Effective debt management

Debt is high and savings are low. Indeed, total household debt rose to an all-time high of $13.15 trillion at year-end 2017, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data. There is no better time for effective debt management.

And, as of year-end 2017, some 4.6% of outstanding debt was in some stage of delinquency. Of the $619 billion of debt that is delinquent, the Federal Reserve Bank of New York noted that $406 billion is seriously delinquent – at least 90 days late or “severely derogatory.”

Meanwhile, the U.S. household saving rate is floating around 3.4%, well below its average of 8.26% from 1959 until 2018. That’s also a dramatic drop from its all-time high of 17% in May of 1975 and not much above its record low of 1.90% in July of 2005.

So, what might you do if you’re burdened with debt? Here are some effective ways to drop debt and bolster savings:

Tap into the power of websites and apps

Linda Jacob, author of No More Paycheck to Paycheck recommends PowerPay, a free website designed by Utah State University Extension. PowerPay helps you develop a personalized, self-directed debt-elimination plan, says Jacob, who is also a financial counselor with Consumer Credit of Des Moines.

A user enters debt balance, the minimum payment due and interest rate. The site “will then calculate how quickly you can pay off your debt, and will even build you a calendar so you know how much to pay on each debt, each month,” says Jacob.

There are savings-related apps, such as Even, which allows you to set aside money from each paycheck to pay bills each month, says Kristen Holt, CEO of credit counseling, debt management and financial education services concern GreenPath Financial Wellness.

“For example, if most of your bills are due in the second half of the month, these apps will hold aside enough money from your first paycheck of the month so you don’t have to use your whole second paycheck for bills,” she says. “This leaves you with a more consistent amount of money left to spend after every paycheck.”

Click here to continue to USA Today to read more ways to drop debt and bolster savings.

---