"The average American carries $7,500 in credit card debt, and many bear the burden of car loans, mortgages and more; it often seems impossible to get out from under the load and start saving to achieve life goals," says Aaron Patzer, vice president and general manager of Intuit's personal finance group and founder of Mint.com. "By being aware of your money and tracking spending, you can get out of debt faster than you might think."
Here are some helpful tips from Patzer:
Make a Plan
Find extra money in your budget to pay off debt faster. Develop a plan to track your spending then see where you can save. Budgeting can be overwhelming, so identify two or three problematic spending areas and reduce spending gradually, by 15 - 20 percent each month.
Pick a system for destroying debt and stick with it. If you can't pay off all your cards every month, attack balances from highest interest rate to lowest, a method called snowballing. Pay as much as you can on the balance with the highest interest rate, paying the minimum on others. Once that's paid off, apply the payment to the next amount, and so on. Often, this means attacking credit cards from highest to lowest interest, then auto loans, mortgages and school loans. But think twice before canceling a card - if you owe money on other credit cards, closing an account will make those balances look bigger and hurt your credit score.
Watch Those Cards
Much of the average American's debt comes from credit cards. And many people don't pay attention to changes placed on their plastic - and with this economy, there are a lot.
A zero-percent APR looks great, but missing a payment can mean you won't see that zero-percent rate again. New credit card legislation was enacted to protect consumers, but variable rates can still change drastically.
Find a Tool
There are financial services that help with spending and debt. Try a free online service, like Mint.com, which allows you to set budgets and keep track of your checking, saving, credit card, investment, loan, property and auto accounts in one place. Use it to get breakdowns of your spending and free email or phone alerts letting you know when bills are due, if you've gone over budget or if the bank or card changes your interest rate.
Desktop software, like Quicken and Quicken Essentials for Mac, provides similar assistance. Like Mint, there's no fear of exposing information to fraudsters, as these programs use bank-level data security.
"It may seem counterintuitive, but tracking all your account activity in one place is actually safer because you can see any fraud or theft," stresses Patzer.
Just like losing weight, eliminating debt requires drastic lifestyle changes. Many who fall into serious debt simply don't track their spending. Closely eyeing every transaction can help you win the fight against debt.
For more tips, visit www.mint.com/solutions/debt.
With a sharp eye and tighter belt, you can quickly become debt-free.