5 tips for becoming debt free in the new year

Like losing weight, paying off debt seems to be on everyone's list of New Year's resolutions. We all know it's not easy, but can be done. Follow these five tips to get started on a debt-free future.   

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5 Tips to Becoming Debt Free in the New Year

3 Jan 2018

5 tips for becoming debt free in the new year

So you've decided that 2018 is your year to get out of debt. It’s a daunting task. Where should you start?

If you’re one of the millions of Americans who have added ‘becoming debt-free’ to your New Year’s resolutions, get started with these simple steps. 

 

  • List your debts and interest rates. It’s time to be honest with yourself. Write down all your loan balances and their interest rates, which should be listed on each statement, in order of rate from highest to lowest.
  • Focus on the highest rate debt. The highest rate is costing you the most, so make additional payments whenever possible to pay it off quicker. Continue making minimum payments on your other loan balances to avoid additional fees and penalty rates.
  • Transfer/consolidate your balances. Consider opening a lower rate credit card or personal loan and using it to pay off your higher rate balances.
  • Pay yourself first. It may seem counterintuitive to put money in savings when you’re trying to pay off debt, but having cash on hand in case of an emergency will keep you from going further into debt. Try to keep at least $1,000 in an emergency fund for unexpected expenses.
  • Spend less. Write down your budget – how much money you’re bringing in and where your money is going. Look for ways to cut back, such as eliminating cable, skipping the clothes shopping and cutting back on eating out. Put some of this savings into your emergency fund.

 

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