Clark & Washington

Tips for Starting the New Year Off Right, Debt Free

The new year provides you with an opportunity to make a fresh start on your finances. If you’re going into the new year with debt, it’s important to take steps to reduce it as much as possible. Use the following tips to stay on track financially in 2017 while getting rid of debt and not acquiring more.

Start Building an Emergency Fund

Having an emergency fund is an effective way to lower your risk of getting into more debt in the new year. When you have money set aside, you do not have to worry about using credit cards or taking out loans to cover unexpected expenses, such as car repairs, home repairs or medical bills. Start your emergency fund by putting aside a certain amount of money from each paycheck throughout the year. Even if you are only able to set aside a low amount, your emergency fund will grow over time.

Pay at Least the Monthly Minimums

Make a commitment to pay at least the minimum monthly payment on credit card debt, student loan debt and other types of debt. This helps protect your credit rating and also lowers your risk of falling into higher debt with late fees and higher interest rates. Just make sure that you make these payments on time each month. If you are able to pay more than the monthly minimum, doing so will help you get out of debt faster.

Cut Back on Expenses

Take a look at your budget, and figure out where you can reduce your expenses. For example, you might be able to save money by switching to a less expensive phone plan, cutting your cable TV plan or shopping around for lower premiums on insurance. Even if you’re only saving a small amount on each, these can add up to considerable savings during the year. You might also find that you’re spending more money than you realized on unnecessary items or splurges, which you can cut back on. You can put the money you save toward paying off debt and building your emergency fund.

If you need help getting out of debt, keep these tips in mind. If you have a large amount of debt and are considering filing for bankruptcy, please contact Clark & Washington.

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