If someone asked you about the leading cause of financial stress in your life, how would you respond?
The #1 cause of financial stress revealed
Read more: Rule of 752: How small expenses can destroy your budget
GoBankingRates.com surveyed more than 7,000 people in all 50 states and the District of Columbia to get the answer to that question. Here are the options they had to choose from:
- Paying off my debt (i.e. credit cards)
- Not being able to retire
- Not having enough money to fund an emergency
- Wanting a nicer lifestyle
- Paying for education
- Lack of stable income
- Paying my mortgage or rent
The most common answer was “paying off my debt,” which is a concern that many callers share with Clark on the radio show. People who took part in the survey were also worried about funding retirement and emergency savings accounts.
As you can see in the state-by-state breakdown below, people stressed the least about paying their mortgage or rent.
Action plan: 5 steps to pay off debt quickly
1. Create a budget – Tracking your expenses is the number one way to stop living paycheck to paycheck. By creating a budget, you’ll be able to quickly identify the categories where you’re spending too much. And thanks to websites and apps, so much of this process is automated. You can even get alerts sent to your phone to notify you when you’re overspending.
Read more: Clark’s budgeting guide, including links to free apps
2. Prioritize debts by interest rates — If you have several credit cards, your first goal is to pay off the card with the highest interest rate. Pay more money toward that credit card and slightly less toward the other cards, until the card with highest-interest debt has a zero balance. Then you move onto the next card, and so on and so on.
3. Have an emergency fund – Having an emergency fund can save you a lot of stress when you’re faced with an unexpected expense, like a medical bill. A Bankrate.com poll found nearly half of Americans don’t have an emergency fund to cover three months of expenses, and 28% of those surveyed have no emergency savings at all. If you’re in this situation, start small. Set aside money from every paycheck until you have at least $1,000 and continue to slowly build your savings as you pay off your debt.
Read more: Why you need emergency savings and how to start building it
4. Always make minimum monthly payments – Even as you’re working to build your emergency fund, you have to continue to pay all of your bills on time. No exceptions. This will prevent you from being hit with higher interest rates and fees, which could keep you in debt for even longer.
5. Make extra money – If you can’t take on a second job, there are ways to make money in your spare time by doing things like running errands, selling your old stuff online and pet sitting. Set a goal to work an extra five hours a week and use that money to pay down your debt.
Read more: 18 easy ways to make extra cash on the side
And finally, if you need some inspiration, take notes from this man who retired at 33!
