Featured photo by Kyle Broad
How to Handle Your Debt Issues in 2017
Have you found yourself struggling under a pile of debt? You’re just one of millions of Americas facing this challenge. Don’t give up on your financial future just yet; it is possible to get out of debt with the right strategies and behavior changes. The average American household in debt owes over $15,000 in back taxes, student loans, mortgages, and credit payments. Numbers like this are scary, but instead of drowning in a sea of worry, it’s important to come up with a proactive plan to combat your debt and make your way into financial freedom. Your family can be well on its way to a solid financial future with these important tips.
Pick Your Payment Method
When it comes to paying off debt, experts generally recommend two payment plans: the avalanche method and the snowball method.
- The Avalanche Method:
If you have debt accounts that are quickly accruing high interest rates, the avalanche method could be a better way to tackle your bills. Organize your accounts in order of interest rate charged, from largest to smallest. Funnel all of available money towards the first account (retaining enough to pay the minimum balance on the rest of your accounts). Once that account is paid off, move on to the next. This helps reduce the amount of interest paid in the long run.
- The Snowball Method: The most common method recommended for debt payment is the snowball method. Organize your accounts in order of smallest to largest balance. Pay off the smallest account first, then move onto the next. Many people appreciate this tactic because it helps decrease the amount of accounts you’re responsible for more quickly.
If you’re unsure which method is best suited to your situation, it’s always advisable to talk to a finance professional. Whichever you land on, take time to get your debts organized; it’s the first step on the road to repayment, and can help you alleviate stress.
Improve Your Cash Flow
In order to have more money to put towards paying off your debts, you may need to find new ways to supplement your monthly income. Already work a 9 to 5 job? Consider taking on a weekend job for a few months. Walking a dog, watching your neighbors’ kids, or driving for Lyft can help you bolster your bank account. While you can make extra money a variety of ways, most people find it easiest—and most convenient—to head online. Securing an online job means making money from the comfort of your couch with skills you already have. In order to make an online freelancing job lucrative, you need to have plenty of time to decide, possess self-management skills, and prove to your employers that you can deliver what they ask for on time. Whether you find a job as a freelance writer or use your graphic design skills to create logos, there are plenty of ways to make money on the Internet.
Paying Off Tax Debt
Tackling tax debt is an entirely different equation. Unlike credit debt, mortgages, or student loans, the creditor behind these payments is a government agency, and they are more capable of enforcing serious consequences if you ignore their warnings. They may garnish your wages, seize your belongings, and even enforce jail time in the most serious of cases. It’s in your best interest to get these debts settled as quickly as feasibly possible.
Millions of Americans deal with debt each year, but when you find yourself under a mountain of payments, a bit of panic is inevitable. Fortunately, there are step-by-step ways you can begin tackling your debt and find yourself in a much better position by this time next year. Keep these tips in mind and start working on your financial future today.