How To Take Control of Your Debt and Financial Health

If you’re struggling with debt, you’re not alone. In the United States, the average household has $137,063 in debt, according to a 2019 study by NerdWallet. But there’s hope. You can take control of your debt and improve your financial health.

Keep reading to learn how to take control of your debt and financial health.

Evaluate your debt situation.

When evaluating your debt situation, you’ll want to consider a few things. How much debt do you have? What is the interest rate on your debt? What are your monthly payments? And what can you afford to pay each month? Forbes Advisor has online calculators, including one that helps users identify strategies for paying down their debt more quickly.

To figure this out yourself, start by ranking your debts from highest interest rate to lowest. This will help you focus on the most expensive debts first. Next, create a budget and make sure you’re able to afford your monthly payments comfortably. If not, you may need to consider increasing your income or reducing your expenses.

Then, start making extra payments on the highest interest rate debt while continuing to make the minimum payments on all of your other obligations. Once that debt is paid off, move down the list and continue making extra payments until all of your debts are paid off.

This approach can help you save money on interest and pay off your debts faster. But it’s important to remember that everyone’s situation is different, so be sure to consult with a financial advisor if you need help creating a specific plan for yourself.

Create a budget and stick to it.

Creating and following a budget is one of the most important things you can do to take control of your debt and financial health. When creating a budget, you first need to figure out how much money you have coming in each month and how much you have going out each month. This includes all fixed expenses, like rent or mortgage payments, and variable expenses, like groceries or gas.

Once you know how much money you have available each month, you need to create a plan for how to use that money. This may include putting some funds towards paying down your debt and some funds towards savings. It is important to be realistic when creating your budget and to make sure you can stick to it. If necessary, make small changes until the budget works for you. The most important thing is that you are actively working towards improving your financial health by creating and following a budget.

Take advantage of debt consolidation and repayment programs.

Debt consolidation and repayment programs can be extremely helpful in taking control of your debt and financial health. By consolidating your debts into a single monthly payment, you can make it easier to keep track of your expenses and stay on top of your payments. In addition, many repayment programs offer reduced interest rates and other incentives that can help you get out of debt faster. If you are struggling with debt, consider talking to a financial advisor about the best way to consolidate and repay your loans.

Negotiate with your creditors.

Another way to take control of your debt is to negotiate with your creditors. This can be done by either contacting them yourself or working with a credit counseling service.

When you contact your creditors, be prepared to offer a plan that shows how you will repay your debt. This may include setting up a payment schedule or asking for lower interest rates. You may also want to consider consolidating your debt into one loan with a lower interest rate.

If you are working with a credit counseling service, they will likely do the negotiating for you. They will contact your creditors on your behalf and work out a repayment plan that is acceptable to both parties. This can often result in lower interest rates and fees, as well as longer repayment terms.

In a nutshell, learning how to take control of your debt and financial health is vital. By creating and sticking to a budget that includes a plan for managing and paying down debt, you’ll be well on your way to improving your financial health.