Nearly a quarter of Americans admit to having more in credit card debt than in an emergency savings fund, according to Bankrate's 2013 February Financial Security Index. Are you in the one-fourth of Americans whose credit card debt outweighs your emergency savings? Often, you will need to pay off high interest debt, like credit card debt, before you’re able to save toward a rainy day fund.
Today’s graduates seem to be leaving college with more than just a degree and life experiences — many are leaving with astronomical tuition debt and very few resources with which to pay them off. I recently read an article in the New York Times that discussed the levels of debt being faced by several college students. The article cites a study conducted by the Federal Reserve Bank of New York reporting that for all borrowers, the average debt in 2011 was $23,300, with 10 percent of borrowers owing more than $54,000 and 3 percent owing more than $100,000.
If you’re overwhelmed by credit card debt, I know exactly how you feel. I moved to the DC area with my husband about five years ago with so few possessions that everything we owned fit into a Jeep Liberty. We had just returned from serving in the Peace Corps, decided we wanted to live in the DC area, found jobs, an apartment, and then relocated. Kind of a bold move, but we did it, and then it was time to begin our dream life in the city, right?
Reducing your debt, however large or small it may be, can seem impossible. You’ve seen all the tips and strategies, thought about the best methods for your own situation, and determined what you need to do to make it happen, but the prospect of bringing a peanut butter sandwich to work for lunch every day and staying out of the mall — indefinitely — to reach your goals, is just not appealing.
In the realm of financial advice, there are as many strategies to help you get out of debt as there are ways you might have gotten into debt in the first place. The suggestions from debt-reduction experts and companies, financial writers, and even just ordinary people with Internet connections and a desire to tell their stories, are numerous and widely varied.
You’ve got your eye on a cool new computer, or maybe a designer outfit you’ve just got to have. And you’ve got the credit card — or cash borrowed from friends or family members, or at least the store’s financing offer — that you need to make these items yours. But will you enjoy them so much when you start paying back the debt you also made yours?
Your phone won’t stop ringing and you’re having nightmares about the nasally voice of the debt collector. You want to discuss charges you’re seeing on a loan that you have no memory of agreeing to, but the customer service agents just put you on hold until you hang up. Or you paid in full but the bill keeps coming every month with more late charges tacked on.
We’d all like to be debt-free, but for most of us that would take a very long time and a lot of discipline. But even while we continue to diligently pay the bills each month, we can change the way we pay off each of our different debts.