Managing Your Debt: Year In Review
The end of the year is a popular time for reflecting on the past 12 months, and it’s also a great opportunity to do some debt detox and general financial housekeeping. By setting yourself up for success at the end of the year (while everyone else is hibernating!), you increase your chances of paying down debt, increasing your credit score, and freeing yourself from being a slave to money 24/7. When your credit score increases, your opportunity to borrow money at lower rates increases, so that whatever you’re buying—especially those bigger purchases like a house or car—is costing you less in interest, saving you money in the long run. With proper attention to where your money comes from, and where it’s going, you’re laying the groundwork for the year to come and preparing yourself for financial wellbeing.
Prepare An Income and Expenses Calendar
We’ve made this recommendation numerous other times, but knowing where your money is going each and every month is the first step to financial freedom. Maybe you’ll discover where cuts can be made, or opportunities to increase your income. PRO TIP: always have a column for possible freelance or side work that could bring in extra income; don’t count on this money, but do consider opportunities that may arise over the next year.
Get Serious About Your Debt: Negotiate With Creditors
Set aside a day (or maybe two) at the end of each month to review where your money went—whether it was for expenses or even investments. Pay attention to your credit card interest rates, and don’t be afraid to pick up the phone to call your credit card companies. You’d be surprised at how many people are paying way too much in interest just because they’re not speaking up about their accounts.
Consider Hiring a Credit Counselor
Credit counselors are indeed a real thing, and can even help you renegotiate interest rates and loans. While they aren’t free, we’ll always recommend getting professional help for tricky financial questions.
Refinance Your Home
If you own a home (and it’s not paid off), you may be a great candidate for home refinance. By refinancing your house, you have the option to take the equity you’ve paid into your home and use it to pay off high interest loans, whether they be credit cards, auto loans, or even student loans.