Most Americans have some form of debt. It’s just a fact of life.  But in many cases, this debt can quickly increase the level of stress in your daily life. Whether it’s a small amount or you have a mountain of debt, one of the best ways to reduce stress is to take control of your finances. Setting up a manageable plan for repayment options will help you take control. Here are some suggestions to get you started:

STEP 1 – Create a list

Write down everything you owe, including the current balance, monthly payment, due dates, and the interest rate associated with the debt. The list should be thorough and include all debts, including your mortgage, student loans, car loans, credit cards, money owed to family/friends, and child support. Also make a list of your monthly bills such as electric, water, phone, cable, etc. and don’t forget obvious expenses like gas and groceries.

STEP 2 – Set Priorities

This can be a difficult task. There are different ways to prioritize your debts. One method is to focus on paying off the debts with the smallest balances first, which helps motivate you as you see your progress faster. Another method is to tackle the debts with the highest interest rate first, as this will save money in the long run. Regardless of which path you choose, account for all your monthly expenses while staying current with your payments and avoiding late fees at the same time. While it feels good to pay down a bill with a lump sum, make sure you are not cutting yourself short on your other monthly payments. It’s important to have a buffer at the end of the month.

STEP 3 – Review your budget

Make a list of all income sources for the household and any savings you may have access to. Next, compare your total income to the list of monthly expenses from STEP 1. This will give you an opportunity to see where your money is going each month. Select the areas where you may be able to cut back in order to free up funds to be applied to your debt. However, just like in prioritizing your debt, you want to prioritize your bills. Make sure all life sustaining bills are paid first.

STEP 4 – Make Minimum Payments

By making AT LEAST the amount of the minimum payment, shows good faith in repaying your debts and avoids late fees at the same time.

STEP 5 – Defer payments

If you are still struggling to make your monthly payments, even after making cuts in your budget, contact your debtors. Many companies will help you set up a reasonable repayment plan or offer deferred payments until you are back on your feet, especially if your difficulty is due to the recent pandemic.

STEP 6 – Consider a credit counselor

Most importantly, if you are overwhelmed or you don’t know where to start, don’t be afraid to ask for help. Seeking advice from a professional credit counselor is an excellent solution and there are many free services available to you. Check out this article from the Consumer Financial Protection Bureau about finding a counselor. Be aware that there are always risks involved in sharing information, so do your homework and make sure you are working with a reputable counselor.

Hopefully these simple steps will help you regain control of your debt and provide some peace of mind. If you need assistance, call or stop by your local First Keystone Community Bank branch. Our friendly Keystone Bankers will be happy to help set you on the right path! If you have other suggestions for taming your debt or you have a success story, we’d love to hear from you. Please feel free to drop a comment below.