New Year, New You, New Finances

2018

80% of Americans are in debt. Ranging from a small loan to millions of dollars. Almost everyone who has been to college has a student loan, and most parents are in debt helping to support their children. ‘Debt’ is such a horrible word, it implies a disregard and control over money. Yet most people get into debt because they had to and not because they were careless. Obviously, the ideal situation is to not have debt at all, to be able to live comfortably within your means, but with the average outgoings for a household nearly matching the average income, it is easy to see where the extra money is needed.

But it’s not all doom and gloom; being in debt doesn’t mean the end of the world, in fact, there are many ways to manage it, and prevent yourself from falling back into it.

Saving

The obvious trick is to save where you can. Get into the habit of putting a set amount of money aside each month - this cushion will help you to pay for those surprise bills, will see you through some tough times and could even pay for that holiday you’ve been hoping for. Saving doesn’t have to break the bank - find out a figure that you can reasonably put aside - don’t put a strain on your finances. Resist the urge to spend all your savings in one go - if you’re saving for a holiday that costs $500, then save $700, you have a safety blanket in case something happens while you’re away. And pick a savings account with a high interest rate, that way your money will make money without you having to do anything.

Consolidate

If you have multiple debts then it might be an idea to get a loan to cover them all so that you only have to think about one payment each month, and one interest rate. Look into a debt consolidation calculator to see if this route is plausible for you.

Credit Score

Your credit score is as important while you’re in debt as when you’re out of it. Raising your credit can be easy - paying bills on time and keeping good records helps a lot. Actually paying off your debts in time can help your credit - meeting any fiscal deadline is important for a healthy credit score.

Cut up those Cards

This one may hurt a little - but those credit cards have to go. Either lock them up until the debt is cleared and have a satisfying moment with the scissors, or hack them up straight away to avoid temptation. Try and be ruthless about it, like ripping off a band-aid, but if you know that you will have zero saving for a while, maybe keep one with a small balance just until you have a small safety net saved up - but this is your safety until then, so no needless spending.