Paying Off and Consolidating Debt

So you’ve found yourself with a pile of debt and now you’re wondering how to unbury. First, don’t fret. Virtually everyone has some form of debt, and that’s not always a bad thing. But having too much debt can cause undue amounts of stress in your life and begin to spill out of control. Debt can easily build upon itself and it is important for you to know how much of your income is going towards it. Do you spend more than 28% of your income on your housing rent or mortgage? Do you spend more than 40% of your income on paying debt?  If so, you should focus on reducing those items or, even better, finding ways to generate more income to reduce your debt percentage. Divide your debt between good debt and bad debt. Focus your attention on paying off the worst of your debts first. If you are paying off two cards, say an American Express and VISA card, find which one of these has the lowest interest and pay off the highest interest card first. At a certain point, you will want to switch over to paying the lower interest card when you have the high interest one mostly paid off. Break out the calculator and find out which one of these is costing you the most per week. It will take some number crunching, but the money you save will be well worth it. Always be careful to read the fine print on your credit cards. During this entire process, try to involve your children as much as possible. I know it can be a little intimidating to share your finances with them, but the more they learn now the better prepared they will be for the future.