(InvestigateTV) — The latest report from the Federal Reserve Bank of New York shows that credit card debt was up $129 billion in the first quarter of 2024, leading to a total of $1.1 trillion.
Leslie Tayne, a debt relief attorney with 25 years’ experience, shared five common mistakes she sees when people are trying to pay off debt.
Not knowing the total amount of debt
Many people underestimate their total debt load. Tayne advised them to pull their credit report and statements and add up all their debt.
Not knowing who holds their debt
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Tayne said different creditors will respond differently to financial situations.
“Some will be more flexible with repayment terms settling, but some will be more aggressive in terms of coming after you if you can’t make a payment,” she said.
Not tracking spending
To pay off debt people need to understand what money is coming in and what is going out.
Tayne urged people to create a budget, whether on paper, through a website, or an app. She said it is an essential step to understanding how much money can be used each month to pay off debt.
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Haphazard spending
Tayne noted that it is easy to overspend if consumers are not focused on their end goal. Use a budget before shopping to know what funds are available and to help resist the temptation of impulse buys.
“But haphazard spending really has to do with, well, it’s the holiday season, I’m going to walk into a store, and I originally thought I was going to spend $100, but I ended up spending $200,” she pointed out. “And then I’ll figure it out next month, that’s haphazard spending, and that’s a problem for many consumers, because the challenge is that you haven’t budgeted appropriately.”
Buy now, pay later mentality can easily get out of hand
Tayne said many people fall into a debt trap by simply avoiding the problem, thinking they can deal with it later. She urged consumers to keep tabs on their debt load and spending, and to not be afraid to ask for help.
The Federal Trade Commission (FTC) has free resources that for those wanting to get out of debt.
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