Tackling New Year’s Resolutions to Become Debt Free

It is a new year and we are filled with hope at what the next twelve months will bring. Now it is time to start again and accomplish some of the things we may not have done last year, or perhaps take our lives in a whole new direction. Money is always one of those topics where people wish they had done a better job of saving money, budgeting better, increasing retirement plan contributions or saving for a child’s college fund, and many people vow in the New Year to become debt free. So the Miss Money Bee team has put to together a few bullet points for you to consider incorporating into your journey if this is one of your goals for 2011.  And if you have tips and advice, please leave us a comment! 

• Consistently pay debts on time to establish good credit. A consistent payment history demonstrates “willingness to pay,” which is a key component to creditworthiness.   

• Pay extra money toward the debt charging the highest interest rate. As soon as you pay off that debt, apply extra payments to the next highest interest rate debt. This is known as the snowball method.

• If you have extra money from a bonus or gift, put at least half of the total toward an extra payment on your debt to accelerate payoff.

• Teach your children how to manage their money so they can begin to create a successful financial life.  If they start now, by the time your children reach adulthood, they will possess the skills and habits necessary for financial stability.  

• Spend money prudently on anniversaries, birthdays or other occasions.

• Review your credit card statements every month to make sure payments are properly applied.

• Track expenses, spend wisely, and control spontaneous spending. Write down every single thing you buy for an entire week, so you can see where you’re spending your money.

Remember in this New Year you can accomplish anything you wish as long as you are persistent, consistent, and passionate about achieving your goals.