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Five Tips for Financial Health Tip 3: Tackle Your Debt

February 22, 2017
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You’ve assessed your spending, started saving for emergencies, and now it’s time to tackle what, for some, is one of the most arduous and daunting tasks of all – paying down debt. Whether it’s credit cards, college loans, or a mortgage, debt steals away dollars from our savings and it’s wise to pay it off as quickly as possible.

Before you can truly begin paying off your debt, you must first quit creating more. This is why having a budget and continually assessing where you put your money is so important. Once you get a handle on this, implement the Stack Method.

The Stack Method basically suggests paying as much as you can on your loan with highest interest, making minimum payments on all other debt. Once the loan with the highest interest is paid off, apply the same rule to the next highest interest loan and so on down the line. If you can, transfer and consolidate balances from high interest loans. Shop around to get the best interest rates for the longest duration, being sure to read all contracts in full before signing on.

Once you reach the point of being able to, consider paying more than the minimums on your other loans. The sooner you pay off your debt, the less interest you’ll pay. As your debt-to-income ratio improves, so will your credit score, which will assist you long-term. 

As always, if you have any questions, please feel free to reach out to me.