A new year means new resolutions and the perfect time to set yourself up for a great financial future. According to a survey conducted by Fidelity Investments, nearly two-thirds of Americans are making financial resolutions for 2023. The study also found that 32% of those making financial resolutions are specifically planning to pay down debt. The amount of debt you keep will have a large impact on your financial future. No matter the source of the debt, you are likely paying interest on it as well. Follow these tips to begin paying down your debt and taking control of your finances this year:
- Budget – Determine a budget and set a monthly amount you will pay toward your debt. In months when you have more to spend, you can apply that to debt as well, but determining a budget will help you stay on track.
- Prioritize by rate – To decrease the amount you owe, pay more each month on the debt with the highest interest rate. Pay the minimum on all other debts.
- Investigate balance transfers – Some credit cards offer zero-interest balance transfer, which enables you to transfer the balance of a card with a higher interest rate to a card with a lower interest rate or none at all. However, be aware of any specifics in the timeline for when the card must be paid off.
- Use extra income – Use any work bonuses or tax refunds toward paying down debt. While it may be tempting to buy something for yourself, your wallet will thank you if you apply extra money to outstanding balances.
- Pause credit card spending – The best way to stop accumulating debt is to stop using credit cards. Avoid using credit cards during the time you are paying off debt and focus on paying your monthly bills.
I would love to help you by discussing your financial situation in greater detail and giving you more tips on how to pay down debt and prepare for your financial future. If purchasing a new home or refinancing your current home is in your plans for 2023, I am happy to help with financing. Call me today to set up an appointment!
