How many credit cards do you think the average American holds? 

The answer is four. Although there are exceptions, like Walter Cavanagh of Santa Clara, California, recognized by the Guinness World Records as holding 1,497 cards!

We sure do love our plastic!

Worrisome, however, is how much debt we’re carrying on these cards. According to financial experts, the percentage of Americans in debt is around 80% and the average debt is $38,000 not including mortgage debt. And it’s growing each year.

Staying within a positive cash flow these days can be challenging. 

The price of gas keeps going up. 

Housing costs including utilities, maintenance, taxes and insurance have all risen. 

Groceries and consumer goods and services are more expensive. 

And the cost of borrowing money is on the rise. 

The cumulative effect of all these increases can have a significant impact on our budgets.

Rather than decreasing expenses when this happens, many people incur debt. They use credit cards, take out personal loans, rely on overdrafts, or draw on lines of credit just to meet basic living expenses.

In our “enjoy-now-don’t-worry-about-the-payments” society, it’s easy to accumulate a large debt fast. The problem is that debt weighs you down and keeps you from achieving your goals.

Here are some tips to help avoid financial disaster.

Make A Budget.

The first step towards managing your financial problems is making a budget. You can use budgeting software, an app or online tool, or simply paper and pencil. Write down all of your income and all of your expenses. To avoid underestimating your expenses, save all of your bills and receipts for a month. Analyze all of your expenses to see which ones you can reduce or eliminate. 

Pay In Cash.

If you pay in cash, you can stick to your budget better. Debit and credit cards are convenient, but it can be harder to keep track of how much you spend when you use them.

Stop Making Impulse Purchases.

If you tend to make impulse purchases, you may want to start leaving your credit card at home or stop “window shopping” online.

Prioritize Payments By Interest Rate.

Make a list of all debts and prioritize them by the rate of interest charged (e.g., highest interest rate to lowest). Maximize your payments on the highest interest rate credit cards and minimize payments on the lowest rate cards.

If you contribute to a savings plan, consider suspending payments until you have paid off your debt. Consider using income tax refunds, pay increases, and other unexpected funds to pay down debt.

Meet With A Debt Counselor.

Your advisor can help with your financial problems. Together, you can also look at the possibility of debt consolidation. When you combine all of your debts into one loan with a lower interest rate, you can pay them off faster. It will also be easier for you to keep track of your money.

Buy Used.

You don’t have to buy something new. Buy used things or trade them in. Look at thrift stores, online classified ads, and Facebook pages to find sales in your area. There are a lot of deals and chances to trade.

Borrow Or Rent.

This is a good option for items you will rarely use. For example, sign up for a library card to check out books and magazines.

Do It Yourself (DIY).

Over the long term, using a coffee maker is much cheaper than buying coffee every day.

Think About Ways To Make More Money. 

Ask your boss if you can work extra hours, offer your services for extra money, sell things you don’t use anymore, find a roommate, or get a second job.

Use Your Credit Cards Wisely.

If you don’t use your credit cards wisely, you may end up building up debt, paying interest or hurting your credit score. If you can’t pay your balance in full, always aim to pay at least the minimum amount you owe. 

Stop Worrying and Start Doing Something.

Worrying about your finances won’t solve anything. Follow the tips in this article and you’ll be well on your way to paying off bills, saving more, reducing debt, and improving your overall financial outlook.

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