It’s easy to think of debt solely in terms of credit cards and loans. These types of balances appear on consumers’ credit reports, impact their credit standing and accrue interest charges that can make them more difficult to pay off. For this reason, when individuals sit down to establish a debt management plan, the sole focus tends to be on curbing unnecessary spending and making large payments each billing cycle.
But there are other hidden contributors to debt that many consumers may not realize, and addressing these financial burdens is an important part of keep balances low and eliminating debt altogether.
First, adults should consider their housing costs. Housing, whether individuals own a home or rent an apartment, is typically the biggest monthly expense a consumer takes on. And paying too much for housing can severely cut into individuals’ income and make it more difficult for them to save money, pay off their balances or meet their day-to-day needs. To add to this factor, a recent New York Times report highlighted a growing problem among renters: rising rent costs.
As more adults turn away from homeownership in favor of renting, the supply of apartments and condos is shrinking. As a result, many landlords are increasing the rental rates, making it difficult for cash-strapped adults to find good deals. Real estate experts recommend living on the outskirts of metropolitan or suburban areas to save money on rent. Industry professionals also discourage adults from putting more than 28 percent of their take-home pay toward their rent or mortgage, which may make it challenging to save money or meet other financial obligations.
In addition to housing, adults should also look more closely at their expenses to ensure they are not placing too large a burden on their income. This includes utilities, grocery bills, cellphone packages and insurance. Consumers who are trying to accomplish their goals of eliminating credit card debt or paying off their auto loan can bolster their payments by cutting back on cable packages, shopping around for more affordable insurance and switching to basic rather than premium plans.
Lastly, individuals who have cut back and still find themselves struggling each month may benefit from credit counseling services, which can help them find holes in their budgets and re-arrange their spending habits.