Putting Your Debt in Focus

If you’re among the large population of consumers who are plagued by debt or at risk of losing your job, it’s critical to find ways to minimize that debt. Here are a few simple tips to help you get started.

Analyze your spending.

Before you can begin to address any issues with your debt, you must look at where it all began. Are you carrying excess credit card debt? If so, how did you accumulate it? Are you spending more than you’re earning? They may seem like obvious questions, but you must take the time to make sure you really know how you got into debt. To help determine this, consider writing down your expenses over a month’s time to track exactly where your money is going.

Minimize high-interest credit card debt.

Do you have credit cards or department store charge cards with high interest rates? Take a look at your monthly statements. Then, shop around for a lower interest card and consider transferring your balances. Be sure to close out your old credit card accounts. The last thing you want to do is run up the balance again.

Pay more than the minimum.

If you pay just the minimum balance due on your credit card each month, you’re only paying interest. Consider doubling your payment so that the amount over the minimum payment will be used toward your principal balance.

Consider home equity.

If you’re a homeowner, you may be able to take advantage of the benefits of a home equity line or loan. With home equity credit, you may be able to deduct the interest you pay on your taxes (consult your tax advisor). If you do go the home equity route, keep in mind that you’re taking out another mortgage on your home. If you fail to make those payments, you’ll run the risk of losing your home.

Refinance your mortgage to a lower rate.

Another solution may be to consider refinancing your first mortgage. Interest rates are at some of their lowest levels in years. Consider refinancing your higher rate mortgage to a lower rate mortgage, and possibly borrowing more to consolidate your credit card debt. By doing so, you may be able to take advantage of potential tax savings.

Beware of 0% interest.

You may see advertisements from furniture stores and electronic stores offering you 0% interest for a set period of time. That’s only a good idea if you have the money to pay off the balance before the interest is due. Otherwise, you’ll end up paying all the accrued interest at once.

Get into good habits.

A credit card can actually be a valuable tool if used wisely. You can use it to keep track of your expenses and to help you in emergency situations. However, it can also be a big liability if it is not used conscientiously. Remember not to purchase anything with your credit card if you don’t have the money available. Be sure to make all your payments on time since failure to do so may result in your credit card company raising your interest rates.

By following these simple steps, you’ll be on your way to reducing your debt and gaining greater control of your money. To learn more about how we can help you manage your debt, stop by your nearest branch or call us today.