With Financial Literacy Month (FLM) in halfway over, let’s drill down and discuss personal finance topics at a closer level. The last two weeks we wrote about Why Every Family Should Have a Budget and Why Financial Literacy Month Matters. The first goal of “Count Me In” is to “manage money and debt wisely.” Once you have a budget, the next step is to tackle debt. Here are five surefire ways to reduce your debt.
- Take a Break From Using Your Credit Card
We’re living in an increasingly cashless society. While we don’t have to carry around wads of cash anymore, there’s one major drawback: the pain of spending is lessened. Think about it this way: what’s more painful, handing over a $100 bill or swiping a credit card? If you’re finding yourself tempted to buy stuff, even when you’re carrying a balance on your credit card, clearly you have a problem. Consider taking a break from using your credit card. Leave it at home when you don’t need it. If that doesn’t work, consider cutting it up as a last resort.
- Pay At Least Your Minimum Payment
There’s no easier way to ruin your pristine credit than failing to make the minimum payment. If you’re in debt, you should try to pay off as much as you can afford, but at the bare minimum pay the minimum payment. For example, the minimum payment on your credit card is the greater of a fixed amount (such as $10) and a percentage (such as 3 percent) of your outstanding balance. If you’re able to pay more than the minimum, pay the debt carrying the highest interest rate first.
- Ask to Have Your Interest Rate Lowered
As the saying goes, the squeaky wheel gets the grease. If you’re carrying debt, call up the lender and ask for a lower interest rate. The worst they can say is no. If the customer service representative isn’t willing to help you, don’t be shy to ask to speak to their supervisor. If you have a track record of paying your bills on time like clockwork, the lender may be willing to reduce the interest rate. You won’t know unless you ask.
- Review Your Family Budget
If you’re in debt, it’s important to get your finances in order. Look at your family budget and see where you can cut back. If you have a credit card debt at 18.99 percent, consider taking a break from family vacations until you get your finances back in shape.
- Consolidate Your Debt
Are you carrying a lot of debt? Are the credit card statements piling up on your coffee table? There has to be a better way. When you consolidate your debt, you only have one bill to deal with. Not only does it simplify repaying your debt, a consolidated loan typically comes with a lower interest rate. It’s a win-win situation for borrowers.
If you’re having trouble figuring out how to reduce your debt, feel free to contact our office and let us give you a hand. We’ll make sure you’re on track to meet your financial goals.