10 tips to pay off debt in 2022
Media Contact: Barbara M. Fornasiero; EAFocus Communications; firstname.lastname@example.org; 248.260.8466
Wyandotte, Mich. – December 14, 2021 – It’s a time-honored tradition: making new year’s resolutions to get out of debt and save more money in the year ahead. Michigan Legacy Credit Union (MLCU) President and CEO Carma Peters, who once found her family climbing out of debt after a job loss and the Great Recession, speaks from experience when offering advice on how to move forward on solid financial footing.
“If COVID has taught us anything, it is that your life can change in a moment’s notice. Eliminating debt and having savings to fall back on can mean the difference between barely surviving and thriving – or at least comfortably weathering the storm,” Peters said.
Here are 10 actionable tips from Peters to get you on track for saving money and managing debt:
- Start a budget or financial journal: Spend time making a budget, or document your income and expenses in a physical or digital notebook to identify where to make adjustments or find opportunities to save.
- Cash is king: Stop using your credit card and start paying cash when possible to keep a close eye on your spending.
- Mind over matter: If you need a psychological win, pay off the smallest balance first to feel a sense of accomplishment.
- Be efficient in your payments: If you can skip the satisfaction of a psychological win, concentrate on paying off the highest interest rate debt first, as it is the one most negatively affecting your budget.
- Read the minimum payment box: When paying your credit card, the minimum payment box will tell you how long and how much money it will take to pay off the card’s balance if you make no additional purchases but make the minimum payment. For example, it will take you 16 months and a total of $444 to repay a $288.64 charge if you make only the minimum payment of $29 at a 26.99% simple interest rate.
- Conquer student loan debt: This is the debt that affects personal budgets the most. It can be the biggest enemy of getting out of debt because of the duration of the repayment, not necessarily the interest rate. To help plan repayment, use an online financial calculator to help calculate the time and cost necessary to pay off the debt.
- Consider refinancing: If you can lower your interest rate and find a financial partner that will understand your goals and hold you accountable, it can help you go from a 26% or higher credit card interest rate to a smaller, unsecured rate loan.
- Be patient: You likely didn’t get in a negative financial position overnight and you will not get out of it overnight. It will take time, sacrifice, hard work and focus, but it can be done.
- Start saving small: If you are not a saver, put $10 per paycheck in an account with no access to an ATM or home banking so you must drive to physically withdraw it. Every time you can increase the contribution amount, it will add up over time, and you will have created your emergency fund.
- Change is hard: Most people never change their habits, so it takes a true desire to get to a different outcome. You must be so discouraged by where you are now that you want to make changes that will create a different trajectory for the rest of your life.
“Following even one of these tips to start out the new year can make an immediate impact on an individual’s financial savings and outlook for the rest of the year and help build better personal finance strategies for years to come,” Peters encouraged. “Choosing to change your unhealthy financial habits can be just like a new year’s resolution to exercise – start with one right decision every day.”
About Michigan Legacy Credit Union
Michigan Legacy Credit Union (MLCU) is a member-owned, not-for-profit financial cooperative serving members who live, work, worship, attend school, or own a business in the state of Michigan. Michigan Legacy Credit Union is committed to providing quality financial services at a competitive price, delivered professionally and efficiently while keeping member/owners and their needs first. For additional information on MLCU, visit: www.michiganlegacycu.org.