LAS VEGAS (KTNV) — According to a new survey, many Americans say their debt is unmanageable. Credit cards are a major reason why so many are swimming in debt. To help keep your head above water, 13 Action News anchor Tricia Kean spoke with an expert on how to tackle that debt.
"I have quite a few," said Cherie Cornelius of Centennial Hills.
Since she was 18, she's had a collection of credit cards. She admits, she's gotten herself in some serious debt.
"I have learned over the years that they are not meant for swiping any and everywhere," Cornelius said.
DROWNING IN DEBT
Cornelius says she's learned her lesson after years of just making the minimum payment. But many Americans are still drowning in debt.
A survey by OppLoans says half of Americans are in debt. 52 percent of those say their debt is not manageable.
We went to an expert at the nonprofit, Money Management International, or MMI, for a game plan on paying off debt.
Number one: Know how much you earn and spend each month.
"Most of the clients that we work with have never created any sort of household budget," said Thomas Nitzsche with MMI. "They may not know what their credit score is. They may not have pulled their credit report in years. So it really is important to take control."
Number two: Call your credit lenders and see if it's possible to lower your interest rates.
"It's a good idea to contact all those creditors and see if they are willing to adjust those rates. If you have a financial hardship, make sure to present your case to see if you can get those interest rates down," Nitzsche said.
Number three: Try paying off the lowest balance first. Once it's paid off, you can put extra money into paying off the next lowest balance.
PAYDAY LOANS
"Unfortunately, here in Las Vegas, a lot of people when they are in debt sometimes use these payday loan places," Nitzche said. "Payday loans are so tough. You know one study they did with Pew Charitable Trusts a few years ago found that the average person doesn't just take out one. They actually take out multiple over and over again. That cycle of payday lending is really detrimental because the interest rate is so high."
The report from Pew Charitable Trusts found on average that a borrower takes out eight loans of $375 each year and spends $520 on interest.
"So it's really important to avoid those, if at all possible," Nitzsche said.
With a plan, some financial discipline and time, you can get yourself out of debt. But if you decide you need a professional, beware of who you turn to for help.
"If the company guarantees they can improve your credit, especially in a short amount of time, that's a red flag. If a company says they can settle your debt for pennies on the dollar, that's another red flag," Nitzsche said.
As for Cornelius, she says she's come a long way in figuring it out on her own.
"I have learned just to pay down as much as I can, so I have been able to pay off quite a few of them," Cornelius said. "I'm working on getting a zero balance on everything."
