Pay Down Debt in 2020 with These Simple Financial Changes
As personal debt continues to rise in nearly every category, paying it off is becoming an increasingly prominent financial goal.
In fact, according to a survey from GoBankingRates, paying down debt is one of the top New Year’s resolutions for 2020. As debt totals increase for Americans, our strategies for paying down debt – and avoiding it in the first place – must adapt with each passing year. As the calendar flips to a new decade, consider these simple financial changes to pay down debt in 2020.
Track Your Spending
The other top financial New Year’s resolution for 2020 according to the GoBankingRates survey was to spend less. Spending less and paying down debt are inherently linked. So if these are both of your financial goals, you’ll be able to kill two birds with one stone. However, simply vowing to “spend less” can be a tricky goal to adhere to without more specific ways to accomplish it.
One of the most effective ways to cut your spending is to track every penny you spend. Whether it’s through an app, a spreadsheet, or on a sheet of scrap paper, having to manually record your spending helps you see how much you’re shelling out. It can also discourage you from spending more than you should. You’ll be able to clearly identify when you’ve spent too much or when you shouldn’t spend. And here’s where the paying down debt comes in. When you’re spending less, you have more room in your budget to make payments to your debt. Additionally, tracking your spending in many cases can also help prevent you from going into more debt.
Consider the Worth of Your Rewards
It may seem obvious but continuing to spend on your credit cards can make paying down debt a lot more difficult. If your first reaction to that notion is “But I get rewards on my credit card!” you’re certainly not alone. Rewards can be incredibly helpful and can undoubtedly save you money. But if you’re not paying off your balance in full every month, you’re paying more in interest than your rewards are worth.
Most rewards, whether they’re cashback or travel points, are worth about 1-3% percent. But you’re likely paying more than 20% interest on those same dollars if you’re not paying off your balance. If you have rewards saved up that you can use towards your balance, that can be a helpful strategy to help pay down debt in 2020. But refusing to keep your credit card tucked away in your wallet because you’re trying to rack up rewards could inevitably end up keeping you in debt longer if you’re not careful.
Make Debt a Priority All Year
We’ve all been guilty of giving up on a New Year’s resolution by January 15. But realistically, if paying down debt is your goal, it’s important to stick to it until you’ve resolved it – no matter how long it takes. It can be very easy to start strong and then slide back to making just minimum payments because other ways to spend your money come up. Instead, continue to hold yourself accountable. Set up automatic payments or leave yourself reminders. Don’t give in to excuses. Paying off debt can be a long journey, but it will be even longer if you let yourself slide.
If you’re like so many other Americans and are looking to pay down debt in 2020, it may only take some simple adjustments to your financial situation to achieve your goal. By setting your sights on paying down debt and taking the necessary steps to get there, you’ll be in a much better financial position by the time you’re setting goals for 2021.
Start the New Year off right. Call Leslie H. Tayne, Esq. and the debt professionals at Tayne Law Group today.