credit cards with high-interest rates? Apply for a debt consolidation credit card that has 0% interest for 12 to 18 months. Transfer your credit card balances to this one card so you can reduce your two or more credit card payments to one.
This tactic will give you time to reduce your debt without so much interest piling up during each monthly payment. Of course, keep your other credit cards current by putting at least one payment on it per month and paying it off right away. Doing so can keep your credit score high as you continue to utilize your credit.
2. Spend Only on Bills and Necessities
It can be hard to spend on only bills and necessities, especially when you are used to treating yourself out to eat or purchasing an item for yourself once a week. Every time you get the urge to spend unnecessary money on wants instead of needs, think about your goal to reduce your debt. Keep a budget accordingly by focusing only on bills and necessities.
3. Reduce Your Monthly Spending
Speaking of budgeting, find ways to reduce your monthly spending. Cancel streaming, magazine, and other subscription services you are not using anymore.
Get a pen and notepad and write down all your monthly expenses. Are there any bills you can cut off to save about $50 or more per month?
Maybe there are ways to lower your monthly expenses by purchasing alternative services. For example, if your cable package is $120 per month, you can save money by paying $10 per month for Netflix instead.
4. Take a Hiatus From Accumulating More Debt
While it may be tempting to take out a loan on a new car or to get a new store credit card to shop at your favorite store, take a hiatus from accumulating more debt. Doing so will make it easier to reduce personal finance debt faster by working to pay off what is already accumulated on current credit cards and loans.
5. Pay All Your Bills on Time
You will only spend more if you do not pay loans, credit cards, and other bills on time, because late fees of $25 to $50 can accumulate if you pay after the due date. Keep a calendar on your fridge showing when all your bills are due to keep track of them better.
How Will You Start Reducing Personal Finance Debt?
What is the first step you want to take to reduce personal finance debt today? Let us know in the comments to inspire others to get on the road to being debt free.