UNITED STATES—Christmas is over, the New Year has ushered itself in and for many Americans it will be time to tackle a load of debt. For some it might be way larger than others. However, do not panic, take a deep breath. The biggest mistake so many people make is not trying to come up with a plan; you cannot just go into things blind and expect them to always work out perfectly. There will be hiccups and curveballs delivered throughout the journey.
The biggest error so many of us make is avoiding the bills that we created. Look you don’t have to open the mail, but that is NOT going to stop it from coming. So what does that mean? Open your bills, so you have an idea of what you have to tackle for the New Year. Once you have an idea of what debt you have accumulated for each of your bills, then you have to come up with a plan to pay that debt off.
Think logical because I have a saying that I rather be broke and have all my bills paid off then to have tons of money and loads of debt. Yes, most Americans say that, but none of us want to be broke; it’s never a great feeling. The key is to always try to pay more than the minimum due on your credit cards. Why? It helps you knock down the balance much faster, not to mention it puts you in a position to knock down the interest. That is the biggest killer for most people; excessive interest. If you don’t know it down, you’re putting yourself in a situation, where your credit card balances seem to stay the same no matter what you do.
Next, you need to tackle those high interest cards first. Once those high interest cards have been paid off you can take that extra money you have (likely as a result of all the interest you we repaying before), to knock down the balance on your major credit cards. Yes, department store and retail credit cards are great, but many can’t compare to a Visa, Master Card, Discover or American Express. Why? Those are cards that can be used for the most part almost anywhere you go in the country. I know many of us wish we can say that about our department store cards, but the truth is the truth, it ain’t always the case.
Don’t try to pay everything off at once, so many people do that and it’s a major mistake. You’ll feel overwhelmed and stressed at the same time. I would focus on those cards that have the higher debts and those with the higher APRs first. After you have knocked those out, clip them up or stash them away. Don’t be persuaded to bring all your credit cards with you each time you go out. Why is that bad? You place yourself in a pickle where you will be tempted and temptation is never a good thing.
The worst thing about finances is the fact that you have to create a budget. So many of us hate the word budget, but it’s imperative to have one cause you know three vital things as a result 1) what you bring in 2) what you pay out 3) what you have left to save or spend. You always want to have more coming in than what you’re spending out. If you’re in a situation where you’re spending more than you’re making than you have to cut back on expenses or eliminate those that you don’t need.
Also it is never a bad idea to do what I call pay yourself. From each check you receive put away $20, $25, $50, $100, a solid amount, but nothing too excessive to reward yourself for working. I mean what fun is work if you’re unable to treat yourself for all the hard work that you put in during the week. If you start off the year with a positive vibe, even if things might look dire now, they can vastly improve. Remember positive thoughts attract positive energy, even with your finances.