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Say goodbye to debt: Maximize your money, minimize your stress
Key takeaways
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Tackle high-interest debt strategically and consider consolidating credit card debt through personal loans or balance transfer cards with lower interest rates to reduce monthly payments and pay off debt faster
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Plan and automate your savings. Set SMART financial goals, open dedicated savings accounts for different purposes, and use automatic transfers to consistently save money before you're tempted to spend it
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Cut unnecessary expenses by reviewing and canceling unused subscriptions, unsubscribing from promotional emails, comparison shopping for major purchases, and evaluating routine spending on dining out and services you don't actually need
Managing your money can be challenging, but it's possible to improve your financial future— whether that means paying off old debt or avoiding new debt. Here are some simple guidelines for managing debt to maximize your money:
Get credit wise and reduce high-interest debt
If you're paying the minimum amount on credit cards with high interest rates, consider a personal loan for debt consolidation. You’ll have one monthly payment and a more reasonable interest rate.
Another method of debt consolidation is to use a balance transfer credit card. With a low interest or 0% interest balance transfer credit card, you could transfer high-interest debt from other credit cards or loans to a new account. During the introductory period, you would pay lower interest charges or even none.
You could also consolidate credit card debt or other loans using home equity financing, like a home equity line of credit or loan. With a line of credit, you could get a low variable rate with the option to borrow only what you need, up to your credit limit. With a home equity loan, you could get a low fixed rate with predictable payments that make it easier to budget.
Plan ahead
When you make room in your budget for large upcoming expenses, you can save in advance. Instead of paying interest by borrowing money, you could save up for the purchase and perhaps accrue some interest.
To help with your planning, create savings goals. One good method is to choose SMART goals. This means each goal is:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
As you identify your SMART savings goals, you can develop ways to meet them. Two simple solutions for this are:
- Open a dedicated savings account. If you're saving to reach different goals, it can help to open a savings account for each one. Many banks don't limit the amount of savings accounts you can have. You will, however, need to consider whether you can meet the minimum balance requirement, whether there will be monthly fees that eat into your savings, and whether you could meet the requirements for getting those fees waved
- Set up automatic transfers. Automatic transfers of money into your savings account are a natural offshoot of planning ahead. When you create a budget and set goals, you can determine how much to place in one or more savings accounts. Using automatic transfers means there are delays in putting that money into savings and no temptation to spend it
No matter what your savings goals are, check out our savings accounts and save even more with automatic transfers.
Budget, budget, budget
Take a look at your current budget: Are your wants outweighing your needs? A good place to start might be services like cable, phone, and internet. Look for ways to save money by switching providers or cutting back on extra features you don’t need or can do without.
Practice savvy shopping
Before making a large purchase, do some homework. The internet makes it easy to research your options and compare prices.
Take time to think about what you need and what you want. You might find you don’t need to make that large purchase after all. Or that buying used instead of new is your best bet. You may decide that you don’t need it right away. You can wait until you have saved some or all of the purchase price. Here’s a good rule for managing debt to maximize your money: if you don't need it, don't buy it—even if it’s on sale!
If you’re sure you need it, look for deals and try to pay without borrowing. If you're financing the purchase with a credit card or loan, be sure to read the terms, rates and payment amounts closely to avoid surprises.
Avoid temptation and waste—unsubscribe
If your inbox is filled up with marketing email from retailers and you can't resist the flash sales and other deals, just click unsubscribe. This should eliminate the temptation to make impulse purchases. You could do the same for catalogs. Taking yourself off mailing lists will help you avoid budget-busting spending.
Likewise, unsubscribe from services you don’t need or even use. Streaming services, memberships, and apps can act like a tapeworm on your budget. Check your bank and credit card statements for recurring charges. If you don’t recognize something, investigate and cancel what you don’t need. Look for things that you signed up for as a free trial but forgot to cancel and now are paying for every month.
Evaluate your lifestyle
Ask yourself if you're living within your means to determine if you're spending money on non-essential items that have become routine. This might include:
- Dining out
- Buying lunches or coffees you could easily make yourself
- Gym memberships
- Streaming services
Check out your home, your car and your closet to see if there is more room to save. This will help you notice spending habits that need to be broken. When you begin managing debt to maximize money, you might be surprised at how many ways you find to improve your financial stability.