Making resolutions is a typical part of the New Year for many Pennsylvania residents. If one of those resolutions includes getting a handle on debt, there are some ways to accomplish that. Currently, the average household in the United States carries around $6,700 in credit card debt, and signs show that collectively, Americans are continuing similar spending habits that they had before the recession. The start of 2014 may be a good time for consumers to get bad spending habits under control and pay down what they owe.
Before paying off debt, consumers may find it beneficial to establish a budget to keep track of expenses. Surveys by the National Foundation for Credit Counseling show that only 40 percent of adults in the country currently keep a budget. A budget is a good way to examine spending habits and see where frivolous spending can be cut. Once this is accomplished, consumers may wish to consider setting aside some money out of every paycheck to put toward an emergency fund. This should cover expenses for a year or so in the event of an unforeseen financial hardship.
Paying down current debt is important, and many consumers accomplish this using the snowball method. This means that more money is put toward the debt with the highest interest rate, while the debts with lower rates only receive the minimum payments every month. When that debt is gone, the debt with the next highest rate gets the extra payment, and so forth.
Pennsylvania consumers who work toward these goals may find themselves with extra savings and better credit. Still, many will continue to have trouble paying off their credit card debt and other obligations. There are options for debt relief in our state, including bankruptcy. While it may not be the ideal solution for everyone who is overwhelmed with debt, it may help some get a fresh financial start so they can begin to work on a better future.
Source: The Huffington Post, The 4 Resolutions Every Indebted Consumer Should Make in 2014, Odysseas Papadimitriou, Jan. 13, 2014