Unexpected major repairs, unforeseen illnesses, or the mismanagement of money are a few things that can leave you with excessive debt. Unfortunately, debt is much easier to accumulate than dissolve. The good news is you can dig out from under and regain financial stability.
Owning Past Due Taxes
Owing the government money can cause constant stress. Thankfully, there are ways to resolve past-due taxes. The IRS will send you a certified letter that includes a listing of the years that you owe back taxes and the amounts. As long as you contact them by the date stated in the correspondence, they will work with you to resolve the amount owed. If your balance is too steep or you haven’t filed taxes for many years, you may want to hire an attorney or find a tax relief service to assist with the debt.
Reducing Credit Card Debt
The average credit card debt per household is over $6,000.00. While that number may not seem high, if it represents a total owed to five or more companies, it can be difficult to maintain even the minimum required monthly payment. Fortunately, there are several options for repayment. If your credit is in good standing, you can apply for a new credit card that allows for balance transfers interest-free for a year. This will enable you to consolidate the debt to one lower monthly payment without adding any additional interest. If this is not an option, you can take the credit card with the lowest interest rate or lowest balance and pay extra until you pay it off and then move onto the next one.
Ways to Reduce Household Expenses
Whether you own a home or rent a property, you may have household expenses such as electricity, gas, water, garbage, and cable services. These can add up to $600.00 a month or more. If you own a home, along with a mortgage, you also have property taxes and homeowner’s insurance. Switching to energy-efficient appliances and operating appliances like the washer and dishwasher later in the evening will also reduce the monthly bill. Reducing your cable bill and shopping around for other service providers in your area are other options that can offer a lower amount each month. Turning off lights when leaving a room, lowering or raising the thermostat before bed, and taking shorter showers while using sustainable bathroom products are a few other ways to lower household monthly costs.
You work long hours in a stressful environment and want to enjoy your downtime. However, ordering take-out for lunch, coffee at the local coffee shop, and take-out for dinner a few times can run into a few hundred dollars in a single week. By cutting back on these types of avoidable spending habits, you can save $10,000.00 or more in a year. This will give you a nice nest egg that you can use to make home repairs, put a down payment on a home or a vehicle, and enjoy a luxurious vacation.
Creating a Budget
To avoid falling into debt in the future, it’s in your best interest to create and stick to a budget. A budget is something that will keep you on track with your set goals by allowing you to see the progress. It will also give you the incentive to stay the course and achieve financial stability. Children can benefit from learning how to manage money at an early age, enabling them to develop the good financial sense that they will carry with them throughout life.
Debt is easy to accumulate. Fortunately, there are many ways to reduce it and regain control of your finances.