With the average U.S. Household carrying about $136k in combined debts (auto, mortgage, credit cards + student loans), many of us are trying to find a way to get rid of debt without paying more money per month. While budgeting and preparation can get you far, we have one extra tip to help you pay off debt for good. Read on to take advantage of our easy tips plus our new Debt Free Life solution.
The first step on your get out of debt checklist is to become aware of where your money is being spent and focus on which debts you need to prioritize. You’ll want to make a list of all your debts and then list out your monthly sources of income.
On your list of debts, be sure to include:
With this, you’ll want to make a list of all your monthly sources of income so you can compare your debt to how much money you have to work with overall. Similar to creating a budget, list out your monthly expenses and try to get an idea of how much money is coming in and how much money is going out each month on bills, groceries, tuitions, etc.
At this point, you’ll want to prioritize which debts you want to pay off first based on the list you created. Pay your balances strategically – most people will want to pay off debts with the highest interest rates first.
However, if you’re planning to apply for a loan soon (such as a mortgage) it could make more sense to pay down credit card balances first to lower your credit utilization (to help you qualify for a loan). In this case, you’d want to pay off the account with the highest balance first rather than the debt with the highest interest rate.
If you’re not sure which option is best, it’s always a good idea to consult with a financial professional.
You’ve heard this one before, but it really helps to stick to a budget when you’re trying to pay off debt. Make it a priority to find any expense you're willing to reduce, whether it's your dining out budget for the month, cutting down on subscription services, or your cell phone bill.
Make an effort to stick to the budget and save money when you can.
We know that this one sounds a little crazy in a plan where you are trying to reduce your spending, but an emergency fund ensures that you don’t accumulate any more interest on your credit card debt if you experience an unexpected emergency, like an injury on the job or damage to your vehicle.
While you’re paying down debt, set aside a specific amount of money each month for emergencies. The goal is to have enough saved to cover three to six months of living expenses. If you’re the sole breadwinner, you may need to set aside enough money to cover closer to a year of expenses.
Our final tip can help you get rid of debt without spending any more money than you’re currently spending. Even better, you can eliminate all debt in just a few years by taking advantage of a time-tested strategy used to build wealth with life insurance.
With Symmetry’s Debt Free Life program, you’ll be able to kick your debt to the curb for good and grow your savings at the same time.
With Debt Free Life, you’ll use the cash value of your life insurance policy to pay off debts incrementally. As the cash value grows, you’ll start eliminating debts while saving the extra money for retirement. In nine years or less, your debt will be gone, and you will be on track to have a significant retirement savings plan.
Even more, the life insurance element of Debt Free Life provides your family with financial protection should tragedy strike. It’s a win-win for people who want to eliminate debt, save for retirement, and protect their assets with life insurance.
To learn more, all you need to do is fill out this short form and a consultant in your area will be in touch to help you build a customized plan. The earlier you begin your path to financial freedom, the better results you will see. Let’s get started!
This article is written for informational purposes only and should not be taken as financial advice. For a detailed consultation regarding life insurance, please reach out to your Symmetry Financial Group insurance agent.