Drown in debt? Here is the first step you should take

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It is easy to feel overwhelmed by debt. Unpaid student loans, an ever-increasing credit card balance with high interest rates, a monthly car payment: these are just a few reasons young consumers feel like they have a huge financial weight on their shoulders.

In fact, a survey conducted by Select and Dynata found that nearly half (44%) of 18-34 year olds feel they are “drowning in debt“. While it can seem difficult at times to see a light at the end of the tunnel, the best step these debt-ridden adults can take is simply to take somethingargues Kristen Ricupero, a financial coach and consultant at Financial Fitness Coaching.

“It doesn’t have to be big to be effective,” explains Ricupero. “Money is more emotional and behavioral than numbers.”

Your point is that your debt settlement journey can start with small profits, such as: This can motivate you to take the next small step, and so on, until your debt is a thing of the past.

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Your first step: do something, even if it’s small

A lot of people feel like they can’t get ahead and Achieving life goals because they have too much debt. But keep that in mind any One small step in the right direction can help you get on the right track.

“Too often the problem with feeling plagued by debt isn’t because we’re not making enough money to get rid of it, but because we don’t know where to start or where our money is going,” explains Ricupero.

If you feel like you are drowning in debt, she encourages you to just look at your bank account first so you can get a better picture of your past expenses. This will help you understand your shopping habits and uncover categories where you can potentially cut your spending. One of the goals is to find excess money that can be used on your debt.

Then select a debt to pay off

Most people who feel overwhelmed by debt have balances in multiple accounts, whether they have more than one credit card, student loan, or a large car loan. Sometimes it can be difficult to prioritize that should pay off first.

You must at least have the Minimum payments on all of your other debts to keep your accounts updated – and to keep your credit standing stable. After that, figure out the best debt settlement plan for you.

You can choose to settle your smallest balance first (snowball method) or focus on the debt with the highest interest rate (avalanche method).

Once you figure out how much extra money to put up on your debt, Ricupero recommends that you just put it on a balance. Handing out the extra cash to pay off multiple balances at once is one of the “biggest mistakes” that keep people in debt longer, she sees.

“The effects on the client are greatest when you put everything on one debt,” says Ricupero. “You’ll make faster progress, which means you’ll want to keep going if you focus on one thing at a time.”

If you have credit card debt, consider this third step

When you wear one Revolving credit card balances, given the notoriously high interest rates on credit cards, this is what you should focus on first. “Interest rates can go up and up quickly every month,” said Leslie Tayne, debt relief attorney with Tayne Law Group.

Consider signing up for a credit transfer credit card. When you do a balance transfer, you’re moving debt from one credit card to a new card that offers a low or 0% introductory period that typically lasts six to 21 months. During this time you will not incur any additional interest fees and you can benefit from the fact that your payments go entirely towards your main balance.

The Citi® Diamond Preferred® Card has a long APR of 0% on credit transfers for the first 21 months, which is almost two years (thereafter 13.74% to 23.74% variable APR). Remember, all transfers are made in the first four months after the account is opened and there is a balance transfer fee of $ 5 or 5% of the transfer amount, whichever is greater.

The Citi® Double Cash Card offers no interest for credit transfers in the first 18 months (thereafter 13.99% to 23.99% variable effective annual interest rate; credit transfers must be completed within four months of opening the account). any transfer (minimum $ 5) applies; thereafter, there is a 5% final payment fee of each transfer (minimum USD 5). The Citi Double Cash Card also has a cashback rewards program where cardholders receive 2% cashback: 1% on all eligible purchases and an additional 1% after paying their credit card bill (you will not receive rewards for any transferred funds).

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Note to editors: Opinions, analysis, reviews or recommendations expressed in this article are solely those of the Select editorial team and have not been reviewed, approved or otherwise endorsed by third parties.



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