Despite the picture-perfect American dream, a lot of families are actually struggling trying to make their ends meet. Interestingly, however, one of the biggest culprits is debt.
Take, for example, the Kosola family. Jeff was an automotive engineer who had to work in China. His wife, on the other hand, quit her job and moved back to Detroit so she could take care of her baby. She may have her own work, but considering the expenses, including day care, she hardly has any left each month. Compounding all their debts together, along with their mortgage, they are buried in $101,000 due.
What They Did to Reduce Their Debts
Instead of wallowing in pity and desperation, the couple decided to take more control over their finances. Jeff decided to take a side job in a pizzeria near their home, working over the weekends delivering pizzas, while they both reduced their shopping and dining-out expenses. Just over two years, they only have $25,000 remaining debt.
The Lessons Brought by Recession
Recession has definitely taught a lot of things to U.S. consumers. One of these is to be more mindful in how they spend, especially with the use of plastics. According to TransUnion, one of the three credit bureaus in the country, the credit card debt dropped to no more than $5,000f roe very borrower, one of the lowest over the past 10 years. More users have also learned to pay off their credit card debts on time, so late repayments went down to 0.6 percent during the second quarter.
The Different Ways on How You Can Cut Back on Your Debt
Through hard work, Jeff and his family was able to secure a bigger home. Surely this is also something you wish to achieve in the future. But unless you do something with your debt, such desire is completely unreachable.
Fortunately, there are many ways on how you can reduce your debt:
1. Take advantage of the low mortgage interest rate. The Federal Reserve will keep the interest rate low until 2013. That means you can enjoy more affordable mortgage loan repayments every month. You can lock in your home loan to 25 or 30 years. To know how much you savings you can actually enjoy from a lower mortgage interest, you can use a mortgage calculator. You can already find one online.
2. Reduce your unnecessary expenses. Jeff and his wife have a very simple strategy: reduce unnecessary spending. Just imagine how much you can spend if you opt for DVD rentals than cinema tickets or home-cooked meals over dine-outs.
3. Prioritize those with higher interest rates. If you have more than one credit card, organize them according to interest rates. Work hard on paying the one with the highest interest rate, since it normally eats up a huge portion of your family income.
4. Consider balance transfers. You can work with your credit card issuer so you can transfer your remaining balance to a card that doesn't carry a very high interest rate. In fact, some already offer 0 percent interest rate good for around 18 months. You can save a lot of money from the reduction of interest repayments.
Take, for example, the Kosola family. Jeff was an automotive engineer who had to work in China. His wife, on the other hand, quit her job and moved back to Detroit so she could take care of her baby. She may have her own work, but considering the expenses, including day care, she hardly has any left each month. Compounding all their debts together, along with their mortgage, they are buried in $101,000 due.
What They Did to Reduce Their Debts
Instead of wallowing in pity and desperation, the couple decided to take more control over their finances. Jeff decided to take a side job in a pizzeria near their home, working over the weekends delivering pizzas, while they both reduced their shopping and dining-out expenses. Just over two years, they only have $25,000 remaining debt.
The Lessons Brought by Recession
Recession has definitely taught a lot of things to U.S. consumers. One of these is to be more mindful in how they spend, especially with the use of plastics. According to TransUnion, one of the three credit bureaus in the country, the credit card debt dropped to no more than $5,000f roe very borrower, one of the lowest over the past 10 years. More users have also learned to pay off their credit card debts on time, so late repayments went down to 0.6 percent during the second quarter.
The Different Ways on How You Can Cut Back on Your Debt
Through hard work, Jeff and his family was able to secure a bigger home. Surely this is also something you wish to achieve in the future. But unless you do something with your debt, such desire is completely unreachable.
Fortunately, there are many ways on how you can reduce your debt:
1. Take advantage of the low mortgage interest rate. The Federal Reserve will keep the interest rate low until 2013. That means you can enjoy more affordable mortgage loan repayments every month. You can lock in your home loan to 25 or 30 years. To know how much you savings you can actually enjoy from a lower mortgage interest, you can use a mortgage calculator. You can already find one online.
2. Reduce your unnecessary expenses. Jeff and his wife have a very simple strategy: reduce unnecessary spending. Just imagine how much you can spend if you opt for DVD rentals than cinema tickets or home-cooked meals over dine-outs.
3. Prioritize those with higher interest rates. If you have more than one credit card, organize them according to interest rates. Work hard on paying the one with the highest interest rate, since it normally eats up a huge portion of your family income.
4. Consider balance transfers. You can work with your credit card issuer so you can transfer your remaining balance to a card that doesn't carry a very high interest rate. In fact, some already offer 0 percent interest rate good for around 18 months. You can save a lot of money from the reduction of interest repayments.
SHARE
