The average American is carrying a heavy load of household debt. In fact, America’s current debt load has never been higher. Recently, the Federal Reserve Bank of New York estimated that household debt in America is approaching a whopping $13 trillion. That number is even higher than the household debt levels seen at the peak of the financial crisis that began in 2008. While the majority of household debt is comprised of mortgage debt, there’s a hefty amount of credit card debt as well.
Many consumers are anxious to get out from under their heavy credit card debt but don’t really know how to go about it. Unfortunately, many Americans lack the skills and the knowledge to manage their money in the first place, which is likely a contributing factor to their problem. However, there are strategies for tackling a high credit card debt problem, and some people who can help you along the way.
Your Spouse or Partner
With a supportive spouse or life partner, you can find the understanding and cooperation you need to develop a plan to get out of debt and stick to it. However, some spouses or partners may have a hard time adjusting their habits to match your newfound determination to eliminate your debt and start building your wealth. After all, very few couples reach the same turning point at the same time. It may take you awhile to convince your spouse or partner that you’re serious about making permanent changes and get him or her in step with you.
However, once you’re both on the same page, you can be a great support system for each other. The trick is to develop common goals and milestones you can agree on and help each other stay on track. Few things are as powerful as two people dedicated to reaching a common goal!
One thing that can help you are talking about what your life will be like once you’re free from debt. Talking about important goals such as saving for retirement and investing money for the future will help you stay motivated and focused. Allowing yourselves to celebrate your successes along the way with small rewards is a great motivating factor, too.
Friends to Keep You Accountable
If you don’t have a spouse or significant other, or if you just want others outside of the process to lean on, consider having friends or confidants monitor your situation and hold you accountable to your goals and resolutions.
When you have to answer to others about your behaviors and decisions, it’s sometimes easier to stick to them. Alternatively, if you just need some counsel every now and then, having a friend or two who understand what you’re trying to accomplish can be incredibly helpful, especially when you hit the rough patches in the process, which is bound to happen. Be sure to choose those who are strong and straightforward, those with the frankness necessary to hold you accountable. Sometimes, a little tough talk is exactly what you need!
It can be anyone in your life who truly cares about you and your wellbeing. It might be better to avoid family members and instead choose those who can be truly impartial and not invested in your situation. Those outside of your family can usually be a bit more objective than a family member can.
Your Friends ‘Who Have Everything’
Doesn’t it always seem that your friends have this great life and never want for a thing? Somehow, they always seem to be buying a new car or going on expensive vacations without a financial care in the world. They have a life that everyone envies, and you find yourself trying to compete or at least keep up with their lavish lifestyle, and sometimes this causes you to make very poor spending decisions.
Chances are strong that everything isn’t as blissful as it seems on the other side of the fence, and you should remember that when you find yourself counting other people’s money. There’s a very good chance that they have struggled with money issues as well. With Facebook, Instagram, and other social media outlets, it’s easy to make other people think your life is perfect and that you have plenty of money. However, making an impression or trying to keep up with the Joneses isn’t worth going deep into debt to do it.
Instead of looking at other people’s lives and wishing you could have what they have, start by looking at your own life and visualizing where you want to be. It’s all too easy to just imagine having someone else’s life, but it’s not at all helpful. Instead, set manageable goals that will both improve your life and will not force you deeper into debt.
Your Insurance Guy
Many people get their car, house, and other insurances when they need them and hardly ever look at things again. They just keep paying the bill every year and don’t stop to think that they could reap savings just by reevaluating their current premiums and policies.
Insurance companies are notorious for edging up premiums after they have you as a customer. They do this by putting expiration dates on special discounts and raising the premium when the policy is renewed each year. They’re counting on you not noticing these increases and hope that you’ll just let the policies automatically renew each year. After several years, it’s likely that you’re paying far too much for your insurance policies.
Make it a habit to shop your insurance policies every year. Don’t just get new quotes on your car insurance, but also any other insurance you carry on your home or other things you own. By doing this, you can potentially save hundreds of dollars each year, and that’s money that can be used to help pay off your debt.
