“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” – Suze Orman
One goal many have after the New Year is to focus on financial wellness, which makes sense after the hustle and bustle of the holidays and the many expenses incurred. It’s important to pay close attention to our finances so we can achieve, or maintain, financial freedom and ultimately free our heart and mind from worry, as the quote shares above.
A significant part of financial wellness is managing debt. When someone has little or no debt, they have increased financial security in case unexpected situations arise, such as a job loss, medical expenses, or a family member in need. Due to the importance of managing debt, and the topic of financial wellness being top of mind, we’ve included a few tips below that can help you, or a loved one, make a plan to address debt this year:
Know How Much You Owe – In order to pay down debt, it’s helpful to know where you stand before working toward a goal. This includes knowing your balances. Make a list of all you owe – credit cards, loans, or outstanding accounts. Be sure to include the interest rates, minimum payments, and pay-off terms for each debt. Keeping all of this information updated and organized, such as in a spreadsheet or worksheet, can help you stay on track.
Choose a Debt Repayment Method – There are multiple methods to paying off debt. Some include paying off debt in order of smallest to largest amount, paying off the debt with the highest interest rate first, paying more than the minimum, consolidating debt with a personal loan or credit card to lower your rate, etc. Knowing which method to choose can be overwhelming, and luckily, your financial advisor can help. Consult with your advisor to help you evaluate and choose the best path for your situation.
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Keep Up With Your Budget – Once you know your debt repayment strategy and the amount you will be paying each month, add it into your budget and stick with it. In addition, keeping up with your budget and revisiting your income and expenses on a regular basis can help you stay on track so you can avoid incurring additional debt in the future. Plus, you may even find that you can put more money toward debt repayment.
Lower Your Bills – Debt or no debt, finding ways to lower bills can help us in numerous ways—and for those who do have debt, lowering bills can help free up money that can be used to increase your debt payments so you can be debt-free faster. Some ways you can lower your bills might be to choose store brands when grocery shopping, reviewing your memberships and limiting them to the ones that offer the best value, and shopping around for better rates on auto insurance or car loans. Even the smallest savings can add up over time and make a difference.
We hope these tips for paying off debt can provide insight into how you can get started and be on your way to meeting your financial goals and ultimately achieving financial freedom. If you have any questions about the tips above, or if we can help with your financial planning in any way, call us today at 412-630-6000. Our experienced financial advisors are ready to help.
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