No one likes being in debt. It holds you back from achieving your financial goals. This might be why ‘getting out of debt’ is one of the most common New Year’s resolutions! While there are no quick, overnight ways to get out of debt, there are some steps you can take that will make a big difference. If you want help reaching your financial goals in 2019, consider these money saving tips in 2019.
Automate Your Savings
People get into debt for any number of reasons. One thing is certain though, no one likes being in debt, paying interest, or even late fees. Why throw your money away if you don’t have to? But for some reason, people don’t think twice about paying late fees. And they should. Late fees can add up fast.
Roughly 20% of credit card users incur a monthly late fee. And credit card companies are notorious for their late fee charges and high interest rates. This might explain why they rake in billions of dollars in annual late fees.
Paying bills on time will reduce the amount of interest you owe. It will also improve your credit score.
You can automate virtually any bill. Whether it’s a student loan or utility bill, automatic payments that connect to your bank account or credit card ensure that your bills are paid on time.
Here is a sampling of bills you should be able to automatically pay every month: car loans, student loans, mortgage, rent, credit cards, phone bulls, cable bills, electricity & gas bills, water, sewer and trash bills, and insurance premiums.
Some banks even have a feature that rounds up your debit card purchase to the nearest dollar and automatically transfers the different to a savings account.
Contribute to Your Retirement
You’re never too young, or old, to save for retirement. If your company offers a retirement savings option, that they match (even if it’s just a portion) take advantage of it. You can then invest this money any way you like. If you’re younger, you might want to put a large portion into higher risk investments, if you’re nearing retirement, you’ll want to take a defensive position, and invest in less risky equities.
If your employer does match what you put into an RRSP, it doesn’t make sense to not do it. Because it’s free money. If possible, contribute the maximum amount that your company will match.
Best of all, if you ever leave your job, your retirement plan goes with you.
Focus on Your Credit Score
Even if you have debt, you can take steps to help improve your credit score. Your credit score (300 to 900) is very important because it tells lenders how reliable you are at paying your bills on time; the higher your score, the more reliable you are. The lower the score, the greater the likelihood you are of defaulting.
A low credit score means you could be rejected by traditional lenders for a loan. There is a chance you might still be able to get a loan from the big banks if you have a low credit score, but it’ll cost you. The interest rate will be much higher, and they may not lend you as much as if you had a higher credit score. To get the best rates and terms, some lenders insist on a minimum score of 680.
Having a low credit score impacts more than just your relationship with the banks. A low credit score can affect whether or not you get a car, rent an apartment, secure a mortgage, or take out a home equity loan.
The best thing you can do to maintain a high credit score is make your payments on time and keep track of your credit score.
Check Your Debt and Create a Strategy
You already know you’re in debt. That’s no surprise. But it’s imperative that you keep an eye on your debt and what you’re spending your money on. Create a list of all your debts: list the total amount you own, the minimum monthly payment, and interest rate.
Creating a budget plan that helps manage your money will help you figure out how much you earn, spend, and save. It will also guide your spending, which will help you reach your 2019 financial goals.
Once you’ve created a list of all your debts, create a strategy for paying it off. Seeing the types of debts, the amounts, and interest rates will determine your strategy for paying them off.
- Debt with High Interest Rates: Paying off these debts first will result in paying less interest. Make minimum monthly payments on your debt and use any extra money to pay down the debt with the highest interest rate.
- Debt with Low Balances: For psychological reasons, some people prefer to pay down the debt with the lowest balance first. It feels like you’re making progress sooner. This can be a great motivator and help you stay on track to meet your goal of becoming debt-free. There is a trade-off though; it could mean paying more in interest over the long run.
Canadalend.com, Helping You
There is no one-size-fits-all approach to becoming debt free. Everyone gets into debt for different reasons. And no one strategy to becoming debt-free works for everyone. Think about where you’re at financially and what you’ve accomplished over the last year. Then, call the financial experts at Canadalend.com and let them help you set goals to make even better progress in 2019.
The licensed mortgage specialists at Canadalend.com are independent, which means they have access to hundreds of different lenders. Many of those lenders specialize in helping people secure home equity loans who are self-employed, new Canadians, have bruised credit, or even no credit, unreliable income, or even recently declared bankruptcy. They can help you refinance your mortgage or consolidate your debt to get you on track to saving more in 2019.
To find out what kind of mortgage or financial options are available to you, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.