Debt is one of the biggest troubles facing most American families these days. Families are struggling to make car payments and high monthly mortgages, and many are taking on even more debt by sending their kids to college. In fact, the debt crisis has become so severe that the Federal Reserve’s July report noted that the total U.S. revolving debt was a staggering $793.1 billion, 98 percent of which belonged to credit cards with the average American household having nearly $16,000 in credit card debt.
This high level of debt can cause extreme anxiety, and has made many decide to choose reducing their debt as their New Year’s Resolution. So if you are one of millions that has chosen to reduce their debt in their upcoming year, consider adhering to the following tips:
Create a Budget
One of the things that leads people to overspend is the lack of foresight in regards to their monthly budget. People don’t always take into consideration just how much they spend monthly compared to how much they bring in. To make an adequate monthly budget, be real with yourself. Write down exactly how much you make and take into account on how much you spend on everything from your mortgage to your entertainment, and then see where you can feasibly reduce your expenses.
Cut Up the Cards
Credit cards are the most likely cause of debt, next to school loans and mortgages with many people actually paying more to their credit card companies than they do on their car payment. If you find yourself frequently reaching for your credit cards when you can’t afford an unnecessary purchase, cut them up. Go head and get rid of those cards so that you can pay them off without racking up more debt.
If you do choose to keep a credit card or two in your wallet, make sure that you choose the best rebate credit cards so that you are able to benefit the most from what you charge each month. Most credit cards with great rebates offer reviews online, and the Chase Sapphire Preferred review and the Discover review are a few of the more popular. However, if you use these cards, make sure that you can pay off the balance at the end of every month.
Make Your Morning Coffee and Bring Your Lunch
Hundreds of dollars are wasted every year on fancy coffees and eating out – even opting for a regular cup of coffee daily instead of your normal drink can total up to a staggering $80 a month, and that’s the minimum.
To save yourself some money, money which would be better spent paying off debt, make your morning coffee at home and bring your lunch to work. Sure, eating in the office isn’t always as fun as escaping the office for a brief period, but it can save you $200 or more a month – a cutback well worth it if you are serious about getting out of debt.
Choosing to get out of debt isn’t as easy as simply paying a few extra dollars to your creditors each month. Choosing to get out of debt is a lifestyle change. In addition to paying extra each month, you will need to change your life so that you can live more frugally which means avoiding the coffee shops, shopping sprees, and unnecessary trips.
*This is a guest post by Becky W.