In 2019, U.S. credit card debt hit a record high of $829 billion, according to Experian data. In 2020, this was reduced to $756 billion, primarily due to the COVID pandemic which caused many Americans to change their spending habits and provided them with relief funds to help pay down their debt. Consumers are motivated now – more than ever – to continue down this path. Having the facts about how to get out of debt is more important than ever before if you want to maintain this commitment and continue these good habits. The good news is getting out of debt does not have to be stressful, painful, or hard. Mostly, paying off debt requires focus, a changed perspective on spending, and the ability to separate the myths from the facts.
It is okay to make new charges after consolidating debt.Although it can be tempting to use charge cards after consolidating debt, remember you still have a loan to pay. Small changes add up quickly, and before you know it, you’ll be back where you started.
All debt is bad.Loans that increase your net worth or lead to making money (like mortgages, student, or business loans) can be useful tools for getting ahead. When deciding to take on debt, consider how much the loan will cost and whether it will improve your financial position.
Retail credit offers are a good deal.Retailers offer enticing credit promotions to make sales. If they were a good deal, then the retailers would not offer them. High fees and increased sticker prices typically offset the promises of zero interest and no down payments.
After my divorce is final, I will no longer be responsible for my ex's accounts.A divorce decree does not remove your name from joint accounts. You will have to deal with each creditor separately to have your name and responsibility removed from joint accounts.
I will never recover from my poor financial decisions.
History of collection accounts, late payments, or overspending will not drag you down for life. Sure, it will take time to pay everything off and re-establish healthy credit history, but these records do not last forever. Negative information will only remain on your credit report for seven years. When you decide to get out of debt, leave the heavy baggage behind, and enter your future with a positive attitude.
Terms and conditions
This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal, or accounting advice. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial professional. The information contained in these articles was obtained from sources believed to be reliable and accurate at the time of publishing. We do not represent that it is accurate or complete, and it should not be relied upon as such. All opinions and estimates expressed in this article are as of publication date unless otherwise indicated, and are subject to change.