How to Manage Debt like a BOSS
Do you feel like you're drowning in debt? You're not alone. In America, the average household has over $15,000 in credit card debt alone. Yikes! But don't despair—there are ways to get out of debt and stay out of debt. Read on to learn how to manage your debt like a boss.
First things first, let's talk about the difference between good and bad debt. Good debt is an investment that will grow in value over time, like a home or a college education. Bad debt is something that doesn't increase in value and typically has a high interest rate, like credit card debt. Now that we've got that out of the way, let's move on to some tips for getting out—and staying out—of debt.
Create a Budget
The first step to getting out of debt is creating a budget. A budget will help you see where your money is going and where you can cut back. There are tons of great budgeting apps out there that can make creating and sticking to a budget easy.
Pay More than the Minimum Payment
If you only pay the minimum payment on your debts, it will take forever to get out of debt. Whenever possible, pay more than the minimum payment. Even an extra $50 per month can make a big difference. And don't forget to pay your bills on time! Late payments can result in costly fees and damage your credit score.
Snowball Your Debt Payments
When it comes to paying off debt, experts recommend the snowball method. To use the snowball method, simply list your debts from smallest to largest and focus on paying off the small debts first. As you knock out each small debt, you'll have more money available to put towards paying off the next one—and so on, until all your debts are paid in full. Not only is this method psychologically satisfying (it feels great to see those balances shrink!), but it's also mathematically advantageous since you'll be paying less interest over time.
No one likes being in debt—but unfortunately, it's something that many of us have to deal with at some point in our lives. The good news is that there are things you can do to get out of debt and stay out of debt. By following these tips, you can be well on your way to financial freedom: create a budget, pay more than the minimum payment, and snowball your debts payments. Managing your money doesn't have to be stressful—with a little effort (and maybe some help from a budgeting app), you can be in control of your finances in no time!