How To Control Your Debt
Below is a MRR and PLR article in category Finance -> subcategory Debt Consolidation.
How to Control Your Debt
Summary
If finding a daunting balance on your credit card statement sounds familiar, you're not alone. Many Americans are maxing out their credit cards, using them for everyday expenses like utilities, groceries, gas, and fast food, highlighting the increasing reliance on credit. Beyond credit cards, debts from student loans, mortgages, and the IRS can add to financial stress. Here's how to keep your debt under control.Understand Your Spending
Credit cards can make it easy to overspend. Even small purchases can accumulate rapidly, leading to high balances with steep interest rates. To prevent this, maintain a transaction log for your credit card just as you would for your checking account. Record each transaction, and set a spending limit for the month. Once you reach this limit, stop using the card until the balance is paid down. Consider removing the card from your wallet and storing it elsewhere to resist temptation.Be Aware of Your Payments
Evaluate the amount of debt you're comfortable carrying by considering how much interest you're willing to pay monthly. Calculate the maximum debt you can sustain at that interest level. For example, if you prefer to pay no more than $25 in interest each month with an interest rate of 12.9%, divide $25 by 0.129. The result suggests you should carry no more than around $195 as a month-end balance to maintain this interest cost.This principle applies to home buying as well. The listed price of a house is just the beginning. Consider the total amount you will pay over time, incorporating interest. Mortgage interest calculations can be complex, so have your loan officer provide a detailed breakdown before buying. Generally, your mortgage payment should not exceed 30% of your income, ideally remaining below your net bi-weekly paycheck.
Limit Credit Card Use
If prior attempts to control your credit card spending have failed, you might need a stronger approach. Store the card out of reach or destroy it if necessary. A creative solution is to freeze the card in a bowl of water, requiring effort to retrieve it?"dissuading impulsive spending.Stay Aware
Managing debt starts with staying aware of it. Swiping a credit card is easy, but understanding the true cost of each swipe can make you pause before using it.By staying informed and disciplined, you can effectively manage and control your debt.
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