One of the heaviest loads an individual can carry through life is personal debt. It weighs on our minds and our consciences, even causing some individuals to lose sleep, and it often places undue stress on our relationships and families. In many cases, debt can feel like an insurmountable hill to climb—but with expert guidance and the support of a dedicated advisor, you can make a plan that significantly reduces and eventually eliminates your debt.
You deserve financial security and peace of mind, not uncertainty and stress. Here are three tips to help you pay off as much debt as possible in 2022 so you can focus on saving, investing and getting ahead.
Know your numbers
Before you can create a plan to address your debt, you have to know it inside out. Make a list of all outstanding balances including credit cards, student loans, bank loans, lines of credit and even money owed to family, if applicable. You should also make note of the interest rate and payment terms attached to each of these debt loads in order to prioritize repayment. It doesn’t make sense to tackle a small loan with a 7% interest rate first if you also owe money on a credit card charging 19% interest, for example. If you’re not sure how to prioritize each debt repayment or make it work within your budget, please reach out to an Interior Savings advisor for help.
Identify your goals
The best way to reach your goals is to have a clear, sustainable plan, and a monthly budget is a great place to start. In order to create a budget you can stick with over the long-term, you have to look at the whole picture. Don’t just think about how much money you owe—think about your financial goals for the future, from buying a home to saving for retirement (or even saving for a vacation, for starters). A budget is just one part of a financial plan—not a comprehensive plan in itself. Your complete financial plan should look at both what you need to do (pay off debt) and what you want to do (own a home, open an RESP for your child, save for retirement) and help you achieve these goals. In most cases, a financial plan will also address insurance and a legal Will and/or estate plan.
Speak to an expert
Having debt now doesn’t mean having debt forever. Remember, financial planning is a skill that takes years of education and experience to master, and it doesn’t come naturally to everyone. It’s okay to be overwhelmed or unsure of how to reach your financial goals—just be sure to find a dedicated advisor to help you identify and implement personalized financial solutions. The best time to start is right now—please reach out to Interior Savings to learn more.