You’ve tracked your spending, designed a budget for your monthly expenses, and you’re well on your way to financial wellness. In this next step, you’ll create a plan for paying down your existing debt.
Consumer debt can be one of the biggest challenges to realizing good financial wellness. Credit card companies design their business model in a way that makes it easy to get stuck paying off debt for years. With some intentional action and commitment, reaching true financial wellness and being financially independent is possible. At the very least, seek to be on track for paying it off shortly. Below, we’ve outlined how to pay down debt in five simple steps, along with three debt-paying strategies to avoid. 1. Organize your debtBefore you get started, determine how much debt you must pay off. List every credit card you own that has an outstanding balance and jot down the amount owed to each. Next, list the interest rate of each card. Do this for any other fixed installment loan debt you have as well. These numbers will help you build a debt-payoff plan in the next two steps. You can also add up the amounts owed on each account to reach your total outstanding debt amount. 2. Choose your debt-crushing methodThere are two main approaches people utilize for getting rid of their debts:
Choose the method that makes the most sense for your personal and financial circumstances. 3. Maximize your paymentsOnce you’ve chosen your debt-crushing method, it’s time to find ways to maximize your monthly credit card payments. You can do this by trimming your spending in one budget category and channeling that money toward paying down your debt. You can also find ways to pad your pocket with extra cash for your payments, such as freelancing for hire or selling your creations on a platform, like Etsy, if you’re the crafty type. Once you’ve determined how much you can afford to pay each month, you can create a debt-payoff plan using the systems you’ve reached in Step 1. 4. Consider a debt consolidation loanFor some consumers, the most challenging part of paying down debt is managing multiple payments across several credit card accounts. With several monthly debt payments to make, it can be complicated to remember them all. It can also feel like the monthly payments are only going toward interest. A debt consolidation loan can change all that. When you consolidate debts to one low-interest loan, it’s a lot easier to manage the monthly payments. Plus, the savings on interest payments can be significant, especially if the new loan has a low interest rate. If this approach sounds favorable, consider taking out a personal loan from Ingersoll-Rand FCU. The loan will provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest monthly payment. 5. Negotiate with your creditorsMany credit card companies are willing to lower your interest rate once you prove you are serious about paying down debt. After kicking off your debt payment plan, it’s worthwhile to contact each credit card company to discuss your options. At the very least, see if you can get the company behind the first debt on your list to lower your rate. 3 Debt-Crushing strategies to avoid As you work toward paying down your debt, beware of these debt-crushing strategies, which may do more harm than good:
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Q: Now that Russia has invaded Ukraine, and the fighting does not seem to be ending anytime soon, I’m worried about the U.S. entering the war. It really has me wondering; How does war impact the economy and how can I protect my money in case of war?
A: While we all hope the war taking place between Russia and Ukraine won’t spread further, when major countries are at war it does impact the global economy. Here’s how the war in Ukraine is influencing the U.S. economy and American banking, additional fallouts we may be facing soon and steps you can take to protect your assets in case of war. How does war affect American banking? The U.S. Treasury Department has banned all financial institutions in the U.S. from opening or maintaining correspondent banking accounts for Russia’s largest bank (Sberbank) and its subsidiaries. By March 26, Sberbank will be effectively cut off from the U.S. financial system. This directive is part of a group of sanctions the Biden administration has placed on the Russian state-owned VTB Bank, and new debt and equity restrictions on more than a dozen Russian entities. All assets held by the blacklisted companies and institutions are now frozen, and U.S.-based individuals and companies can only conduct business with them if they receive exclusive permission from the U.S. Treasury Department. However, despite these sanctions, most U.S. banks and credit unions will continue to operate in a regular capacity throughout this time. Financial institutions have compliance officers on staff to ensure all federal laws, including wartime sanctions like these, are followed completely and without interrupting ongoing service. In addition, the financial service industry has experience dealing with similar sanctions from Russia’s annexation of Crimea in 2014, and more recently, sanctions related to China and Venezuela. Some U.S. banks are also fearful that there may be a wave of retaliatory cyberattacks from Russia in response to the sanctions placed against the country by the U.S. and other Western countries. While there is no way to predict what will happen, it’s a good idea to be extra alert for possible banking hacks. How does war affect the economy? Various wars in our country’s history have had an inflationary effect on the economy. During the Civil War, this was caused by the Confederacy printing money to pay its soldiers. During WWII, the U.S. economy was running at almost full capacity with high levels of government spending. These factors, along with a shortage of workers, led to wartime inflation. In addition, the shortage of goods and services, which is common during war, as well as a shortage on raw materials like crude oil, also trigger inflation. Unfortunately, we have already begun feeling the effects of war on a challenged economy. You may surely have experienced a spike in prices at the pump. In some areas of the country, like San Francisco, prices had already hit an all-time high of $5 in the beginning of March. This increase is a direct result of the many severe sanctions that have been placed on Russia by the U.S. and the European Union, which impact Russia’s ability to sell crude oil. The price for this crucial component of gas has consequently skyrocketed. Beyond the pump, prices on goods, like grains and metals, are also rising due to increased fuel costs as well as worries about possible future shortages. Russia and Ukraine are also major exporters of wheat and corn, as well as essential metals like palladium, aluminum and nickel, which are used in a wide range of products from mobile phones to automobiles. An interruption in the supply of these goods due to war automatically leads to an increase in prices. Yet another factor causing prices to soar is air transport. As of March 7, 2022, Russia has closed its airspace to 36 countries. This means each of these countries must divert shipping planes to routes that are lengthier and more expensive. The extra cost of shipping, of course, gets passed on to consumers. How can consumers protect their money in case of war? The stock market has already taken a hit from the war, and many Americans are fearful that the war may spread and/or further impact the economy. Here’s what you can do to protect your assets:
Your Turn: Have you taken any steps to protect your money in case of war? Tell us about it in the comments. Charity Fraud is nothing new. Every time a tragedy strikes, scammers take advantage of those who try to help. With war breaking out in the Ukraine, a new wave of Charity Scams are washing over those with big hearts.
How Charity Fraud plays out: Scammers will approach you in a manner of ways, through emails, social media posts, crowdfunding platforms, phone calls and more. These fraudsters will pull on your heart strings, asking you to donate to their charity, often pressuring you to donate right away. They may ask you for cash, wire transfer, or even card numbers. How do you spot the scams?
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