The vast majority of Americans encounter debt in some form, but while certain financial obligations are easily manageable, other debts can quickly snowball and threaten a person’s livelihood. Common issues include maxed out credit cards, high personal loans and student loans, huge medical bills due to a lack of insurance, low retirement funds and mortgage payments.

Prepare for the future

Sorting out financial problems doesn’t happen overnight but you will want to outline a plan that will enable you to repay debt as quickly as possible. Attaining the lowest interest rates is of paramount importance but a poor credit rating can result in rejections for new credit. Fortunately, there is credit score repair for people with bad credit to solve the problem. You will then be able to shift debts to cheaper credit cards or complete a method known as “credit card shuffle”, which involves transferring balances to minimize payments and create substantial savings.

You will also need to be frugal in your daily life to raise further funds to pay off debts. You should budget your pay each month and prioritize absolute essentials and forgo luxury items. Try to save a portion of your incomings at the start of the month too as it may be more difficult later on. Cutting utility costs, cancelling TV subscriptions and cable, eating in every day and generally looking at ways to reduce outgoings can stabilize your financial situation considerably. You could also seek advice from a financial advisor and set specific, realistic goals and milestones for the year ahead to focus your money saving efforts.

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Saving and investment

Making your money earn money is the best way to secure your long-term financial future. There are a plethora of financial options to choose from, including setting up a basic savings account with an attractive interest rate, which is relatively low risk, to investing in stocks, which carries a higher risk. Financial expert Andy Tilp believes a new savings account is great for financial stability but is not the best long-term money making solution due to the generally small amounts of interest generated each year.

Both money market accounts of certificates of deposit (CDs) offer the potential for greater returns but are unlikely to deliver big payouts down the line and are ideal for savings that will be used within five years. Depending on your long-term outlook and risk tolerance, stocks, bonds and mutual funds are best suited for retirement goals. Tilp adds: “Be a frugal investor and look for inexpensive ways to invest,” Tilp says. “Diversify. Be patient and resolute. Don’t bail at the first hint of a loss.”

Steady and economical

It is important to not overcommit so opt only for levels of investment you are comfortable with. If you want an entirely no risk strategy for the future, open a high yield savings account with a bank or create an online checking account to earn small amounts of interest. You could also look into property investment and purchasing other lucrative assets. Getting your finances back on track isn’t easy but taking it step by step and adopting a steady, economical and optimistic outlook can banish debt woes and put you on the path towards a brighter financial future.