TIME TO START YOUR DEBT – Are You Worth The Effort?

Posted on January 4, 2012. Filed under: Collaborating Agency, Credit, debt management, Guidance/Resources, Personal Management, Press Release | Tags: 2012, Debt, debt management, decreasing your debt, Resources, steps to lower debt |

Alrighty now. New Year’s Resolutions….yeah, about that. Why do people make them? They can be hard and most of the time one has to dig deep to stay motivated to achieve the goal, whatever it is. So, why should someone focus on their financials? There are so many more appealing areas one can chose to focus on- feeling wonderful about eating healthy, getting that rockin’ body, gaining new knowledge, striving for the love life you’ve always wanted. Seriously, who wouldn’t want to think about food or how to meet someone instead of money? Financials can be scary, especially after the holidays for those of you who do not have a gift budget and will soon be fainting over the accrued credit card debt. Here’s the thing- financial management is something that trickles down and impacts you in so many different ways- the food you eat, the places you exercise, your relationship with those you love, the amount of stress you have. Personally, when I first began to face my debt it was unnerving. But my reality was- once I developed the habit of knowing my budget, how much was owed to who, creating steps to tackle the debt was empowering. This did not take away the fact that it is hard, especially during this economic climate. That is All Purpose Lifeskills’ New Year’s Wish for everyone-Develop a plan and be empowered! And yes, you are most definitely worth it. You can change your world!

To assist you with your financial management, we would like to share the following article:

TIME TO START YOUR DEBT DIET

Tips for Slimming Down Debt in 2012

DENVER—With the beginning of a new year, many people will make the conventional promise to lose weight, exercise more or quit smoking. But one resolution that would benefit all Americans who are concerned with their financial situations is to get out of debt and begin a method of living healthier—financially. “Typically, January is a time of anxiety for many Americans as they receive their credit card statements and start to experience the financial hangover from their holiday spending indulgences. For anyone who is concerned about the amount of debt they owe, now is the perfect time to resolve to pay down debt and establish a plan to stay financially fit throughout the year,” says Paul Golden, spokesperson for the National Endowment for Financial Education® (NEFE®).

The best way to jumpstart your financial resolution in 2012 is to develop a “get out of debt plan” that will help you assess the amount you owe, eliminate debt obligations and stop credit overuse in the future. NEFE suggests the following five tips to help consumers:

1) Assess the debt. Make a list of how much money you owe to each creditor and note the interest rate of each card. Being able to see exactly how much debt you have accrued will help you develop a plan to pay it off. If you have been reluctant to do this that is a warning sign that things are out of control and you cannot put this off any longer.

2) Develop a debt priority approach. Determine the debt with the highest interest rate and put any extra cash toward that obligation first, as this account is costing you the most money. Once you have paid off the largest balance, continue paying the same amount toward the next account on your list, prioritizing by the next highest interest rate.

3) Cut it out. Pick one spending item or activity, such as buying new clothes or eating out, and commit to living without it for a set period of time—perhaps every other month. You can use the money you normally would spend on that item or activity to help pay down debt, or put it toward an emergency savings account.

4) Be careful with credit. While you are trying to erase debt, use credit cards sparingly, if at all. Eliminate all credit cards but one, and pledge to use that card only if a true emergency occurs and taking from savings is not an option. When making purchases, ask yourself whether the object is a “need” or a “want.” If you wouldn’t borrow money to buy an item, it isn’t worth using your credit card to buy it. If you are tempted to make a purchase, simply walk away for a short time and see if you still want the item. Chances are in that moment of clarity, you will forget the impulse that was tempting you.

5) Start saving today. To avoid falling into debt again, begin smart money-management habits right away. Start off 2012 by dedicating yourself to saving regularly. Even if you only save a small amount, having a surplus of money will ease your anxiety. The next time a financial need arises, you can use the emergency savings at your disposal instead of turning to credit cards.

For tips on how to budget, eliminate debt and get into a savings habit, visit www.smartaboutmoney.org, a user-friendly website offering a collection of resources to deal with all of life’s financial challenges.

About the National Endowment for Financial Education (NEFE)

NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.

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