Profitt Report: Here's how to start tackling your debt
The average American carries a balance of more than $6,300 on their cards according to the credit-reporting agency Experian.
No matter the kind of debt or how you got into debt, you first need to step up and take ownership of it.
“If you don't prioritize and you try to tackle something all at once, it's too much and it paralyzes you,” said Mindy McIntosh, financial professional of McIntosh and Associates in Freeland.
She said first, take an honest look at all your debt and write it down in one place.
“Ok, here's our debt bubble of whatever it might be,” McIntosh said, “compare that to what's happening in their daily budget, income and expenses.”
Take note of interest rates. You have two strategies: pay down the debt with the highest interest rates first or the snowball effect, where you pay down the smallest balances first.
“The snowball seems to help folks more because they feel like ‘wow, I’m actually making a dent in this,’ they're proud of themselves, they're more focused long-term,” she said.
This isn’t possible for everyone in every situation, but another option is to consolidate your debt into on personal loan.
“If they do that, it's usually a lower interest rate where they can pool four or five debt items,” McIntosh said, “they can also get a zero-interest payment credit card, gives you a certain amount of time just to give them a breath, to get back on their feet.”
Be careful with these options and read the fine print. For example, most zero-interest credit cards require you pay off the balance in a certain amount of time. Otherwise, you’re back-charged all the interest you would’ve paid.
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