Oh, how wonderful life would be if debt was just a bad dream. Well, pinch yourself. You’re not dreaming. Debt is definitely a real thing. For many people, it is a living nightmare. How can you Student Loan“wake up” from this bad dream and get out of debt and move on with your life?

If you’re like most Americans, you have some form of debt—credit card, student loan, auto loan, mortgage, etc. Debt can be a tool to help you to achieve your long-term goals (like buying a house or taking out a loan for higher education), but it can also be a trap that can bury you alive. According to surveys, the average household credit card debt in America is $16,061 and the average student loan debt is $37,172 for those who have taken out student loans. With just those 2 categories, many Americans face over $50,000 in debt before even considering mortgages or other daily living expenses. YIKES!

How much simpler would life be if you could pay off that mounting credit card debt or begin to  chip away at the mountain of student loans? Would you be able to breathe a sigh of relief and relax a little easier? Paying off debt is possible. It’s not going to be easy, but let’s face it, nothing worth having is easy. It’s going to take some determination and some sacrifice, but you can dig your way out of debt in less time than you think! Let’s talk strategy!

Credit Card UseFirst of all, before we can even begin to talk about debt retirement strategy, we need to address a key point to avoid future credit debt. Yes, I know it sounds simple, but don’t live beyond your means. Yes, the concept of this is simple, but, believe it or not, this turns out to be a major stumbling block for MANY people. Know how much you make on a monthly basis, and DO NOT spend more than that! That’s how credit card debt starts to accumulate…and FAST! If you MUST swipe that piece of plastic, make sure it is for legitimate NEEDS like emergency auto repairs, health emergencies, rent, groceries, well you get the picture. Even still, if there is some other way that you can cover those expenses and avoid swiping that card, explore those options first. The more you swipe, the higher your tab gets. And you aren’t responsible JUST for the money you spend. Credit card companies are going to take you to the cleaners for the convenience of using their money. It’s called interest.  And interest on credit cards certainly isn’t cheap. The average interest rate on a credit card is around 15.59%, and that’s only the average! Many rates are higher! At interest rates like that, you certainly don’t want to be using your credit card to “keep up with the Joneses” and buy extravagant dinners, clothes, gadgets, and anything else that catches your eye.

Secondly, if your current income is less than your monthly expenses (a contributing factor to why you’ve racked up the credit card balance you currently have), it’s time to explore how to increase your income so you can stop swiping that card. Sure, you could ask your boss for a raise, but most of the time, that isn’t going to happen. You’re going to have to get those creative juices flowing. Do you have some extra time in the evenings or on the weekends? Try finding a side job that would match up with your interests and availability. Maybe the “traditional” part time job doesn’t mesh with your schedule. Think outside the box.  There are TONS of side gigs that you could explore that would be on YOUR time—pet sitting, dog walking, house sitting, babysitting, running errands, mowing lawns, and the list goes on and on! Find something that works for you and start increasing your monthly income!

Now that we’ve talked about curbing your monthly spending and increasing your income, you’re ready to talk debt-retirement strategies. Well, not just yet. Before we can talk strategy, you need specific money set aside each month with the sole purpose of debt retirement. If you don’t have a monthly budget already in place that allows you to set aside such money, that’s your first point of attack. Don’t panic if you don’t already have a monthly budget in place! I can help. Check out last weeks’ blog about developing a budgeting strategy that is easy AND effective! We talked in depth about the 50/30/20 plan. This plan works whether you make $20,000 or $2 million! Once you’ve brushed up on your budgeting skills, be sure to stay tuned for the follow up blog later this week about strategies for debt reduction and debt retirement!

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Berger, Rob. “The Fastest (And Slowest) Way To Pay Off Credit Card Debt.” Forbes, 15 Dec. 2016, 9:52 AM, www.forbes.com/sites/robertberger/2016/12/15/the-fastest-and-slowest-way-to-pay-off-credit-card-debt/2/#d7bcb116f02d.

Close, Kerry. “The Average U.S. Household Owes More than $16,000 in Credit Card Debt.” Money, 20 Dec. 2016, time.com/money/4607838/household-credit-card-debt/.

Dilworth, Kelly. “Rate Survey: Average Card APR Rises to All-Time High of 15.59 Percent.” Creditcards.com, 22 Mar. 2017, www.creditcards.com/credit-card-news/interest-rate-report-32121/

Fontinelle, Amy. “6 Tips to Dig Your Way Out of Credit Card Debt.” Fox Business, 26 July 2016, www.foxbusiness.com/features/2016/07/26/6-tips-to-dig-your-way-out-credit-card-debt.html.

Friedman, Zack. “Student Loan Debt in 2017: A $1.3 Trillion Crisis.” Forbes, 21 Feb. 2017, 7:45AM, www.forbes.com/sites/zackfriedman/2017/02/21/student-loan-debt-statistics-2017/#3ce67f025dab.

“How the Debt Snowball Method Works.” Dave Ramsey, www.daveramsey.com/blog/how-the-debt-snowball-method-works.