By Darryl Montgomery
Want to learn how debt management could help you save money? You’re not alone.
Paying down debt is one of the top financial priorities for African-Americans. The ability to understand and make thoughtful, informed decisions about your finances is an important life skill, no matter what stage of life you may find yourself in.
There is no time like the present to assess your financial goals and put together an action plan to manage your debt. Here are six tips to help alleviate financial burdens and work toward long-term wealth.
1. Pay off debt sooner and potentially pay less interest by paying more than the minimum each month on loans. Also, ask your lender about paying half your monthly bill every two weeks instead of the full amount monthly. You’ll make one extra payment over the course of a year and could pay your debt off faster (be sure to ask your lender about how partial payments reduce principal, any prepayment fees, and any other impacts of partial payments)
2. Prioritize paying off loans with the highest interest rate first.
3. Stay on top of debt by setting up automatic payments. Select the date, the amount and the debt you’d like to pay.
4. Bank with a responsible lender that gives you options for paying down debt on terms better for your bottom line. There are many different ways to consolidate debt, so talk to your bank about your options.
5. Reduce your overall monthly expenses by lowering the rate of your current loans. If your credit score has improved, or if overall interest rates have gone down since applying for a particular loan, you may be able to lower the rate of your auto, home, personal, or student loans or your credit cards. Consider any fees that might be associated with refinancing.
6. Use free educational resources, such as Wells Fargo’s Hands on Banking® to help you make responsible financial decisions. These sites offer interactive features that explain key credit concepts, such as building credit, improving or rebuilding credit, taking charge of existing debt and practicing good credit habits. Improving your money management skills could help you lower monthly expenses on big ticket items, such as loan repayment, and reduce the overall cost of your debt over time.