3-Step Approach to Household Debt Management

3-Step Approach to Household Debt Management

Debt is a universal problem, and something that continuously affects the person’s emotional health and quality of life. In the United States, the most common form of debt is credit card debt and it’s on the rise. According to one latest study of credit card debt among households, it was found out that the average credit card debt of a household is $15,355. And with an average interest rate of 18 percent and increased consumer spending, household debt is expected to grow. Aside from credit card debts, individuals often take out other forms of debt to sustain their lifestyles or to bridge the budget deficit due to expenses related to health and education. If you think that debt will become part of your financial statement for the next few years, it shouldn’t define you or affect quality of life.

Always Match Assets With Liabilities

A balanced assets and liabilities is a cardinal principle adopted by financial institutions, and a principal you may want to adopt inside the household. The idea behind this balanced statement is to have the money or the resources in case you need it. To make this work, you need to avoid the usual mistakes made by many homeowners and professionals when it comes to budgeting and investing. This means avoiding the use of credit cards to finance the monthly mortgage payments on your property. Applying for a long-term loan to pay for short-term financial obligation is not a sound financial move. If you take a 5-year loan to finance a used car, there’s a big chance that you’re still paying for the loan after the car has been permanently stored in the junkyard.

When it comes to keeping a balanced financial statement, it pays to appreciate what extra work and part-time jobs can do. There are a number of part-time jobs available, and some of these popular part-time jobs like paid surveys can be completed online.

Use Credit Cards Responsibly

Credit cards are the main sources of debt, thus it should be used responsibly and with caution. If a credit card is a household need, then consider only the best credit cards that offer the best rates. And once the credit card has been approved, financial experts suggest paying more than the minimum payment required in a month. By paying more than the minimum, you can easily pay off the credit card bill. If the household maintains a number of credit cards, you must pay off the cards that boasts the higher interest rates.

Time to Break the Debt Cycle, Now

If you are struggling with debt, then the recommendations listed above can help you take the right steps forward. You can also limit the expenses to grow the resource base of the household. This means cutting on expenses during the holidays, and slashing the budget for entertainment and other ‘wants’. It also matters if you have a budget and you use the appropriate financial tools available online. By confronting debt head-on, the problem can be addressed gradually and your life becomes more manageable.

3-Step Approach to Household Debt Management Credit Picture License: Debt Scrabble via photopin cc

Leave a Reply

Your email address will not be published. Required fields are marked *