Every single year more and more Americans fall into debt and for some an even worse fate, bankruptcy. The problem for many is purchasing more than they can reasonably afford or pay off in a quick time. Too many people abuse credit making big purchases without doing the math first and having what I call an exit plan to pay the debt off. Personal debt is often times unavoidable, we have debts for rent or our mortgage, car payments, insurance payments etc. Personal debt is only a problem when we make purchases that dwindle our spending power to the point that all of our income goes into paying off debt.
Reducing our debts and managing them is vital to our financial success and good credit. Your credit score takes into account your debt to income ratio as well as your credit utilization ratio, that is how much of your available credit you have used. Using more than 30% of your available credit will impact your credit score negatively. If you want to qualify for a loan down the road with a good interest rate it is essential to reduce your personal debt.
Reducing your debts is an equal part of will power and common sense. Most times when we fall deep into debt it is our own fault, baring medical debt or veterinary bills, but debts like $4000.00 to a shoe store because you just had to have those 3 pairs of Gucci shoes well that debt is your own fault.
If you want to reduce debt in 2015 just follow these simple rules:
Expenses you have, debts and revolving payments.
Spending power you have, that is money that is not going to essential expenses
How much you can afford to place into a savings account.
Once you have this knowledge and you should memorize it, at no point should you ever not know where you stand financally at any point during the year, there is no excuse for not knowing. With this knowledge handy you now know what your spending power is and if you need to resort to using credit you now know how much money you have available to spend on monthly payments to pay off that debt as quickly as possible.
* Resist the urge to over spend
Before you buy anything ask yourself if it is needed and how it will effect your overall finances. Yes you need to live a little, you need to spend some on yourself to make life worth living but if you are spending several hundred dollars on things each week that you do not need you are holding yourself back.
* Examine your credit score and credit cards
If you have accounts with high interest work on finding new credit cards with lower interest or call your credit card company and try to negotiate lower interest rates. You can save anywhere from hundreds to thousands of dollars by following this simple tip.
* Pay off your highest interest debts first.
Take inventory of your debts and what the interest rate on them is, then pay off the highest interest ones first. If you can consider a debt consolidation loan if the interest is in a more acceptable range as not only will you pay less in interest but your credit score will go up.
InstallmentLenders.net is on a mission to help consumers achieve their financial goals in 2015. We review consumer finance loans, credit and debts and provide tips for borrowers from Texas to Alaska, Massachusetts to Hawaii and everywhere in between.