Also, if you don’t already have one, talk to your insurance person about an umbrella policy. An umbrella policy is extra liability insurance over and above what’s already covered by your current insurance policies. It’s intended to help protect you and your assets from any major claims and lawsuits that may arise. There are two ways an umbrella policy protects you.
- It provides extra liability coverage above the liability limits of your auto, homeowners and any other insurance policies you may have that cover things such as boats and ATVs. The purpose of this policy is to take over when the current limits on your policies have been reached.
- Another benefit of an umbrella policy is that it’ll cover events not covered by your existing policies such as liability on any rental units you may have or out-of-the-ordinary liabilities such as libel and slander.
One of the biggest advantages of having the additional liability insurance is that it covers you for unusual things that are currently outside of your current coverage. This includes dog bites, falls on your property by friends, neighbors, and children that cause injury or damage. Or, things that happen off your property such as accidental damage to another’s property by you, your child, your tenant, and even your dog.
A Financial Advisor
Whether you’re looking for an evaluation of your current situation or someone to help you along the way, a financial advisor can help you in many ways.
Hiring a financial planner isn’t mandatory for developing a plan to eliminate your debt, but it can help you get started making the right decisions. A consultation with a financial planner will only cost you a small amount of money but the benefits you receive could make all the difference in whether you’re successful. Think about it this way: When your pipes leak, you hire a plumber, and when your car breaks down, you hire a mechanic. Why wouldn’t you hire someone to help you fix your money problems?
The average American isn’t well versed in the practice of money management and investing. Having someone that can evaluate your position and point you in the right direction is imperative. In addition, having someone who can help you build a plan that includes short-term solutions and long-term plans for your financial wellbeing can set you up for a great financial future.
However, you’ll have to do some of the work yourself. Learning even the fundamentals of personal finance and wealth building will take you some time and require some homework. A financial planner can act as a guide and a mentor. As time goes by, your financial picture will likely become more complicated as you earn more money, have a growing family, and acquire assets. A financial planner can help you make the right decisions at the right time and keep you out of trouble should you fall on hard times. Having someone to turn to with important questions is likely to be helpful.
Having a financial planner in the mix will also help you and your significant other get on the same page with your goals and aspirations. He or she can also be a neutral third party that can help resolve any disagreements you may have. In addition, as discussed, having a partner that agrees with your thinking is an important factor in your success.
Good Friends Who Believe in You
Having supportive friends is a big component to your success. The best thing you can do is let your close friends know that you’re changing things in your life in order to better prepare financially for the future. You don’t have to tell them every detail of your financial situation because, frankly, it’s none of their business regardless of how close your friendship is. However, clueing them into the idea that you’re trying to save money and build wealth to strengthen your financial future will help them understand when you turn down that invitation to go out to dinner or pass on that expensive weekend away.
As they see you become more disciplined in your decisions, you may even inspire them to rethink their habits and start saving money themselves. Bottom line: someone who truly cares about you and your friendship won’t pressure you or make you feel bad about the decisions you’re making. They’ll support you and respect your desire to make a better life for yourself.
Unfortunately, there will always be “friends” who’ll try to make you feel like a cheapskate for not spending money as they do. Most often, it’s because misery loves company. Chances are strong that they have little discipline when it comes to managing their own money, so they’ll scoff at you for exercising yours. If they become a drag on your new habits and attitudes, don’t pay attention! There are plenty of activities you can suggest that will work for a variety of budgets.
If you need help getting out of debt, don’t be shy! Some friends won’t be the right people to ask, but many others will be happy to help you get out of debt. Helping you get out of debt can come in many forms including childcare, meal preparation, joining you in a side hustle, and much more. Even small contributions from friends can go a long way in helping you to become financially independent.
Getting out of debt will take hard work, perseverance, and some time. You didn’t get into debt overnight and you won’t get out of it overnight either. The most important thing you can do is develop a solid plan and stick to it. Surrounding yourself with people who’ll help and support you will make the process easier and quicker.
