American consumers are notorious for getting themselves in debt. Consumers owe over $11.91 trillion in various forms of debt, with credit card debt being among the most popular type of funds owed. Does your debt contribute to this shocking statistic? Read below to learn three key ways to reduce debt.
- Establish a budget.
The first step to reduce debt is to make a clear plan of how to do so. By establishing a budget, you can allocate your funds accordingly and put a portion towards repaying your debts. A budget will not only start the debt repayment process, but it will help you figure out how long it?ll take you to fully pay them off. Determine how much of your money needs to go to household bills, and then to your debts.
If budgeting isn?t for you, you may want to consider different ways to invest your money. With smart investments, you can greatly increase your income with the return from those investments. From stocks to real estate, there are several ways to invest the money you have.
- Cut up cards.
If credit card debt is getting you in trouble, the easiest way to reduce debt is to stop any more from accumulating. Cut up those credit cards to stop unnecessary spending! Credit cards make impulse buying too easy; the temptation won?t be there if you destroy the cards. A good rule of thumb is to only spend money you currently have and not place any purchases on credit. Before you do so, it?s important to see if your credit card company charges inactivity fees.
- Sell an annuity.
One of the lesser known ways to reduce debt is to sell an annuity. If you have a structured payment plan, you can sell it for a lump sum. Selling your annuity will give you the funds up front when you need it to pay off any harrowing debt. If your normal income isn?t enough to help dig you out of debt, an annuity settlement will ease your debt woes so you can get back on track financially.
Once you?ve pulled yourself out of debt, you can re-establish a budget, be smarter about your purchases, and ensure it never happens again.