Arizona consumers with unmanageable debt loads should work to bring their balances down. That doesn’t mean they should stop using credit altogether. Responsible credit use is the only way to build and maintain good credit, but you don’t want to spend the rest of your life shackled to debt and paying out the nose on interest charges. Unfortunately, a lot of Arizonians who’ve built hefty amounts of debt have just resigned themselves to their current situations. They don’t see an end to the debt cycle, so they just accept the fact that they’ll be in debt for the rest of their lives. However, it doesn’t have to be this way. With careful budgeting and a willingness to restrain excessive spending, heavily indebted Arizona consumers can pay down high credit card balances, save money on interest charges, and start using credit as a tool to build a better credit score.
How Most Arizona Consumers Start the Debt Cycle with Credit Card Abuse
In 2017 the Northwestern Mutual Planning and Progress Study revealed that the average American carries about $37,000 in debt. This includes mortgages, student loans, personal loans, auto loans, and credit card debt. According to the same study, about half of those who are indebted in the U.S. regularly devote about half of their income to debt repayment.
Of course, there’s little that you can do about having a house or car payment. You need a place to live, and most Arizona residents need access to a vehicle. At best, you may be able to refinance your current mortgage or loan in order to get a better interest rate. Otherwise, these are debts that you’re stuck with until they’re paid off.
Credit cards, on the other hand, are a different story. In that poll, almost 25% of respondents listed “excessive and/or frivolous” spending as their worst “financial pitfall.” This is easy to believe, because, in Arizona alone, every household carries an average of $5,673 in credit card debt. This can be problematic in several ways.
How the Debt Cycle Continues as Credit Card Debt Accumulates
Using too much of your available credit can be harmful to your credit score. Next, by carrying credit card balances over from month to month, you’re constantly paying interest charges. This is money that everyone should set aside for an emergency fund. Without an emergency fund set up to cover unexpected expenses, just one medical or car repair bill could throw you into a financial tailspin.
Most Arizonians with heavy credit card debt get into this position by treating available credit as additional income. It can start out innocently enough by charging one vacation or several holiday gifts and not paying the bills off when they arrive. Eventually, the bills get carried over to another month, and another. You charge more gifts, another vacation, dinners out, and your credit card balances keep growing because your payments can barely keep up with the interest charges. Before you know it, you are in the kind of debt cycle that seems inescapable.
The Best Ways for Arizona Consumers to Escape the Debt Cycle
Every debt cycle CAN end, but it may take a good amount of discipline and self-restraint. While every Arizonian should be sticking to some type of budget, indebted consumers must adhere to tighter budgets. Why? You have three goals. First, you’ll have to keep up with your regular bills. Next, you’ll need to put money aside to put toward credit card balances. Lastly, you should reserve at least a small amount of your income every month to put into savings. This is how you’ll build the emergency fund that will act as a buffer between you and financial disaster.
When it comes to paying down credit card balances, there are two basic tactics to choose between. You can either pay off the smallest bills first or start with the credit cards that carry the highest interest rates. By paying off little balances, you’ll have a sense of accomplishment that may serve as an incentive to keep going. On the other hand, tackling the high-interest balances will probably allow you to start saving money faster.
The Fastest Way for Arizona Consumers to Improve their Credit Scores
Paying down high credit card balances should improve your credit score. Another way for Arizonians to give their credit scores a boost is to find and dispute errors on their credit reports. About 80% of consumer credit reports contain errors of some type, and a lot of these inaccuracies are harmful to credit scores.
Checking your credit reports is easy. You just have to visit www.annualcreditreport.com and request copies from TransUnion, Experian, and Equifax. Under the Fair and Accurate Credit Transactions Act (FACTA), you’re entitled to do this for free every twelve months.
If you find any errors on one, two, or all three of your credit reports, you can get a credit repair lawyer to help you get them removed for FREE. Sure, you could go through the disputing process on your own, but why would you want to when you can get an experienced attorney to do the work for you?
How Arizonians can Get a Free Credit Repair Lawyer
Don’t let errors on your credit reports bring your credit score down. At Arizona Credit Lawyers we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (480)771-6001 or contact us on our contact page.