This month let’s talk about a subject we have all had to address in our lifetime. Debt! It can have consequences on your financial health over the years. The average Millennial reports having debt such as student loans, credit cards, auto loans, and a home mortgage. It is never too early to take inventory of your current debts.
Here are some ideas. Start by making a list of who you owe, how much you owe, and the interest rate. Once you know what your debt consists of, you can make a decision on how to tackle it. One method you can use is to pay the ones with the highest interest rates first. You pay less interest in the long run, but they are often the accounts with the highest balances. It may take longer to see your progress, affecting your motivation to stay focused on the goal. Another method is to pay the ones with the lowest balances, this way you get rid of the smaller accounts quicker, and you can see progress.
It is important to make sure you pay at least the minimum payment on all your obligations. It is easy to prevent late or missed payments by setting up auto pay on all your debt accounts.
To pay off debt faster and remain as debt free as possible, it is important to be aware of your spending. Take a look at your monthly payments and highlight all the areas when you think you can reduce spending. Some ideas might be take out, unnecessary subscriptions, or your daily trip to the local coffee shop.
Be sure to track your progress. At the end of each month, check and see where you are. Seeing the progress, you make will keep you committed on your journey toward debt free living.
And of course, pat yourself on the back and say good job this month. Then celebrate your progress with your favorite take out of that coffee to go!