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Prioritizing finances to  is a hefty task that requires looking at the past, present and future to make life-altering decisions and protect your well-being.

While experts disagree on the exact percentages that should be put aside or how much debt should be tackled first, there are some habits for managing money that many experts agree on.

If you’re trying to figure out whether to save or pay off debt, there are easy ways to eventually do both. You can make a plan to be debt free and armed with savings by looking at your income, evaluating how much you need in case of an emergency, and taking note of the interest rates on your accounts.

Examine All Forms of Income

As you start analyzing your finances, look at all forms of income. The idea is to make a plan that will utilize your resources to their fullest potential.

That means using cash gifts, tax returns and paychecks toward your budget. Indulging in a shopping spree with your tax return might seem like a fun idea, but prioritizing your finances first keeps a shopping binge at the mall from further digging you deeper into debt.

It’s important to have a holistic view of your income sources prior to deciding what percentage you are planning to set aside toward paying off debt and savings.

Once you subtract living expenses and other necessary bills from your income, you can start divvying up the remainder for bills and a savings account. Regular payments will soon put an end to those high-interest monthly payments and you’ll have wiggle room for fun purchases here and there.

Build an Emergency Fund

Emergencies are difficult to plan. Whether it’s a flat tire, an unexpected hospital visit or sudden unemployment — life can catch you off guard.

An emergency fund can serve as a lifesaver in these situations, keeping you afloat to immediately address whatever issues you’re facing.

While paying off debt is a fantastic long-term goal, preparing for emergencies is an essential first step. Without putting aside any money in savings, the next emergency could force you to rely on credit and push you farther into debt.

Experts suggest setting a savings goal of $1,000 and continue building that reserve so you have six to 12 months of living expenses covered.

Tackle Minimum Payments on Debts

Defaulted loans and unpaid credit cards damage your credit score and require you to pay fees that increase the existing debt. Additionally, the longer you wait to pay off debts, the more interest you will owe.

Start to break that debt cycle with small steps and consistency. You should make minimum payments on the due date. If you are able, pay more than the minimum amount due so that you avoid paying more interest in the long run.

Credit payments should be a priority. Credit card debt, also known as revolving debt, tends to be more difficult to pay off because it continues to swell with fees and additional purchases.

Remember, not making payments will further damage your credit score — an asset that you may be able to repair and utilize in the future.

If you cannot meet minimum payments, you may want to consult a credit counselor that will help you consider options like debt settlement or consolidation. These options can reduce the overall amount you owe and possibly speed up the process of getting out of debt.

Take a Strategic Standpoint on Interest

If you have a $1,000 emergency fund and are making minimum or slightly more than the minimum payments, then congratulations! You are ready for the next step — interest rates.

Your savings account will earn interest on the money you’ve put aside. Even if the interest rate is 1 percent, it’s still an incentive to generate free money for the future.

Interest rates also heavily influence your debt.

You will want to look at all of the accounts you owe money on and single out the one with the highest interest rate. Once you’ve done your research, take this account and pay more than the minimum payment.

By choosing this plan of attack, you’ll save on interest rates and hopefully put debts in order. Evaluating your finances and thinking about how to pay off debt can be scary, but it’s even scarier when you have no idea where to start.

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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