Today, as cost-of-living increases faster than income, Americans are taking on (and holding on to) more and more debt — altogether, around $12.73 trillion worth.* Overall, household debt has increased 11% in the last decade.**
Debt happens. If you have it, you’re certainly not alone. While reducing debt isn’t necessarily easy, it is possible. And the good news: the more you pay off, the easier it becomes. We’ve put together a few tips to get you started.
1. Prioritize Your Debts
Prioritizing your debts and paying them off one-by-one is a great starting point. The more you pay off, the more you can put toward the monthly payment of the next. Similar to the way debt grows exponentially, the more you pay off, the faster it disappears, ultimately saving you money (in interest), time, and stress.
2. Cut Your Expenses
To avoid new debts and pay off existing balances faster, take a look at your bills, subscriptions and other recurring charges. Cut what isn’t necessary and ask your service providers about ways to save on the ones that are. There are tons of tools and apps that can help you monitor expenses, track budgets, and even analyze accounts for long-forgotten recurring charges.
Another place to save? Your insurance policies. People often overpay for insurance — home, auto, life — without realizing there are more affordable carriers or options available. For example, term life insurance policies have much lower premiums than those of whole life insurance policies. These savings are one of the reasons term life insurance is part of our approach to financial wellness.
3. Increase Your Income
Lastly, to kick your debt reduction plan into high gear, find ways to make more money, to increase what you can put toward payments. Sell items you don’t need or use anymore, take up a money-making hobby, even look into part-time job opportunities.
Start reducing debt today with an actionable plan.
The longer you hold debt, the harder it is to pay off. But worry not — financial wellness can be a reality for you. Let us help you get there — and stay there.