Tips for eliminating debt disaster - FOX5 Vegas - KVVU

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Tips for eliminating debt disaster

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LAS VEGAS (FOX5) -

You've probably read a lot of stories about how the economy is improving. Unfortunately, people's personal finances may not be keeping up, especially in Nevada.

During the height of the recession, a new car, fancy home and expensive dinners with friends were often luxuries. They're much more common now. Everyone seems to be trying to keep up with the Joneses, but the Joneses might be broke.

“I wanted everything my parents had, but better of course, at an extremely young age,” consumer blogger Jaime Tardy said.

By the time she was in her early 20s, Tardy was a financial success. She owned her own home, a new car and had a high-paying job.

“When I had a brand new car and could drive it and show it to my friends, that was me being successful,” she said.

Eventually, Tardy started thinking about quitting her 60-hour-a-week job to start a family. When she began researching her personal finances, she was shocked.

Tardy owed $19,000 on the car she loved, $26,000 in student loans and nearly $25,000 for a home equity loan.

“That's when you choke because you had no idea it would be that much,” Tardy said.

Tardy's story isn't uncommon. Consumer debt has skyrocketed in the last 30 years. According to website PlasticEconomy.com, Nevada has one of the worst consumer debt problems in the country.

Nevadans carry an average of $9,000 in credit card debt with an average interest rate of 18 percent.

“They'll talk about sex, they'll talk about drugs, they'll talk about alcohol, but they won't talk about money,” credit counselor Michele Johnson said.

Johnson has spent 30 years helping people get out of debt. She said most people don't realize how much trouble they're in.

“They're aggressive in thinking how much money they're going to make and they underestimate how much they spend. We tend to know what our payment is to the credit card company. We very rarely know what the balance is,” Johnson said.

Johnson said the first thing to do is what Tardy did and figure out where you really stand. Make a list of everything you spend money on in a month and then cut anything that isn't absolutely necessary.

Tardy said three key actions brought her out of debt. First, she went big and sold her new car back to the dealer, only losing $1,000 doing so. She purchased a more affordable used car.

“It was a hard decision to make, but in one day, one decision, I got rid of $12,000 in debt,” she said.

Tardy then set a goal date tied to a reward.

“When we know that there's an end, especially when there's a reward at the end … to me it was quitting my job. I was like, ‘That is a great reward. I have to go through the pain now, but the reward will be worth it,'” she said.

The third step was selling everything she could part with.

“When you sell stuff, it's not about never having it again. I remember selling a monitor back then, and I was like, ‘Ah, but I really wanted the extra monitor.' I went without it for a while, but once I was debt-free, I bought an even better one,” Tardy said.

It took Tardy 16 months to become debt-free. Shortly after that, she quit her job. She now has two kids and runs her own blog, Eventual Millionaire. She works between 20 and 30 hours a week and makes more money than she did at her previous job.

“I enjoy every single day, whereas before I used to dread Sundays. Mondays now are my favorite days of the week, which is crazy to some people, but I love it,” she said.

“I'm not saying it's going to be super easy, but you can do it, and you can do it faster than you think. Once you get past that, then life begins. That's what happened to me,” Tardy continued.

Tardy said she was embarrassed to tell her friends that she and her husband couldn't afford to go out to dinner or attend other social functions. After she paid her debt off, a lot of those friends came to her for help, and they are now debt-free as well.

There are also ways to save money without sacrificing. Johnson recommends shopping around for car insurance. Most people stick with the same insurer for years, but you can save money by switching or adjusting your coverage for a cheaper premium.

Johnson further said you can save money by shopping around for different banks for credit unions. You also might look for a less expensive cable provider or get rid of it altogether.

Copyright 2014 KVVU (KVVU Broadcasting Corporation). All rights reserved.

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