New Year's Resolution: Get Rid of That 2020 Debt 

By GreenPath Financial Wellness

2020 was a tough year to say the least, and now that it is behind us, we can look at 2021 with fresh eyes and make plans to better our financial future. If you collected a lot of debt last year, you are not alone, and there are plenty of things you can do to regain your financial freedom. Every situation is different which means it is important to first assess your situation before creating a plan.  

Ask yourself these questions:

Do you know how much you owe to lenders? Understanding your debt-to-income ratio allows you to make a strategic plan to make payments this year. You do not want to put yourself in a position where you are paying off your debt but cannot afford necessities. 

Do you pay the minimum monthly payment? The goal is not to extend your payments to the maximum amount of time. While you are not hurting your credit score by making those minimum payments, you are racking up interest and paying more than you initially owed. If you want to relieve yourself of overhanging debt, try paying more than the minimum.

Do you take cash advances from your credit card company? Credit card companies will often entice you with cash advances to help you pay off your monthly bills, and while that sounds good when you are struggling to make payments, it is actually a trap. In the end, you are charged a fee for using that money and you pay more than the amount you borrowed in the first place. Nobody wants to end up in more debt by trying to pay off their current debt. 

Do you max out your credit card often? If you are maxing out your credit card often, you may want to consider looking over your expenses and making an internal change. Paying bills is one thing but spending on frivolous items that are putting you in debt is not helping you reach your goal. Remember, it is not about the limit on the card, it is about the money you actually own. If you cannot afford it without the credit card, then you cannot afford it with one. 

These are just a few questions to help you get an overview glance at your current debt situation. Whether you need to make some lifestyle changes or change the way you are paying off debt, talking to a financial advisor can relieve some of the stress of planning and help you feel confident in working toward your 2021 resolution.

Telhio also offers a debt consolidation loan that allows you to take all your debt and consolidate it into one payment plan with a lower interest rate and a longer repayment period. Visit /per_loan.html to get started.

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