By ABA Retirement Funds, An MSBA Affinity Partner
Building a healthier financial life means striking a balance between living for today while preparing financially for tomorrow.
You have multiple savings goals and as your priorities change, it is good to know how best to save for the things that matter most, without sacrificing your own financial future. Here are five tips to help you get out of debt.
Know what you owe and build a budget
Imagine knowing where your money goes and what it would be like when you do not owe anything. How would life change if you were out of debt? How would you feel? Understanding how debt can cost you over time and beginning to plan a way to eliminate it will help you find your financial balance. Once you know how much you owe, you may want to identify unnecessary spending and a debt-elimination goal over time. It all starts with a plan – start with building a budget with the Voya.com Home Budget Savings Calculator.
Determine your pay-down strategy
Now that you know what you owe, here are a few strategic options you can use. First, you may want to prioritize how you want to pay off your balances. One option is paying off the highest interest rate first, while also making minimum payments on the rest. Consider the snowball method as well, where you pay off the lowest balance and then, take the amount you would have paid for that card each month and roll it into the next debt amount.
Stay balanced, stay strong
Getting to where you want to go will depend on the choices you make today. Finding the balance means making sure all of your expenses, insurance protections, and emergency savings are in place first. Then, after you budget and account for everything else, with anything left over, you can prioritize your debt strategy and place a high percentage of your remaining discretionary income toward your debt to help you stay balanced and stay strong.
Reduce spending temptations
Although technology can work in your favor, sometimes having immediate access to retail sites such as Amazon.com is too convenient and can get you into trouble. Sites that save your credit card information could have you spending more than intended. Remove any temptation from sites like this by deleting its ability to save your information. By not having things auto-saved, it may give you more time to determine if it is something, you actually need.
Know the score
Your credit score is more than a number. It is what potential lenders use to determine how likely you are to keep your word and pay them back. It also reveals a lot about your financial wellness and knowing what is in your credit report is essential. Did you know you are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit-reporting companies? When you know the score and stay on top of your credit, it makes it easier to get and stay healthy financially.
Remember, building savings and reducing debt takes time. As you look for more ways to get out of debt, be sure to budget for all of your competing savings goals. Save early and save often, so you can provide for your loved ones, and live the life you’ve envisioned.
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