The year 2022 has arrived, which means it’s time to make those New Year’s resolutions. Perhaps you want to take your dream vacation; perhaps you want to start a new hobby, enroll in a new class, or spend more time with your children. There are, of course, the traditional goals of losing weight, eating healthy, and exercising. Make financial new year’s resolutions for your betterment.
Controlling your debt is a critical component of financial wellness. This can appear to be such a daunting task that it’s difficult to know where to begin. That’s why we’ve compiled our best debt-relief tips for 2022. Examine our seven strategies.
Create a Budget
It’s difficult to pay off debt if you don’t keep track of your incoming and outgoing funds. It is critical to creating a monthly budget. This is an effective debt management solution suggested by experts to manage all the debt solutions in all possible ways.
For your income, financial experts usually recommend a 50/30/20 split. Fifty percent goes toward necessities such as the mortgage and utilities. Thirty percent is set aside for wants, and the remaining twenty percent is set aside for debt repayment. If you can save money in the wants column, that’s even better. Transfer your savings to your debts to help you reach your debt-free goal faster!
A budget also allows you to keep track of your progress, allowing you to set benchmarks, recognize when you fall short, and celebrate when you reach a goal.
Create Good Habits
Developing good habits is especially important if you are a free spirit or an impulsive buyer. Our hectic, modern lives make this strategy difficult, but all the more necessary. Here are some suggestions for developing a better financial lifestyle:
- Don’t spend out of boredom: Before you buy, ask yourself, “Do I really need this?”
- At-home cooking: Save money on tips, expensive entrees, and that glass of wine that’s almost as expensive as the same bottle at the store. You can prepare restaurant-quality meals in the comfort of your own home for a lot less money.
- Even if your skills and schedule are limited, meal plan services are a less expensive alternative to a night out on the town.
- Plan your meals and your grocery trips: Knowing what you want to cook and what you need to buy ahead of time will help you avoid making impulse purchases. Make a list and eventually double-check it for better analysis.
- Don’t be concerned about keeping up appearances: Things may appear greener on the other side in our social, more connected world, especially since most people only put their best face forward. It is critical to assess your values and remember what is most important. That way, you can stay on track while not going over budget.
- What you don’t want or need can be sold on Facebook Marketplace or other similar platforms: Make an inventory of what you have lying around the house or buried in your closet. Anything you don’t want, someone else might, so resell it and keep paying down your debt.
Also, read Some of the good tips to ease your debt
Reduce Your Expenses
It’s time to look over your budget and see where you can save money. There are numerous ways to reduce your expenses and redirect your savings toward debt repayment:
- Coupons should be cut — or, in this day and age, clipped and saved on your phone.
- Consignment store: You don’t have to buy everything brand new, and you might be surprised at what treasures you can find at secondhand stores.
- Reduce your reliance on cable by seeking out free or low-cost entertainment options for your home.
- Reduce you’re eating out and avoid going to that pricey coffee shop on a daily basis.
- Avoid expensive activities such as concerts, golf outings, and professional sports.
- Get rid of any unnecessary memberships or subscriptions: You may even forget which ones you have at times. Perform an audit to determine what you can live without.
This debt payment plan requires you to start with your smallest debt, regardless of interest rate, first. Concentrate your extra cash on that until it’s paid off. Then proceed to the next smallest debt, and so on. This strategy allows you to secure victories more quickly. The sense of accomplishment and relief that comes from paying off a debt will motivate you to keep going until you’re debt-free.
This strategy requires you to begin with the debt with the highest interest rate. It’s no secret that paying off debt with high-interest rates is difficult. It may appear that you are making little to no progress. Putting your extra money toward getting rid of these payments will help relieve the burden they bring while also saving you money in the long run.
Consolidation of Debt
Another excellent way to reduce your loan through debt management solutions and better manage your loan repayments is debt consolidation. And you don’t need to open a new credit card to do so.
Financial institutions, such as 1st Ed, provide low-interest, fixed-rate loans designed to consolidate your credit card debt into a single payment – and at a much lower interest rate than your typical credit card. This will make it easier and faster for you to pay off your debt.
This could be the most important factor in your financial success. Once you’ve established a budget and a debt-reduction strategy, find a partner, friend, or family member you can rely on to help you stay focused, committed, and motivated.
Sticking to healthy habits and the plans you set in place can be difficult when you’re looking at months or years of debt repayment until you’re financially free. Having someone walk beside you, encouraging you, and reminding you of your end goals can be a wise and nearly priceless strategy for finally achieving debt freedom.
Financial wellness is a journey, but it is well worth it in the end. This is where 1st Ed can help you. Our debt consolidation personal loan options are a great place to start. Learn more about our low-interest, fixed-rate loans and how to apply here.
We hope these debt-reduction tips help you achieve your goals for 2022, and we wish you a happy and prosperous new year.