New Year and No Debt – How to Save in 2014
Getting out of debt is a resolution that many Americans attempt to tackle. In fact, 34% of Americans make getting out of debt a New Year’s resolution. With over 80% of the nation struggling to get out of debt, it’s easy to see why this resolution tops the list.
While these other resolutions may be common, getting out of debt can help all of these other resolutions come to fruition. Here’s a quick list of tips in order to start your debt-free journey:
1. Assess and Direct Your Income/Expenses.
Making a budget -- and sticking to it -- can be the single most important step to take when attempting to manage debt. There are many free online resources to assist you in creating a budget. It’s important to calculate the ratio of income/expenses so you can see what you are really making vs. spending. Taking an outsider’s look at your expenditures can reveal areas to cut back on.
If you maintain a gym membership, consider going for walks or runs instead, or using a set of weights bought at a thrift store. This quick move can easily shave hundreds on your yearly expenditures, and can also help you lose weight and get healthy - one more New Year’s resolution. Exercising is also a wonderful way to spend time with your family. Give thought to cutting out other extra expenses like television or runs to the local coffee shop. Skim everything extra off the top to give yourself and your family more funds to dedicate to paying off balances.
2. Sell What You Can
This step may very well help tackle the “Getting Organized” resolution. Take a tally of the things you own that are no longer used or needed. Whether its toys the children no longer play with, or a boat you owe on but never use, consider selling things and getting rid of extra items or possessions you haven’t completely paid off.
Take a step back and think, “Is this item worth owning? Does owning it, or making payments on it really make sense given my financial situation?” Go through each room of your home, and decide which items can be sold. Have a garage sale, or sell things online. Earmark these funds to go toward paying off debt.
3. Consolidate Your Debt
Many cardholders struggling with debt have 4-6 credit cards that they carry a balance on. This is not only overwhelming, but it’s also hard to keep up with the ever-changing interest rates and sneaky charges.
Find a card that has a fair interest rate, and move all balances to that card. Contact the card company at least twice a year to see if they have any special financing rates or interest rate promotions to take part in. Having one balance to worry about is much easier than juggling 4-6 monthly payments.
4. Cut the Cards
Not having the physical cards available to use may be the secret to getting your family out of debt. Credit card companies know that it’s incredibly easy to pull out a card for an expense you can’t afford, knowing that you’ll be forced to pay for it -- plus interest -- later down the road. Get rid of the cards so they’re not a temptation later.
Getting rid of debt is an extremely smart move. Not only will you keep more money in your wallet, but you will also have financial peace of mind. Furthermore, by not writing checks to cover balances every month, you can save up for things you’ve been dreaming of, and have the best year yet.