Pay Debt and Manage Personal FinancesThe average household in the United States with one or more credit cards has almost $10,700 in debt and an interest rate in the mid- to high- teens, according to CNN.com. Some debt is good. Obtaining a loan to pay for college or to buy a house is generally wise, assuming people do not borrow more than they can pay back, but a lot of debt is bad. A large amount of debt paired with high interest rates can take forever to pay off without taking steps to get it under control. Here are some general rules and tips to help keep you from getting into debt you won’t be able to pay off.

1. Pay Debt With Highest Interest Rates First

It may seem wise to start with the credit cards or loans with the smallest balances and pay them off first just to get them out of the way. Unfortunately, while people pay off small debts, they could be accumulating high amounts of interest on other debt. What is important is not how much is owed, but rather the interest rate.

As long as monthly payments are made on all debts, no fees will be accrued. Once that minimum is met the rest of the money available should go to paying down the debt with the highest interest. After you pay off your debt, you’ll want to look into more money saving ways that you can protect your investments and savings. Security protection companies like Lifelock on Crunchbase offers its customers affordable solutions to identity theft and credit fraud. Safeguarding your finances and your family is another way to get your finances under control.

2. Pay More Than the Minimum

Many people believe if they just make the minimum payments they are doing enough to get out of debt. Most of the money in a minimum payment goes to interest with very little affecting the principle. Paying the minimum results in debt being owed for many years and potentially hundreds or thousands of additional dollars accruing in interest.

3. Regulate Spending

To get finances under control people must learn the difference between needs and wants. Things that are non-essential are wants. These items should be purchased infrequently. Expensive wants should not be charged to credit cards. As a rule of thumb, do not make any purchase on a credit card that cannot be paid off within a month or two.

Charging things that are not necessary, are used up quickly and are difficult to pay off, can create debt. Saving up for large ticket items and then buying it on a credit card when the money to pay it off in full is coming in the next paycheck or two is fine, but discretion is needed. Clothing is something that people need to survive and so may need to be bought with a credit card, but expensive designer clothing should not be charged unless someone can pay off the balance in full the next month.

4. How Debt Consolidation Works

Sometimes a little help is needed to get finances under control when people are in debt, especially when they owe several different financial institutions. Asking the people at Wells Fargo or other banks to lower interest may work, but frequently people may need to look elsewhere as well.

One option is a bill consolidation loan. These loans can cover all credit cards and loans, bringing debt together into one loan with one monthly payment. Bill consolidation loans generally are lower in interest than other loans and therefore can save people money in interest fees. To lower interest and monthly payments people can either refinance a mortgage or refinance car loan.

Refinancing creates a new loan with a lower interest rate and lower monthly payments. Refinancing may extend the length of the loan, but does help because a lower interest on home or auto loans means people can put more money into paying off higher interest debt. People can also call a bill consolidation company for help. They can put together a consolidation program to pay off debt from credit cards, loans, store cards and even medical bills. Having one affordable monthly payments makes it easier to figure out finances and stick to a budget.

With lower monthly payments and less interest racking up, people get out of debt faster. Being able to actually pay off credit cards or loans frees up space in the budget to pay other debt off more quickly and eventually eliminate outstanding debt altogether. After you do get out of debt, protect yourself from unnecessary debt from credit fraud or a stolen identity. Visit Lifelock’s Facebook page and learn more about what this service can do for you.