Mikkie Mills is a guest on our blog today. Mikkie says; she is a Chicago native who loves to save money and help others do the same. When I’m not writing, I’m chasing the little ones around or rock climbing at the local climbing gym.
Starting into the new year, most people like to think about starting fresh. They often plan on dropping some unnecessary things, and adding some new worthwhile ones. Getting out of debt this year would be a great goal for many people. Here is how to go about reducing your debt in 2016.
Calculate Your Debt
Before you decide on any approach as to how you will get out of debt this coming year, you need to know exactly how much debt you have. Write down all your debt, as well as the interest rates on all of your credit cards.
Place Priorities on Your Debt
When paying your bills, you always want to pay the minimum on each of them. This will enable you to avoid any late fees. Wells Fargo advises that you should find which bill has the highest amount of interest and pay as much as you can to reduce that bill as quickly as possible. Paying more than the minimum on any bill will reduce the overall interest you pay on it, too.
Keep in Contact with Debtors – Especially Your Mortgage Company
IF you are falling behind in your payments, the last thing you want to happen is to lose your home, too. Consumer.FTC.gov advises you to stay in touch with your debtors, and especially your mortgage company. They will often work with you to reduce or even suspend your payments temporarily. This can give you some time to get back on your feet financially – and keep the house.
Decide If a Debt Reduction Loan Is Necessary
If you only have a small amount of debt and relatively good credit, you might be able to get a new balance transfer credit card and put your higher interest credit card debt on the new card. This will give you a lower payment each month, possibly zero percent interest for a year or more, and enable you to pay down your debt faster.
If money is tight and you are having a hard time making the monthly payments on your bills, you may want to consider getting a loan for debt consolidation. This also will give you a lower interest rate, lower monthly payments, and possibly even a little longer to pay off the debt. Be careful about using this method if you have bad credit, because it may only put you into deeper debt with the higher interest rate.
Eliminate Unnecessary Expenditures
Most families have monthly expenditures that they could reduce or even do without. This includes items such as gym memberships, newspapers or magazine subscriptions, high-priced cable or Internet services (a lower cost service usually works quite well), and eating out at fast-food places and restaurants. Also, if you buy a coffee every morning, and eat lunch out, it is costing you. Bring your coffee and lunch from home and save money.
Write a Reasonable Budget
Look over your monthly income and debts, set up a budget, and work at staying within it. Be sure to leave a little money for some fun, especially if you have children at home. It also wouldn’t hurt to look into managing your budget with an app. SmartyPig is a free online budgeting tool that provides a smart and easy way to save for things you love. Smarty Pig not only helps you save but also provides rewards for those who save a significant amount. As you take better control of your finances with this revolutionary tool, you will be able to see your disciplined efforts improve your current debt reduction plans. A major key in reducing debt is maintaining the consistency of the debt payment. With, Smarty Pig, your can customize the amount of money you deposit each month towards debt. By setting and forgetting it, you will be able to maintain the consistency of payment with thought the monotony of manually making the payment month after month.
Commit to Reducing Your Debt
Create a chart showing all your debt. Update it each month showing how much you have reduced each bill. As it gets lower, you will get more excited about the day when it is all paid and you have no more debt. It will take ongoing commitment on the part of both spouses and support from each other to resist the sales and using the credit cards for new purchases.
Downgrade – If Necessary
If your debt is really a problem, and you are entertaining the idea of declaring bankruptcy, you should look for ways to cut back quickly. This may include selling an extra car, or trading it in for a much less expensive model. You may also be able to sell other items, too, that are around your home that you are not using. Sell them in a garage or yard sale, or online. Other items, such as boats, jet skis, snowmobiles, power tools, etc., can be sold for quick cash, too.
Reduce Household Expenses
Oftentimes, a number of things can be done around the house to reduce your monthly energy bills. This can include making sure that cracks around the windows and doors are sealed, lowering the thermostat a couple of degrees at night in the cold months and when you are not there, raising it a couple of degrees in the warmer months, turning lights off when not in the room, etc. You also want to do simple things like unplugging electronics when not in use. Buying appliance insurance will help you not have to pay for breakdowns when they occur.
Increase Your Income
In order to reduce your debt even faster, you may want to take on a second job. The spouse may also want to take on a part-time job – or full-time – if not already working, in order to help get the household out of debt. Many things could be done in order to bring in a little extra money, and most of it should go toward the debt.
After your debt is all paid off in 2016, you will definitely want to have a little celebration. Enjoy it. You’ve earned – just don’t put it on your credit card.
The National Retail Federation estimated spending to be around $800 on average this holiday shopping season. And if what you happily spent in December has you feeling blue this January, SmartyPig can help.
Our new Holiday Shopping goal numbers are off the charts this month with thousands of SmartyPig users deciding to start saving up now for what they will be buying next December. And for just $65 dollars a month you can too, avoid that nasty holiday spending hangover. Click here to get started on this goal, or any goal, and start earning competitive interest and the opportunity for even more cash when you reach your goal.
Wishing you a Happy New Year, and good luck with your goals in 2016!
My goal for 2016 is not to have any unexpected or emergency expenses. 2015 kicked our butts. – Joylynn
Saving for 2020 Olympics in Tokyo! – Melissa
Saving for a down payment on a home with my new wife! – Amelia
Keeping the savings up for any emergency!!! – Krystal
Start something …but start. – Lucy
Did Santa bring you everything and more this holiday season? Again this year, cash and gift cards top the list as gifts most often given and received. It’s nice to treat yourself to a little something with those monetary presents, but it’s an even greater gift to take that cash and start a new SmartyPig goal. Maybe it’s a trip a to Europe in 10 years, or perhaps something smaller like a weekend road-trip or new T.V. Or maybe you’re just extra practical and decide to get to saving for your car insurance or health care deductible right away.
SmartyPig is a great place to stash those extra dollars. You’ll forget about them and have yourself sitting on a beach in no time!
Wishing you successful saving.
Sarah Foss, SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com
Santa has made his list, and checked it twice, but you should still add a few of MSN Money’s hot tips to your end of year financial to-do’s.
88% are saving MORE money this year.
1. Revisit your financial plan aka your budget.
2. Build an emergency fund.
3. Check on your retirement accounts.
4. Do something to inprove your career and earning potential.
These items only take a few minutes and could provide a year’s worth of financial security. We challenge you to take 2015 out in style and get started on this list immediately!
Wishing you successful saving,
Sarah Foss, SmartyPig’s Media Mad Woman, SFoss@SmartyPig.com