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Experts: Americans, borrowing more than ever, must learn to eliminate debt

With education costs and credit card balances higher in recent years, experts say you may have to make drastic changes to get a handle on your debt.

Matt Ingram, a finance lecturer at Wright State University, says Americans are borrowing more than ever.

"When the economy is growing and people feel stable in their jobs, they think it's going to continue forever so they tend to borrow more," Ingram told News Center 7 Consumer Reporter Rachel Murray on Wednesday.

According to the Federal Reserve, the average student loan payment has jumped from about $227 a month in 2005 to $393 in 2016 - the average student loan debt is about $37,172.

Huber Heights resident Tina Wyatt says her master's degree costs her $900 per month.

"I had to take out loans and I just kind of assumed that's what you do," Wyatt said. "Now I'm over $80,000 in debt and it's rough."

RELATED: Digging out of debt? You are not alone

According to Ingram, as long as students keep borrowing, education costs will continue to rise.

"If there's an infinite amount of borrowing capacity, schools are just going to raise their prices - that's what has fueled this increase."

Experts say tackling credit card balances is the first step toward eliminating debt. The average balance is $6,375 - up nearly three percent from last year, according to Experian.

Springfield consumer credit counselor Rachel Klopfer says the first step is the hardest, and may seem illogical, but tracking every penny you spend is essential.

"See where the money drains are, and a lot of times it's fast food spending - more money on children than you think," Klopfer said.

Before you start digging in to debt, Klopfer says you should save about $2,000 because once you pay off your credit cards, you have to stop using them.

Next, Klopfer says, you should try something called "snowballing."

"You take extra money and you work really hard at paying down debt."

The key to student loans is finding an income-based payment plan that works for your budget. Go to studentloans.gov to estimate your payment, then contact your lender and set it up.

Klopfer says private student loans may be more of a problem, but many lenders are willing to work with you to negotiate a plan.

Even with the necessary steps in place, it can still be a challenge to maintain your debt, but there's help. Graceworks in Dayton and Springfield offers free consumer credit counseling. To learn more, visit https://graceworksdebtcounseling.org/.

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