Wannabe debt free? Expert advice on making your plan

- We’ve all been hit with a big credit card bill, but what if the balance gets too high to pay off? FOX 13 consumer reporter Sorboni Banerjee has a plan to get you back on track.

Whether you’ve had emergency expenses come up, or you overestimated your ability to pay back that first credit card, being in debt and feeling like you’re in over your head is no fun.

Clearpoint Solutions Credit Counselor Juan Menendez helped us put together some steps you can take to take down the debt.

“The typical family, right now is over $10,000 in credit card debt, and that's not to speak about student loans,” Menendez explained.

And according to the American Bankers Association, the majority of credit card holders don't pay in full each month.

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If you’re one of those people, or getting close, here’s what you should do.

1) Stop using your credit cards and contact your creditors.

“Creditors, most of time can work out a plan to bring you up to date, because meantime the late fees are killing you. The interest is killing you,” Menendez said.

With annual rates of up to 18-percent, that interest could equal more than $2,000 a year on top of the amount you owe.

2) Create a payment plan

Decided in what amount of time is reasonable to pay off the debt. Clearpoint Credit Solutions usually puts people on a five year track. It can take much longer than that, depending on how much you make and how much you owe, and that’s OK as long as you’re paying more than the minimum payment.

“If most people pay minimum, it depends on interest, it's gonna take well over 10 years, and that's if you're not using credit cards anymore,” Menendez said.

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3) Stick to a budget

This can be the hardest part, but you have to stick to a budget. Pay the bills and the debts first, but leave yourself a little wiggle room for the occasional movie or luxury item.

”The budget would include basic financial obligations taken care of then you want to have some fun,” Menendez said.  

4) Put money in savings.

Credit counselors say you should be saving at least 10-percent of your income, but most Americans have less than $1,000 put away.

“They might have a 401K through jobs, but when I say ‘savings,’ I’m talking about savings you should have to dip into when things happen - when a car breaks down, if you are laid off - you should have six months set aside,” Menendex explained.

Making sure you save can save you from having to use your credit card like a get out of jail card in a financial emergency.

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