2022 Preparedness - Part 2: Week 28
Week 28 July 18th
Last week we talked about a side hustle and making some money on the side. What to do with this money? Get out of debt.
Debt is becoming more expensive to carry due to rising interest rates. Pay down debts sooner, particularly those with variable interest rates. These debts may include credit cards, personal loans, student loans or adjustable-rate mortgages. If you can lock in a fixed rate now and get out from under a variable rate, you will be saving significantly in interest costs over time. Remember student loan payments are scheduled to begin again in September.
How do you pay down debt?
1. Pay off the smallest debt first. Once paid off use the amount you were paying on that debt to pay off the next debt. It is a huge incentive boost when you can tear up a debt, even the smallest one. Success breads success.
a. Pay more than the minimum payment
b. Pay every 2 or 3 weeks instead of only once a month.
c. Consolidate debts at a lower interest rate. Add up the amounts you were paying and on the consolidated loans and pay that amount on the new loan, lower interest with the same payments and you will pay off the loans much faster.
d. If you have a low interest rate loan on your home consider borrowing against it to pay off debt.
2. Continue paying minimums on all debts while concentrating on paying off one.
3. Commit extra money to pay down debt. Use tax returns, raises, bonuses, even birthday and holiday gifts to pay down debt.