Did you know that the total consumer debt tally in the U.S. climbed to $17.1 trillion in 2023?
Many individuals, families, and households are living paycheck to paycheck. Studies show that many Americans don’t have sufficient funds on hand to afford a $1,000 emergency. So, many have to turn to high-interest credit cards or higher-interest loans. It’s not hard to see how people struggling to make ends meet can sink into debt.
If you’re like many people in the country falling deeper and deeper into debt, now’s the time to do something about it.
Here are five specific things to consider if you need help.
1. Tabulate What You Owe
When drowning in debt and seeking a life preserver, you need to know how much you owe and whom you owe it to. Look at your debt and how much interest you’re paying, and reflect on whether you’re bringing in enough to pay it down. Whether or not you do, you must contact creditors to work out payback terms or to let them know you can’t afford to pay.
2. Figure Out How to Pay Back Debt
After quantifying debt, you need to figure out how to eliminate it. There are various ways you can go about it. Some advise tackling the smallest debt first, others say it’s best to start with the largest one, and others recommend focusing on the debt with the highest interest rate. There are pros and cons to each option. But the main thing is that you commit to a strategy and stick to it.
3. Cut Back on Your Spending
It’s hard to get back on solid financial footing if you’re spending too much. Yes, there are things you need. And there are bills you must pay monthly. But if you’re deep in debt and need to climb out, you should eliminate anything unnecessary. You won’t be able to climb out of your debt problem if you’re creating more debt along the way. You’ll be like a hamster on a wheel.
If you don’t budget, it’s a good time to start. Budgeting can help you avoid debt or get out of debt. It’s about ensuring you spend within your means. When you start budgeting, you’ll see where you might be spending too much money. You need to spend as much as possible to pay down debt- not take out orders. A budget will help you stick with the game plan.
4. Talk to Lenders
Try working with lenders to address your debt situation. Some lenders will slash some of the amount owed as long as you pay back a specified amount of your debt load.
5. Speak to a Lawyer
Despite your best efforts, you might wish to talk to a lawyer. You may be so far in debt that you don’t have the means to right the ship. Lenders are usually willing to work with people in debt. But if you don’t have the means to pay anything, you’ll need another strategy.
People tend to tense up when discussing bankruptcy. No one wants to go that route, but it can be the right option. Speaking with a lawyer, you’ll have the information needed to make an informed choice. You can ask the lawyer anything you wish and get helpful replies.
If you’re in debt, you’re one of many in the U.S. So, you’re not alone. There are things you can do to improve your situation rather than continue to struggle. Remember the five points above. They can help you turn things around and build a stronger financial foundation that’s debt-free.
