Face Your Debt
If you’re struggling with debt or have an uncomfortably high credit card balance, you’re not alone. 98 million U.S. households (78 percent) have some form of debt.
Many of people can manage their debt just fine. But if you feel your debt is too high or your debt is more than a third (33%) of your income, it may be time to do something about it.
Begin your debt reduction plan
- Determine what you earn and what you spend.
- Add your total income (your paycheck and other income sources).
- Separately, add your fixed expenses: recurring bills such as rent or mortgage, utility bills, insurance payments, car payments.
- Add to that your variable expenses: food, clothing, entertainment, gifts, etc.
- Now subtract your total expenses from your total income.
If you have enough money left over to begin paying off debt, good. Most of us have very little left over after subtracting expenses from income. Read below for more on finding money in your budget.
Our online calculators can also help.
Find money in your budget
- Our What’s it worth to reduce my spending online calculator shows how cutting costs can add up to savings.
- Look at your fixed expenses. Can you get a better deal? For example, a less expensive phone plan that provides most of what you want.
- Check out online resources and books or magazines on money-saving and debt reduction techniques.5 You may find a debt-reduction plan that really makes sense to you.
- If you find it difficult to pay off certain loans or bills, contact your creditors (the people or companies you owe money to).
- You can often arrange easier payment terms by being proactive, forthright, and willing to problem-solve. Do this before your account is given to a debt collector.
- Make sure you’re not sabotaging your debt reduction plan by unwisely using your credit cards.