It’s easy to obtain credit cards and other forms of credit as a teen, especially once you reach 18. You may begin to receive credit card offers in the mail, offers for car loans and other forms of credit. While you have every right to apply for and open these accounts, doing so without the financial knowledge necessary to manage them can leave you in financial trouble later.
What can you do if you are already in over your head? Here are a few tips for getting out of debt so that you can protect your financial future.
1. Admit your mistake and contact the credit card companies
The first step to addressing debt is to admit that you’re in too deep. If you can’t afford payments or your entire check is going to pay your debts, it’s time to make a change. Reach out to the credit card company about lowering your payments or changing your payment dates. You may be able to negotiate and close the account for less than it’s worth, too, especially if it has already gone to collections.
2. Start paying down the debts in the right order
While everyone has their own opinions on the best way to pay down debt, one surefire method is to pay off the smallest debt first. Then, take the payment you would have used on that card and place it on the next largest debt. As each debt is paid off, you begin to “snowball” the payments, paying each off faster than before.
3. Consider extreme options last
Some extreme options for dealing with debt include choosing a form of bankruptcy. As a young adult, this might be a good option if you’re in a significant amount of debt and have no ability to pay the debts. However, if you can see yourself paying your debt off within the next few months or years, it might be better to hash out your payments instead of hurting your credit with a bankruptcy.
These are three things to remember when you start paying off debt. You can get ahead of your debts and move forward with a stable financial outlook.