Debt is something that doesn’t discriminate between young and old, male or female, rich or poor. Money owed is money owed no matter who you are. However, the big difference maker between your debt and someone else’s is whether you let it run your life and your finances.
No one likes being owned by credit card companies, yet Americans have compiled over $850 billion in credit card debt. Debt from student loans is now up to an average of $28,000 per graduate of a four-year program, meaning most of us owe money to someone. If you’re tired of monthly bills and balances that don’t seem to get any smaller, here’s a New Year’s resolution for you: commit to eliminating your debt. Here’s how you can make it happen:
Always pay more than the minimum- paying only the minimum means you’re increasing the total amount of interest you pay over the life of the loan or on your credit card debt.
Always pay on time-missing a payment not only means you may be facing costly penalties, but it also kills your credit score, something that can come in handy when you’re trying to get the best interest rate on a mortgage.
Create a repayment plan, then stick to it- if you don’t have a budget, then make one first. After that you’ll be able to see what you can contribute to paying off your debts each month. And just like every other resolution, you need to stick to the plan to make it work.
Quit impulse-buying- if you’re already in debt, why are you spending more money you don’t have? If it’s not in your budget, forget about it. This may mean you have to sacrifice the latest and greatest in gadgets or new clothes every month, but it will be well worth it when you’re debt free.
Use common sense- the number one reason people accumulate so much debt and stay in debt is because they don’t use common sense. All of the above tips are geared toward helping you make smarter financial decisions so you can get out of debt. If you’re serious about eliminating your credit card or loan debt, it pays to stop and think before making a purchase.
Iowa State Bank hopes these tips help you develop a strategy for paying off your debt in 2014, or at the least, get you thinking about what it will take to clear the red from your ledger. We wish you good luck in achieving your financial goals in the New Year, and we look forward to seeing you at one of our locations soon!