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Debt

If you're in debt, you're not alone. Consumer debt in America is at an all-time high. Sometimes it's hard to know - or admit - if you have a problem with debt. You may be scared or overwhelmed. That's natural. But don't wait. Taking charge of your finances will make you feel better - you'll have less worry and anxiety.

The first step is to honestly ask yourself if your debt has become a problem. Here are some circumstances that might indicate that it has:

• Next month's bills arrive before last month's have been paid.
• Your bills often include late fees.
• You avoid opening bills when they arrive in the mail.
• You procrastinate balancing checkbooks.
• You bounce checks.

Write it Out
Do you actually know how much debt you have? Many people don't. Start by making a list of everything you owe, whether it's a mortgage, a credit card, student loans or even money you borrowed from your parents. Write down:

• The lender name
• The amount you owe
• The term of the loan
• The interest rate and fees

Then total them up. The numbers will probably make you worry, but you've already made a positive step.

The power of 50
Paying the minimum due on your credit cards each month can be deceiving. If you have a credit card with a $3,000 balance at an annual interest rate of 18 %, and pay only the 2% minimum monthly payment of $60 per month, it would take you 8 years to pay off your bill.

That means that you will have paid $5,780, not the $3,000 you thought you were spending when you made the charges.

But if you can pay an additional $50 per month on that debt, for a total payment of $110 a month, you will pay down more of the $3,000 you originally owed. And that means less money for the creditor to charge interest on. As a result, you would pay off the debt in 3 years and save over $1,800 in interest payments.

Imagine what you could do with $100 more per month.

Don't get discouraged
Reducing debt is like losing weight. You're not going to lose 50 pounds in a month. You need realistic goals in reasonable timeframes. Same with debt. Most people take four to five years to become debt free. So aim for three years. It's not too long or too short.