9% of consumers think they will be in debt for the rest of their life

0

Americans are clearly no strangers to debt, as evidenced by the fact that American consumers aged 18 and over owe an average of $ 23,325 off their mortgage, according to Northwestern Mutual’s 2021 Planning & Progress study. Unsurprisingly, this debt keeps many people from reaching big goals, with 29% delaying major purchases, 18% putting their retirement savings on hold, and 14% having to wait to buy a home.

The good news is that 45% of people with debt expect to wear it for only one to five years. But 14% think it will take 11 to 20 years to pay off their debt. Most depressing, 9% expect to be in debt for the rest of their life.

If you fall into the latter category, you should not resign yourself to going into debt forever. Instead, take these key steps to reduce your debt sooner.

1. Make your debt cheaper

If you owe money on your credit cards, you risk accumulating interest overnight, thereby digging yourself a little deeper into a hole. If so, lowering the interest rate on your debt may make it easier to repay it.

One option in this regard is to do a balance transfer, where you transfer your debts to a new credit card that charges a lower interest rate than what you are currently paying. Another option is to take out a personal loan, use it to pay off your credit cards, and then pay off that loan at an interest rate that should be lower.

If you are a homeowner, you may also want to consider a cash refinance, where you borrow more than your mortgage balance and use the extra money you get to pay off your debt. Refinancing rates are near record lows these days, so you could really lower the interest rate on your debt by going this route.

2. Reduce a major expense in your budget

You will often hear that cutting back on small daily expenses can go a long way in helping you reach your financial goals, such as being debt free. While it’s true that every little bit counts, if you don’t want to spend the next few decades of your life in debt, you may need to make bigger changes.

Consider cutting back on a major expense, whether that’s ditching a car (if that’s possible where you live) or moving to a smaller house (again, if that’s feasible). This could free up hundreds of dollars each month for debt repayment purposes.

3. Increase your income with regular sideline activity

The more money you earn, the more money you will have to reduce your debt. It is worth finding a side activity that you can do for the long haul. This could mean driving for a rideshare service or finding a gig you can perform from home. Or, you may decide to work a few evenings a week at a local business. The key is to find something stable so that you can continually generate additional income to reduce your debt.

4. Be smart with deals

You may get extra money from time to time, whether it’s a tax refund or a work premium. Resist the urge to spend that money and instead use it to pay off some of your debt.

If you are faced with a bunch of loans, you might think that you will never be able to get rid of them in your lifetime. But certain wise actions on your part could free you from your debts in a few years.

Alert: Highest Cash Back Card We’ve Seen Now Has 0% Introductory APR Through Nearly 2023

If you are using the wrong credit or debit card, it could cost you dearly. Our expert loves this first choice, which presents a 0% introductory APR on new purchases and balance transfers until near 2023, an insane cash back rate of up to 5%, and all with no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the advertisers included. The Ascent does not cover all the offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. Ally is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman does not have a position in any of the stocks mentioned. The Motley Fool owns shares and recommends Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Source link

Leave A Reply

Your email address will not be published.