Tips to save money and dig out of debt | 7 On Your Side
NEW YORK (WABC) -- For many people, the top of their New Year's resolution list is to save more money.
A lot of us want to get physically fit and financially fit.
You can start by tackling that crippling credit card debt.
Sky-high interest rates can make it impossible to chip away at those balances.
"We were more focused on how I can save and invest so I can one day quit my job," Jamila Souffrant said.
The Brooklyn wife and mother of three was stuck in a career she disliked and a commute she detested. So, she and her husband a public school teacher went back to the ABC's: saving more and spending less.
"So my husband and I, we saved and invested $169,000 over two years. That was a combo of putting money in our pretax retirement accounts and just general savings," she said.
Take advantage of employer matches, many will also match the amount you may be paying in student loans.
By maxing out, Souffrant was able to say Sayonara to her job and launch her book on her journey to financial freedom.
The first step, face all of your debt.
"Ignorance is not only bliss, but it is costly," she said.
Devise an attack method.
"The snowball method is you paying off the smallest balance debt first. And so that gives you a bit of momentum. So, if you are someone who was encouraged by paying off debt and seeing your amount of debt, go down the accounts close out, that might excite you. The other method is the Avalanche method where you are paying off the highest interest rate balances first. Now, that's a smart, mathematical way, because over time, you'll save an interest because you're paying off that higher interest rate first," Souffrant said.
See if you can transfer balances to a 0% interest card.
You usually will need great credit to qualify and the discipline to cancel or stop using the existing card.
The pros are you can move your balances, save money on interest, and consolidate your bill into one easy payment.
The cons are that 0% interest rate does not last forever. There are transfer fees involved, and you could add to your debt if you don't stop charging on.
We first met Ryan Masajo during the pandemic. He had six high-interest credit cards and a student loan. His YOLO, or you only live once, lifestyle of travel and culinary delights dug him 85,000 in the hole..
But he consolidated that debt into a personal lower-interest loan with SOFI , microsaved money by cutting his own hair and pressing his own clothes, and 2 and a half years later he was debt free!
Just make sure you research any offers before signing up.
"Consolidating is a good idea if you are going with a reputable company," Souffrant said. "Now if you can pay that off before the interest rate kicks in..."
If you are gun shy about opening more lines of credit, at the very least turn on those automatic minimum payments or talk to your current creditor.
If you are a long-term customer in good standing they may be able to work with you on a lower interest rate, late payment forgiveness, or a payment plan. You won't know unless you ask.
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