How to Reduce Consumer Debt
Consumer Debt
If you are dealing with debt, you are not alone. According to a report by Debt.org, “Total U.S. consumer debt is at $11.4 trillion. This debt includes mortgages, auto loans, credit cards and student loans.” We live in a wealthy country. People have money problems for many reasons. Some people work hard all their life and they retire poor because they have accumulated a lot of debt. Debt is a way of life for some individuals. If you want to get out of debt, you have to develop a plan. You can start out by taking a few practical steps to build your financial future.
Protection
Consumers need protection in case they have a family emergency. Make sure that you are protected in case of a health problem, a disability or a death in the family. Simply put, consumers need health insurance, disability insurance and life insurance. Health insurance will protect if you get sick. Disability insurance will protect you if you are hurt and cannot work. Life insurance can pay all your bills when you die. If you do not have insurance, then you are putting your family’s financial future in jeopardy.
Manage Debt
Consumers have to manage debt in order to build a strong financial foundation. Start out by reducing your liabilities. Try to set aside at least three to six months of income just in case you lose your job or have an unexpected expense. By taking these steps, you will have a foundation that will endure the rough times. Your financial house will withstand hurricanes, earthquakes and storms. You must live below your means and do not spend more money than you make.
Get out of debt and stay out of debt. Spend less money and save more money. If you do not control your debt, it will control you. Debt is like the weed in a garden, if you ignore it, it will not go away. Do not use credit cards. Use debit cards or cash. Trying to eliminate debt is difficult to do, it takes a lot of time and effort. Pay off your debt by starting with the smallest one and then move up to the largest debt.
Stay on Track
Consumers must stay on track to get the best results. Spend your money on necessities. For example, you should spend money for rent, food, insurance and utilities. Avoid spending money on expensive cell phones and other gadgets. Do not buy things you do not need. It takes a lot of discipline to get out of debt. Your goal is to be debt free.
Finally, after your debts are paid off, you can start investing your money. There is a formula for making money. If you save $5.00 a day at 8% for 30 years, you will have $223,553. If you save $20 a day, at 8% for 30 years, you will almost be a millionaire $894,214. Time is money. You have to start investing as soon as possible to build wealth for you and your family.
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