If you owe money on student loans, car loans, and credit card bills, you’re not alone.
Worrying about paying off debt is a national epidemic.
But let’s define debt….
Anything owed to someone else is considered debt. This excludes insurance, groceries and childcare costs. Ongoing bills like electricity, water, and utilities are also not considered debt. These are variable monthly expenses.
However….
How you pay for these expenses can turn into debt.
If you use credit cards to pay for your recurring monthly expenses, you’ll accumulate debt.
Your mortgage is also a type of debt but is generally considered a “good debt.”
But don’t take on more than you can handle.
Borrowing less than 25% of your monthly take-home pay and sticking to a 15-year, fixed-rate mortgage loan is a good rule of thumb.
In my previous blog, How do I pay off my debt? I shared five basic steps that you can take to pay off your debt quickly.
Now….
Here are 6 tips to help you focus on paying off those debts:
Use a debit card instead of credit cards. This will get you away from revolving credit and the interest associated with it. Be aware that with a debit card, the money is taken immediately from your account, so be sure that you have enough money to cover the purchase. Overdraft fees can be pretty steep!
Only make credit card purchases that you can pay in full. If you must use your credit card, commit to paying off new charges in full each month, in addition to the amount you are already paying to reduce the balance. This will eliminate future interest charges.
Live below your means. Be more frugal as you spend and think twice before taking on any new debt while you focus on paying off your current balances. It’s better to save up for what you need than to “buy now and pay later.”
Use your benefits at work. If your employer offers a company match on retirement plan contributions, consider contributing at least up to the matched percentage. Use flex-spending accounts to pay medical and dependent care expenses on a pretax basis to save tax dollars. Both plans reduce your taxable income, leaving you more money to pay towards your debts.
Save windfall income. Instead of spending your raise, tax refund, overtime pay or bonus, put the extra money towards reducing your debt.
Avoid buying items or services on impulse. Give yourself one day before you make major purchase decisions. Take this time to calculate the total cost of the item or service after finance charges. Then ask yourself the question, “Do I still want to make the purchase at this cost?”
If you find your current financial situation overwhelming, consult a professional. Working with a professional may help you make more prudent financial decisions.
Until next time…..
I look forward to hearing from you!!
Althea
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PS. Yes… I’m a nurse, but did you know that I have a side hustle? I’ve partnered with a leading financial service company and the number one thing they do is credit restoration. We’ve helped many people since I started on this journey and always looking to serve more. Check out these links…. Fix Your Credit and Earn Extra Income.
My goal is to connect people, ideas, and resources so that your life is better because I helped you make the right connection!!
