5 Tips for Reducing Your Debt for the New Year!

January 17, 2020

For many people, the new year represents a clean slate. Reducing debt is a common resolution, but some people prefer to begin before the new year even rolls around. That way, they can tackle their fresh start with more gusto. Whichever camp you are in, these five tips from Los Angeles Accounting firms should help.

1. Get a Clear Understanding of All Accounts

You may have two credit cards, student loan payments, a mortgage and a few other debts. List them all along with their interest rates, remaining balances and the estimated date you can stop paying them. The last factor may not apply to credit cards and other debts you plan to keep indefinitely. If you have trouble putting together these accounts or understanding them, turn to an Accountant service Los Angeles for assistance.

2. Figure out a Strategy for the Debt

Focus on one debt at a time (maybe two) while making minimum payments on the other debts. Some people prefer to eliminate the smallest balances first for the psychological boost. Others prefer to pay down the expenses with the highest interest rates. There is no right or wrong approach. Do what motivates you the most.

3. Note Optional, Occasional or Recurring Expenses

Gym memberships, cable TV, cellphone bills and other expenses are not debts per se. However, reducing them does free up more money to go toward true debt. So, list all of these expenses along with payment numbers and frequency. Explore areas to cut.

4. Bring More Money In

This step is not always possible, but there could be ways to make more money. People have turned to second jobs and roommates for extra cash. You could even explore monetizing a hobby. Look for an Encino Accountant who does free consultations, and get ideas for setting up a business.

5. Shop Around and Negotiate

See if you can get a better deal on your insurance rates. Ditto with investment funds, credit cards and other financial products. Stay on track, and your debt should be noticeably smaller before long.