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How to get yourself out of debt

Posted at 3:45 PM, Mar 19, 2019

LAS VEGAS (KTNV) — Millions of Americans are drowning in debt. It's just too easy these days to charge up a credit card or sign up for a car loan you can't really afford. Tonight, we have a look at the good and bad news when it comes to cleaning up your debt.

"I try to be pretty conscious about what I spend," says Inti Chabert.

He keeps careful track of where every dime of his family's money is going.

"On the left here I have all of my debts. On my right I have all my income," says Inti.

Along with careful budgeting, Inti says he puts a little extra money down on his monthly mortgage and car payments.

"So overall I'm going to be paying less money, which is always a good thing," says Inti.

It's a good habit that's helping Inti stay out of serious debt and he's not alone. A new poll by CreditCards.com finds more than one-third of Americans in debt, see themselves paying it off in the future. But what about the rest of the people.

"Unfortunately, one in four U.S. adults, 25% with debt, think that they're never going to get out of it," says Industry Analyst Ted Rossman with CreditCards.com.

That's up from just nine percent back in 2013. Ted says credit card debt is definitely the most harmful because interest rates are so high.

"The average right now is about 17.6%. That's a record high and many people are paying well into the 20s," says Ted.

The main reason for credit card debt according to CreditCards.com are emergency expenses.

"35% of people in credit card debt told us that it was either unexpected home repair, unexpected car repair or an unexpected medical bill," says Ted.

But it's not all bad news. You can avoid using a card when you're in a crunch by putting money in an emergency fund. Try saving enough to cover at least six months worth of expenses. You should also consider putting your debt on a balance transfer card.

"You can get a 0% rate for up to 21 months. Now beware of transfer fees. A lot of the longer offers will have a 3 or 5% upfront fee," says Ted.

The other major debt many Americans face is a large car loan that sometimes stretches six or seven years. While the monthly payment is less, you're paying a lot more in interest. To avoid that, try using what's called the 20/4/10 rule.

"You want to put 20% down. You want to finance for no more than 4 years and you don't want your car payments to eat up more than 10% of your monthly income," says Ted.

Finally, Ted recommends doing exactly what Inti does -- write down your budget.

"I think that whether you do it on paper or whether you do it through an app, I think tracking your progress and celebrating small wins can really be beneficial," says Ted.

So remember the good news: it can be done! The bad news is: you have to be patient. It takes time to pay off any debt. Just take the necessary steps to avoid it in the future.