At the start of a new decade, Americans are feeling more positive about their ability to pay off debt than they have been in years.
According to a new survey by CreditCards.com, a sister site of Bankrate, only seven percent of adults in debt in the US expect to die in debt. This is the lowest percentage in the poll’s seven-year history and much lower than that 25 percent who expected their debts to be carried to the grave around this time last year.
“Stocks have hit numerous record highs over the past year, we’ve recently hit the lowest unemployment rate in 50 years, and we’ve seen more than a decade of sustained economic growth,” said Ted Rossman, industry analyst at CreditCards.com, a sister company of Bankrate? ˅. “These positive statistics have made Americans feel good about their debt as we step into 2020.”
Types of debts held by Americans
The survey shows that most adults in the United States (70 percent) have at least some form of personal debt.
Of those in debt, credit card debt is by far the most common (41 percent of respondents). Other forms of debt Americans carry include auto loans / leases (26 percent), mortgages (26 percent), student loans (16 percent), medical debt (13 percent), personal loans (12 percent), and home equity loans (6 percent) and payday loans (3 percent).
2020: set goals to reduce debt balances
Americans are keen to work towards debt eradication by 2020. According to the survey, most debtors are confident that this year they will make progress on their amortization journeys across a variety of categories, from auto and personal loans (87 percent) to credit card debt (81 percent) and mortgages (74 percent).
Conversely, student loan borrowers are less confident of containing their debts this year: only 43 percent of student loan borrowers believe they will make progress in lowering their credit balances in 2020.
Some borrowers are still sliding backwards
Despite consumer confidence, more than a quarter (27 percent) of respondents actually expect to increase their debt this year, and 12 percent expect to selectively increase their credit card debt.
Taking action now to get rid of high-yield debt for good can save you money in the long run.
How To Start Eliminating Debt
As a first step, eliminating credit card balances that generate sky-high interest rates should be a consumer priority, according to Rossman.
“It’s the most common type of debt, and the average credit card rate is over 17 percent,” he says. “That’s roughly four times the average mortgage or car loan … sign up for a credit transfer card, take on a side job, or cut your expenses to get started.”
Transfer your credit
A Credit transfer credit card This works with your debt settlement schedule. This is a great actionable step that you can take now to get rid of your debt quickly. If you are ready to pay off your debts during the introductory period and stick to your plan, you can save hundreds or even thousands of dollars in interest.
A card like that Citi Simplicity® cardFor example, it offers a long introductory phase of 21 months for credit transfers after opening an account, during which you pay zero percent interest on your transferred credit (then 16.24 – 26.24 percent variable annual interest). If you transfer a remaining balance of USD 5,000, you can pay it off in full during this introductory phase by making monthly payments of just USD 250 (after taking into account the 5 percent transfer fee).
Lower your budget and costs
According to Tara Unverzagt, financial planner and founder of South Bay Financial Partners, the most important step in improving your long-term financial health is getting your financial house in order. “If you don’t know or control your cash flow, you will never get a grip on your debt.”
She recommends using apps that allow you to keep track of where your money is going, such as: B. You Need A Budget or Mint. You can get even more tactile with a table of your own design or a paper journal. If you’re limited to a cash-only budget, this can also be an effective solution.
“After a month or two you get an idea of it [whether] Your outflow is bigger than your inflow and creates your problem, ”says Unverzagt. “If so, find out where you can prune back to balance the two. And you need to include: … set aside some cash for an emergency fund, an opportunity fund, and investments for your future [in your outflow]. The balance between paying off debt, emergency and opportunity funds, and the future is personal and we work with clients to find the right balance to maximize their quality of life now and in the future. “
Find a payout plan that works for you
Adapting your plan to your individual financial situation can be the key to your long-term payout success.
If Student loan debt For example, if your biggest obstacle is to choose the best option for a repayment plan with your loan servicer, whether it’s a standard ten-year plan, a tiered repayment plan, an income-related plan, or any other, it’s important. If you are eligible for federal lending, speak to your service technician about the steps you need to take to have the best chance of this forgiveness being granted.
Consider refinancing a high yield student loan with a private loan to reduce your interest. Refinancing can eliminate other federal student loan benefits like lending and repayment options. So take your time for Make sure it is the right choice for you before you take the plunge. If prepaid transfer cards aren’t the solution for you, refinancing and consolidation can also be effective ways to pay off credit card debt.
Whether your debt is concentrated in credit cards, student loans, medical debt, or any other type of loan, a structured payout plan like that Snowball or avalanche method can help you get rid of your debt efficiently. Also, if your budget allows, you can try making multiple payments each month and paying above the minimum required to bring the interest down.
Regardless of what type of debt is holding you back from your financial goals, if you follow the correct path to repayment via a balance transfer, budgeting, and cost reduction sooner rather than later, you can save money over time and achieve lasting financial health .