BY CINDY TRILLO
January is often the most difficult time for many families and their finances. Approximately one in ten New York citizens are looking for work with thousands more facing an early retirement. Although the state’s average income remains high, the local costs of living have steadily fallen within the past decade.
According to a report from Nerdwallet, the average credit card debt has a balance of over $16,000 and is continuing to rise 10% each year. While 2017 seems like a distant memory, now is the best time to catch up with your monthly bank statements, prevent the risk of credit theft, and see how much you spent during the holidays. To help make those first steps towards debt management, here’s how you can start 2018 right.
Create A Debt Management Plan
The smartest way to begin paying off debt is to tackle the most difficult obligations first. Once the major debt is paid off, you can slowly work your way down the list. This means, if you owe $4,500 to a credit card company with 15% interest, and $1,500 to another lender with 10% interest, it will only make sense to pay off the highest amount first.
Another strategy to fix your credit is to consider a balance transfer. Instead of dealing with multiple accounts of debt, you can place everything on a single credit card. Reviews on interest-free credit cards state that you can enjoy 0% APR for balance transfers after your APR increases based on your credit. However, you will need to qualify for a competitive rate.
Minimize Amount Spending
According to a survey regarding the estimated Christmas spending, the average family spent $906 in 2017. While that may seem like a relatively low amount, the increase in interest overtime will eventually raise the costs and result in more debt. To help pay off debt, start by reducing your spending in the process. But, how do you cut your living costs? All it takes is an organized budget.
Make a list of your current expenses and compare the amount to your annual income. This will show you where you have the most flexibility to reduce your spendings.
Start An Emergency Savings Account
Once you have paid off your debt, the next step is to boost your income and. Ideally, your emergency fund should cover at least six months-worth of living expenses. With great emergency savings, you will no longer have to worry about living paycheck to paycheck and find yourself drowning in debt.
If debt is getting in the way, aim to start 2018 on the right foot towards financial freedom. Focus on what is taking the most out of income and finish paying the remaining balances off until they are done. The faster you recover from debt, the more you can save from fees and interests over the long run.