Take control of your debt with smart planning

Here are six steps that will help you reach financial freedom.

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Having debt can make it hard to feel like you have control over your own financial freedom. Worrying about how you're going to meet your obligations each month—and the consequences of falling behind—can be overwhelming.

Credit card debt, which carries higher rates than other types of loans, can be particularly onerous. In the first quarter of this year, U.S. households owed an average of more than $8,000 on credit cards, up about 6% from the same period in 2016, according to WalletHub.

Smart planning, however, can give you more control over your debt and put you on the road to financial independence. Consider following these steps for a more stress-free financial state of mind:

1. Take a break from using credit cards, and don't take out any other loans. The first step toward being debt-free is to make sure you're not accruing any more loans. Switch to cash and debit payments until you've paid down your credit cards entirely. That way you're not overpaying for every purchase you make by owing interest on it.

2. Figure out how much you owe and on what terms. Sit down with all your monthly bills and determine your total debt amount, as well as the interest rate on each account. Pay attention to whether interest levels are fixed or variable, which means the rate could go up in the future. If you've been a long-time customer without many missed payments, call your credit card issuer to see whether they'd be willing to lower your rate.

3. Figure out where you can cut in your budget. To truly be independent from debt, you need to live below your means. Look for places in your budget you can trim—like unused gym memberships, cable subscriptions, or some meals out—to free up some money each month for additional debt payments.

4. Put that extra cash toward the highest-rate debt (while paying minimums on all balances). To save the most money on interest, you'll need to be strategic about where you're directing extra cash. First, pay the minimums on every bill, then take any additional cash and put it toward the loan that carries the highest interest rate. You might consider setting up those minimum payments to be paid by your bank automatically: that way you never risk missing a payment and getting charged a late fee.

5. Once that debt is paid off, direct that entire payment to the account with the next-highest rate. The amount you can put toward that balance should be higher, since you're no longer paying down the principal on the loan you just paid off. Continue to whittle away at your debt until you've eliminated it entirely.

6. Redirect your payments toward savings. This is the final step toward independence from debt once you've eliminated your high-interest loans. Building up a savings account with 3 to 6 months' worth of expenses means that it's less likely that a financial shock like a job loss or an unexpected medical bill could force you to turn back to your credit cards.

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The statements and opinions expressed in this article are those of the author. Neither Fidelity Investments nor your employer can guarantee the accuracy or completeness of any statements or data.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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