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The American Debt Crisis - Growing Debt a Concern Amidst PandemicSalem-News.com
As of March 2020, the average American household was drowning in over $138,000 in debt.
(SALEM, Ore.) - We've heard it before – the American debt crisis. It's not anything new, but it's growing every year. The amount of debt for the average American continues to rise, causing concern during a world pandemic.
The American economy set records in the second quarter, and not in a good way. The economy plummeted 32.9 percent between April and June, making this the worst plunge ever. This is due to the novel virus rampaging throughout the United States, causing businesses to shut down and millions of citizens losing their jobs.
As America continues to battle with the first wave of COVID-19, the concern over household debt lingers on.
As of March 2020, the average American household was drowning in over $138,000 in debt (of any kind). The country altogether owes $14.3 trillion in debt. Each month, Americans are rolling over $6,500 in credit card debt from month to month.
How Do You Combat Household Debt?Tackling debt isn't always an easy task. Especially if the amount you owe is significantly high, it usually involves a mindset shift and lifestyle change. Without a plan and changes, many Americans will be paying their debt for decades, with some never reaching financial freedom.
Creating a debt reduction plan can get intimidating very quickly. Where do you start, and what methods work best? How do you stick with your plan with the uncertainty of what could happen during the pandemic?
To start, consider debt reduction software programs that will help guide and keep you on track. Many programs can manage your spending and allow you to track your bills. You'll want to have more information about debt reduction software before going this route and choosing one.
Other options include different methods for paying back debt. You have the snowball method in which you tackle your smallest debt first and then move on to the next one. As you pay off a debt, you can take what would be those payments and add them to your next smallest loan.
The avalanche method is when you make minimum payments on all but your highest interest rate loan. Because interest rates are what can pull people further into debt, going this route can help save you money down the road.
Preparing for the WorstDuring the novel virus pandemic, it's brought to light the importance of emergency funds. Too few Americans have this set aside.
Emergency funds are just that – money set aside for emergencies. With the unemployment rate shooting up significantly (14.7 percent in April but falling to 11.1 percent in June), those emergency funds would kick in.
An emergency fund should help you cover expenses for three to six months. The idea behind is that you wouldn't fall behind in bills due to an illness, injury, or losing your job.
Those funds would help many Americans today as they struggle with job losses and trying to recover from the virus shutdown.
It's difficult to predict what will happen in the coming months. Will we take control of the virus and rebuild our economy, or will the virus continue to rampage across the country?
No matter what the case may be, paying close attention to your household debt and utilizing programs and different methods can help keep you afloat during a pandemic.
Source: Salem-News.com Special Features Dept.
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