In the past decade, U.S. consumers have had a hard time maintaining a balance between their income and their debt due to economic and personal factors. According to 2011 Federal Reserve statistics, the total amount of consumer debt in the U.S. was nearly $2.4 trillion in 2010, including credit card and home loans.
Despite the recent economic upturn, these are financially rough times for everyone. You work hard for your money and you want to make sure that, especially during these economically volatile times, it doesn’t go to waste paying another high interest rate. By prioritizing your debt, you will maximize your payments, save your credit, and achieve a more manageable debt.
Focus on Your Home First
The roof over your head should always be your main priority. Taking care of your home mortgage is important, but the options for refinancing your home and maintaining affordable payments can be daunting. However, with the new HARP 2.0 guidelines released to offer underwater homeowners better rates, you may be surprised at what you’ll be able to afford.
You can get refinancing options though any of the bigger lenders like Lending Tree or Quicken Loans. You can also go through mortgage bankers, like the direct mortgage lender New American Funding, as they don’t charge you brokerage fees like a mortgage broker would.
Reducing or Eliminating Your Bills
Look for bills that can be reduced or eliminated. Do you really need to pay $150 each month on cable? (How many of those 1,000 channels are you actually watching?) With Internet streaming as popular as it is, you can practically watch any show online for free, too. Or, consider opting for a Hulu subscription for $8/month.
When it comes to your electricity bill, a few degrees here and there can easily equate to hundreds of dollars in savings. In the summer, keep it set at 78 when you’re home and 85 when you’re at work. Madison Gas and Electric has a great chart on how much you could save with just a few degrees’ difference.
Since it’s getting warmer outside, avoid using your oven as much as possible. Not only does it increase your electricity bill, but it also warms up the house so your AC works overtime. Instead, use your outdoor grill as much as possible.
A certified non-profit credit counselor will help you reduce unnecessary expenses and make a better budget. Utilize the services of the National Foundation for Credit Counseling and the many tools they offer to manage your debt.
Paying Off at a Lower Rate
If even after reducing or eliminating some of your bills you still have debt to take care of, call your creditor and negotiate paying off your debt for a lower amount but over a shorter span of time. However, the FTC suggests staying away from debt crisis clinics and be wary of businesses with high fees or demands.
Small steps over time can help you create a better financial future for you and your family as the economy recovers.