The start of a new year symbolizes new beginnings and a fresh start, but financial debt can
become an issue no matter the season. Overspending during the holidays is a common problem
that many people face, so prepare to start the new year with these recommendations to help
chip away at debt.
1. Understand your situation
The first step is to understand the status of your finances and where to start improving them. Take a look at your accounts, prioritize the debts you need to pay off first, and put a plan in place. Finding ways to consistently save is also important, but it’s difficult to direct money into savings when you’re weighed down by any kind of debt. Before you can start the saving process, you’ll need to put your plan into motion to bring your wallet back to health.
2. Consolidate your debt
Consolidating your debt into one loan with a lower interest rate can save you money each month and benefit you in the long run. By putting less money toward interest, you can pay down your principal amount sooner. To help kick start your plan, Sharonview offers an accelerated debt payoff calculator to help calculate appropriate monthly payments to the consolidated balance.
3. Create a budgeting plan
Once you’re aware of your debt, it’s time to create a budgeting strategy for any extra income. Increasing your monthly debt and bill payments will mean less money to spend elsewhere, so until your debt is paid off, small changes like eating at home and making your own coffee may be necessary. Cutting back within reasonable means will help ease financial stress and reduce your pay-off timeline.
4. Plan for next year before it’s too late
The holidays happen at the same time every year, yet some people find themselves shopping last minute, causing them to overspend. If you find yourself in this situation year after year, it’s time to start planning ahead. Instead of waiting until the holiday season to do your shopping, pick things up as they go on sale throughout the year. Having a physical inventory allows you to see how much you’ve purchased for each person. This strategy may prevent you from buying too much all at once, while reasonably spacing out your holiday spending over time.
The most important way to reduce debt is to only spend money that you actually have. However, Americans find themselves overspending each year and entering the new year with more bills than anticipated. If you find yourself in this situation, know that you are not alone. Ultimately, consolidating your debt and making small changes to your spending habits will guide you toward financial success and keep you on the right track year round.