NEW HAVEN, Conn. (WTNH) — When you’re drowning in debt, it’s hard to know where to begin. Here’s a road map to help you get started.
Credit card debt is a problem. According to the Federal Reserve, Americans have more than a trillion dollars in credit card debt, making that the highest total in more than a decade.
“…This is a big problem because interest rates are also rising and folks who are carrying a balance, their balances could just be growing and growing and growing,” said Personal Finance Expert Beverly Harzog. “So now is the time to get rid of your debt.”
In order to do that, Harzog says you should pay more than your minimum balance.
“The whole balance is going to be subject to compound interest. Compound interest is evil. You really don’t want to go there,” she explained.
There are several ways to pay off your cards. The first method is to target the card with the lowest balance first.
“Some people like this because they get that big emotional boost,” Harzog said. “They can say, oh, I’ve already knocked one of my debts off and that’s a great feeling.”
If you prefer to save while you pay, Harzog says there’s a method for that too.
“You start with your highest APR and that’s the one you target and try to knock off,” she explained. “So you’ll save more money in interest this way.”
No matter how you do it, Harzog says you can’t wait.
“Getting out of debt has to be your priority,” she stated. “Because this is bad debt.”
While you’re doing this, try to free up some cash in other areas. Maybe it’s time to call your utility companies and see if there are services you’re paying for that you aren’t using. Another idea is to freeze the gym membership since it’s warming up outside. Take that workout outdoors for a few months!