Friday, January 11, 2013 |
First aired on Calgary Eyeopener (04/01/13)
One of the most popular New Year's resolutions by far is to get debt free. But it can be quite a tough task to get one's spending in order given the hectic nature of life and the myriad "buy now, pay later" kinds of financing that can quickly pile on the interest.
Alison Griffiths, a money expert and author of several personal finance books including Count on Yourself: Take Charge of Your Money, stopped by Eyeopener recently to offer some tips to people who are resolved to pulling out of the red.
What's her biggest piece of advice? Get a real plan.
"There's no point in trying to tackle everything at once in a sort of broad, amorphous 'I'm going to get rid of my debt' [way]," she said.
"List every single debt you owe, both the monthly payment and the interest rate. It's amazing how many people don't know what the interest rate is on their various forms of debt. Include everything - student loans, car payments, what you owe mom and dad, all of that."
The goal here is to quickly identify which debts are punishing you the most with high interest rates. Griffiths says you should then pay the minimum balance on every debt on your list, plus a little more to avoid damage to your credit score, and then using whatever's leftover to pay off as much of your highest interest debt.
"What you're doing here is you're saving money by getting rid of the high interest debt, but you're going to get a sense of satisfaction, and that's what keeps us going on resolutions, if you actually resolve to do something and you actually do it, then you're going to keep going."
Here are some other tips:
Many personal finance authors have offered tips and strategies to the CBC audience over the past year. You can learn more in the related links below!