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Overall Debt is On a Downward Trend, How To Keep It That Way

By: Michael Millington

According to the most recent report from the New York Federal Bank, overall household debt has been steadily decreasing over the past few years. The different parts that make up overall debt (auto loans, credit cards, mortgages, home equity lines of credit, student loans, and all other more minor forms of debt) have been slowly but surely falling since the housing crisis of 2008. While each of the individual types of loans has fluctuated throughout the quarters, the overall debt line has fallen at a steady pace. However, even with the positive debt trend, the last two quarters have seen a steep increase in overall debt (from $74 billion in Q2 of 2016 to $94 billion in Q4). There are multiple ways to help turn the trend back in the right direction.

While the debt numbers tell the of the entirety of the country, it doesn’t speak to each individual circumstance and their ability to handle debt. There are ways to handle debt, even for those who may not have the means to handle it normally. Student loans might not have the most options in terms of alternate methods of solving the debt. Auto loans and mortgages are of the same ilk, being as how they are secured debts. Credit cards can either be secured or unsecured, thus giving them multiple ways to be handled.

With debt on the decline, it’s important to make sure that we keep the trend going in the right direction. It’s easy enough to make monetary mistakes and plunge yourself back into debt. There are easy ways to keep your debt to a minimum (or nonexistent) once you’ve already started taking care of your personal debt. Here we will discuss two simple ways to keep your finances in good shape while keeping debt away.


Keep Doing What You’re Doing

The best thing to do when you’re working on your debt (granted you’ve already started making headway towards ridding yourself of it) is to keep doing whatever works for you. Lowering debt and keeping it manageable is a full time financial undertaking. Be certain that you take into account what works and what doesn’t. Stick with the behaviors that work and get rid of anything else.

An easy way to keep track of what works is to have a debts paid budget listing of some sort. Think of this as your monthly budget supplement. Whenever you draw up your monthly budget (preferably at the end of the month) you should also account for the debts you have paid that month and what debts you’ll need to pay in the upcoming month. This will get you into a cycle of not only tracking the money you make and monthly obligations (like bills and food) but also specific debts that you want to get rid of. Having a documented list of what you’re accomplishing can go a long way in helping you achieve your goals.

Recording your efforts is also the best way to find out what doesn’t work as well. Specifically, things that can put you in a difficult position monetarily should be assessed and reworked. If your personal debt relief efforts are having a overtly negative impact on your other obligations (the ones you need to have each month) then you’ll need to make adjustments. There are some instances in which case you’ll need to make certain sacrifices for your debts. However, should there be any instance where paying off your debts puts you in a state of hardship, it might be best to reassess how you handle your debt.


Hire a Financial Advisor

In the event that you can’t make the proper adjustments to your debt by yourself (for a longer period time than a few months) then it might be pertinent to hire a financial advisor. Depending on the how you plan out your finances, it might be necessary to utilize a professional to help you understand how to best utilize your finances to effectively rid yourself of debt.

A normal financial advisor (in the regular sense of the term) can help you understand the best ways to create and maintain wealth. While this isn’t directly related to paying off your debts, this does have an overall effect on your ability to manage your money. Regardless of whether you have debt or not, a financial advisor can best advise you on how to utilize your money in the best possible manner.

Even though a financial advisor can be helpful for your money handling skills, they also cost money as well. While it might not always be obvious for many, being in debt might not allow you the ability to afford a legitimate financial advisor. In this case, you can always look to secure a credit counselor. While some credit counselors will charge for their services, there are also quite a few of them that will offer their services for free. A credit counselor’s objective is to help with debt specifically, as opposed to a financial advisor’s overall focus.