Paying down debt in 2020. Do you have a plan?

Consumer Report

SAVANNAH, Ga. (WSAV) – Every year two of the most popular New Year’s Resolutions are losing weight and losing some of our debt, i.e. by paying it off. Just as you need a diet and exercise plan to truly be successful in shedding pounds, credit counselors say you need a specific plan to pay down your debt.

“It’s almost like getting on the scale, we have to see what the reality is,” says Richard Reeve from Consumer Credit Counseling Service of Savannah,

“The biggest thing we can do this time of year is put the numbers on paper and do an actual written budget.”

Reeve says “budget” is not a dirty word, it’s a spending plan that can help you reach your goals and help your peace of mind.

“Sometimes we think it’s going to be these giant changes in our lives that we have to do and just are super drastic and we’re never going to eat out again and you know those things usually don’t work,” said Reeve. “And so we want to take very small, realistic steps that actually do make a difference and add up over time.”

He says many people are struggling with credit card debt so a good first step is deciding which card you want to pay down.

“Once we know this is the goal, then taking small steps to achieve it really makes the biggest difference,” said Reeve.

He says paying even an extra $20 to $25 every month can help lower a balance. He also says it’s best to stop charging. “The best thing to do is to stop using the cards and stop the bleeding for awhile and give yourself more of a feeling of control,” Reeve says.

He says this month many will receive their credit card bills for December and may have a bit of a “credit hangover” when they see what was spent over the holidays. And just as losing a lot of weight doesn’t happen in a short time, he says making a big dent in your credit card balance has to be achieved over time as well. In short, he says charging less (or not at all) and paying more can make a difference.

Reeve says if you don’t get out of debt altogether in 2020 that paying your debt down, 10, 20 or even 30 percent “can be important and means you haven’t gotten into more debt.”

Advice from experts:

1) Pay down the credit card with the highest interest rate first.

2) If that card gets paid off – apply what you were paying on that to another card. Example: you were paying $200 on the high-interest card and $100 on a lower-interest card. When the first card is paid off, then pay $300 to the lower interest card to get that balance paid off even faster.

3) Try to stop charging

4) If you charge for “rewards” make sure you understand how any rewards such as for airline miles or groceries are actually redeemed

5) When putting together a budget, consider expenses like vacations and repairs to your home or car.

6) Try to include saving in your budget and have that savings deducted automatically into a separate account each month

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