Earlier in January 2023, the Federal Reserve Bank announced its yearly report on American household debt. According to the report, the national debt of the United States crossed a record-breaking $16.51 trillion in the third quarter of 2022. The total national debt is alarming as it is at least 3% higher than the previous years. However, there were certain major factors that “forced” Americans o opt for debt.

The deadly COVID-19 pandemic, looming recession, and mass unemployment are the leading factors. Average Americans who struggled with making ends meet saw debts as the only ray of hope throughout the outgoing year. Although debt can be handy at the moment, it can make things even worse down the road. The current interest rate hike, for instance, will continue to add salt to the injuries of Americans who are drowned in debts.

NBC / As the household debt soars over $16.51 trillion in the 3Q of 2022, average Americans need to be creative with debts.

So, a mass awareness of the functionality and utilization of debts is required. Average Americans who rely on credit card debts can not simply keep up with more debts without a fair way out.

In this article, we are going to unveil some untold ways that can help average Americans in using their debts to turn them into potential wealth.

Pay Off Debts that Have High Interests

First off: there is no second opinion that you have got to pay off your debts one day or the other. And there is no way out. So, which debts you should pay off first? Well, if you have multiple debts in line, first pay off debts that have high-interest rates.

Maitree / Pexels / Paying off high-interest rate debts can ease the burden of your debts.

For example, if you have mortgages to pay off and you know that the interest rate is set to go up, pay them off. Do not worry about other debts at the moment. Instead, focus on clearing the debt that has a high-interest rate.

Whatever the debt is, if the interest rate is high, pay it off. Consequently, this will make the process of paying other debts seamless.

Keep Saving Every Single Possible Cent

While you pay off your debts, consider setting a fair amount of money aside for later. In the longer run, this will turn into a potential saving.

Tira / Pexels / As you pay off your debts, consider saving every possible cent.

Keeping a fair amount of money will give you one of two things:

• In the long run, you will have a decent amount of money in your saving.
• You will have peace of mind, as your savings grow.

However, it is essential to note here that you do not necessarily have to save a massive amount of money. A few bucks every day should be enough. But you will have to be consistent with your savings.

Thus, if you continue to save money for 6 months, you will see that you have a decent amount of money in your savings. As a result, you will not feel the need for going back into debt again.