Saving Money and Reducing Debt in the New Year

It’s the start of a New Year and many people are thinking about saving money or reducing debt.

Know Where You Stand

Before you set new goals or make changes, you need to know where you stand.

• Review your income and expenses for the prior year. Take a good look at where your money is going.
• Track your current spending for a month.
• Create a budget based on predicted income and expenses. If you don’t have one, there are forms or apps you can use.
  • Consumer Financial Protection Bureau has many good tools to help you get started.
  • The Illinois Extension Money Mentors has some some great resources under the RESOURCE tab on their page.
  • There are also many different apps that you can review to see what fits your needs.

Understanding Debt

The next step is to take a hard look at your debts. Make a list of your debts with the balance and interest rates. Focus on paying off the highest interest rates first, then rolling the payments to others as you pay off the balances. A great program is PowerPay where you can enter in your debt and calculate how long it will take to pay off.

Getting Started with Changes

• Start small. Small changes can have big results, so trim areas where you are spending more, like dining out.
  • You don’t need to cut it out, but maybe trim it back a bit. Use that money to help whittle down debt or start a savings account.
  • If you set up automatic transfers into savings, it can help make it a habit.
• Use your technology to remind yourself of due dates, and sign up for alerts so you know when balances are low or payments coming due.
  • Simply paying things on time and avoiding late fees can make a real difference.

Ask for help. If you are having a financial emergency, do not wait. Talk to your creditors, explain the situation, ask about your options. Most will help you create a repayment plan. If you are interested in assistance check out a financial counseling or financial coaching program. The National Foundation for Credit Counseling is a place to start.