AMERICANS have over $14.6trillion in debt and that number continues to grow – but what is the best way to pay it off?<\/p>\n
The average household has over $90,000 in debt <\/a>with no end in sight. <\/p>\n 2<\/span><\/p>\n<\/div> 2<\/span><\/p>\n<\/div> Even with the possibility of student loan debt cancellation<\/a>, there is still credit card debt, medical debt and more types that don’t have those options.<\/p>\n As inflation <\/a>drives up prices people have to decide whether to put money toward paying off debts or paying for their groceries<\/a>. <\/p>\n There is no surefire plan that works for everyone, but there are options everyone should explore.<\/p>\n Jon Sterling, who runs a small business consulting company helping others get out of debt, spoke with The U.S. Sun about the different aspects of it and how to pay it off based on your individual financial state<\/a>. <\/p>\n “I think a lot of it just comes down to discipline,” he said. <\/p>\n “You just have to have some self-awareness and know yourself well enough to know if it’s gonna work for you.”<\/p>\n Before you do anything else, you need to figure out what your debt-to-income (DTI) ratio is. <\/p>\n The DTI compares how much you earn to how much need to pay back in debt each month. <\/p>\n “A lot of people are afraid to even address that, they kind of just ignore it,” Jon said.<\/p>\n “They won’t even open balances or do the math, it’s just too much for them to handle psychologically,” Jon said.<\/p>\n Most financial advisors and experts typically suggest keeping your DTI at 30 percent or lower. <\/p>\n When you’re determining your DTI, remember that not all debt is bad debt. <\/p>\n Things like a mortgage you shouldn’t have to worry about unless you’re behind on payments. <\/p>\n Even people who are good at managing their money can end up in debt. <\/p>\n Things like student loans<\/a> can become extremely hard to pay off. <\/p>\n “It’s just horrendous, you know, student loan debt is the worst, because even through bankruptcy, you can’t discharge it,” Jon said. <\/p>\n “It will literally chase you until you die.”<\/p>\n For this reason, Jon recommends putting a pause on their saving efforts in order to put more money toward paying down the debt. <\/p>\n He says it’s “all hands on deck” when it comes to debt, largely due to the high-interest rates.<\/p>\n In December, the Federal Reserve hiked interest rates<\/a> by 0.50 percent, increasing the percentage target range to 4.5 percent.<\/p>\n That was the seventh time the rate was raised last year, making borrowing more expensive<\/a>.<\/p>\n However, you should use some common sense when deciding what to pay off first.<\/p>\n If you have to choose between making a high-interest mortgage payment to save your home, definitely do that instead of making a low-interest payment on something like a credit card, Jon explained. <\/p>\n Impulse buyers and uncontrollable spenders may want to consider ditching credit cards<\/a> and only using cash. <\/p>\n “If they can’t pay cash for something that means they don’t buy it,” he said. <\/p>\n “By forcing yourself to use cash for everything, the spending becomes much more real.”<\/p>\n If you do, make sure to keep the cash somewhere safe in your home. <\/p>\n When it comes to credit card debt, you can use your negotiating skills. <\/p>\n You can negotiate a lower annual percentage rate (APR). <\/p>\n If they say no to a permanent reduction, see if you can get them to agree to one for a few months so you can catch up on payments. <\/p>\n “Most people don’t know this,” Jon said. “There’s some nuance to it.<\/p>\n “You can’t just call them up and be like, ‘Hey, will you reduce my interest rates?’ They’ll just say no, you know, you have to position it in the right way.”<\/p>\n If your credit score recently went up make sure to mention it as it can give you a better chance of getting a lower rate.<\/p>\n Unfortunately, Jon said the main thing that will make or break your negotiations is the person you’re talking to. <\/p>\n It’s ultimately up to them, so being kind will take you a long way. <\/p>\n “If you treat them like humans – just understand that they have their own things to worry about too – then a lot of times that’ll get you something,” Jon said. <\/p>\n Low-income situations are the hardest. <\/p>\n You should assess how much debt you have and try to pay off the ones with the highest interest first. <\/p>\n Aside from that, Jon said the best thing to do is find a way to earn more money, even if it’s not a lot more. <\/p>\n Temporary work and side hustles<\/a> can be a good start.<\/p>\n Easy side hustles to get started include reselling items<\/a> you own or can buy for a low price, becoming a personal shopper<\/a>, or even participating in focus groups<\/a> from the comfort of your home. <\/p>\n Alternatively, speak to your creditors about extra support. <\/p>\n For example, you could ask for a reduced interest rate, lowered monthly payments or even a pause on payments so you can save up some cash. <\/p>\n There is help on the way for millions struggling to pay their utility bills.<\/a><\/p>\n As you work to save money, be prepared to spend more at the post office. <\/a><\/p>\n<\/div>\n![\"Debt](\"https:\/\/www.the-sun.com\/wp-content\/uploads\/sites\/6\/2022\/06\/ao-comp-debt-offplat.jpg\")
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<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\nFIRST THINGS FIRST<\/h2>\n
FRUGAL PEOPLE WITH DEBT<\/h2>\n
BIG SPENDERS WITH DEBT<\/h2>\n
LOW-INCOME DEBTORS<\/h2>\n
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