Debt Management
Debt management requires planning ahead and discipline and is a serious undertaking, and the return of inflation, layoffs, medical bills, gas, groceries and taxes has added another degree of difficulty for many. However, this is why having a solid budget, you can begin planning a solid foundation for your family and loved ones. It is not a question of if it is when the debt storm shows up at your door. I often hear individuals speaking of becoming rich or creating generational wealth but never speak of how to maintain it and trust is not the answer. A trust is within the pyramid but you are the rock that this will be built on.
1. Start with Housekeeping
The number one and popular approach is to start with a budget. Let's live outside the book for a second. We all have budgets, I can remember being a kid and adding up the cost of snacks with what i had in my pocket and getting to the register and did not consider the tax. The store owner would either allow me to pay later, waive or place it back on the shelf. This often happens in our daily lives but as adults the burden of kids or shelter is a bigger responsibility than the price for a pack of cookies. As adults we often start off by doing the right thing and than life tosses us a curveball. This is where preventative maintenance and planning ahead helps. We plan for today and not tomorrow. We plan budgets as if we are not going to live beyond our current age. It is said that we are living above our means and beginning to go beyond what our budgets will allow and there are many reasons for this. The press does not speak about it. I will! The city you live in has outgrown you and your wallet. The apartment you have has now increased your rent. What do you do? You set a budget based on your expenses and now this has changed. Anytime you want to make a financial move, like paying down debt, buying a house, starting a business, or saving toward your retirement. The budget changes because others around you have changed it. Your budget accounts for all of the money coming in and going out each month. How do we now make informed decisions? It is as simple as planning your outcomes and negotiating with those who can impact your lifestyle. A realistic debt pay off plan is one approach but debt prevention is a better approach. Try this to help you get started. Look at apartments in your community and have them compete for your business. Lock your lease into your budget window. You can reclaim your deposit and stay without adding a moving cost to deduct from your savings.
We have a process for you.
After we have a good understanding of your income. The evaluation process for expenses. These are your fixed expenses such as mortgage, insurance, childcare, and internet service. What if I told you the evaluation can get your net income up to help you.Variable expenses, like grocery costs, fuel, entertainment, clothing, and medical expenses can change monthly. These are more difficult to plan for, but we can create ways to help back this with credit and savings to help increase your (LTV) loan to value and decrease your (DTI) debt to income ratio.
To pay off debt, your savings will do this and balance your life expenses, paying your monthly bills and finding extra money in your budget to put towards your debt. any extra money you create puts towards your debt.
2. Preventive Maintenance
Now that we have done some housekeeping, We can now maintain the house.
The American dream of starting a business from a product or service. Instead, start a family business and this is your goal. Here is a hint to why. Learn to live off the tax statement based on budget. Our proprietary system of doing this keeps more money for you towards retirement. This ecosystem we have built for a very few clients. I challenge anyone this is a bullet proof debt management planning. You don't need a trust for this and you do not need asset protection for this. This is about compliance and procedure to help you have good debt not bad debt. Debt that pays you not the debt you pay. This is better than Ai, This is Hii human intelligence.
3. Debt payoff strategy
The debt snowball and debt avalanche methods are examples of debt payoff strategies that can make effective use of the money you have to pay off debt. With both strategies, you’re making the minimum payments on all of your debts. The difference is how you allocate extra money.
The debt snowball method builds momentum by focusing on small, early wins. You find the debt with the smallest balance and put any extra funds towards paying off that debt first. Once your smallest debt is paid off, you move to the debt with the next smallest balance. Paying off a debt in full early on can keep you motivated as you start getting closer to attacking debts with bigger balances.
With the debt avalanche method, you put any extra money toward debt with the highest interest rate first. This can save you money on interest charges by eliminating high-interest rate balances. Once you’ve paid off the debt with the highest interest rate, you focus on the debt with the next highest rate.
Either one of these strategies can be beneficial, although if you have high-interest rate credit card debt, the avalanche may save you more money. You can always start with one strategy and switch to the other to see which one works better for you. Remember, you’re making a dent in your debt anytime you are paying more than the minimum balance.
4. Factor in your student loans
If you have federal student loans, you’ve probably had to think about how you’ll fit those payments back into your budget. For those who have experienced job loss, there are income-driven repayment plans that are a lower amount based on your monthly income. You can also consider refinancing federal loans, but you will lose federal student loan protections. Private student loan borrowers have fewer options, so it’s likely you’re still making payments on any private student loans you have. You may want to look into student loan refinancing, which is when a private lender pays off your student loans and gives you a new loan with new terms. Student loan refinancing is ideal if you have private student loans, especially high-interest rate ones. Refinancing your student loans can save you a decent amount of money throughout your pay off, although the amount you save on refinancing will largely depend on your interest rate, which is based on credit score.
You can also consider extending your loan term to lower your monthly payment, but the downside is that you can seriously add to your debt. It’s worth researching the pros and cons to see what’s best for your financial situation.
The final word on paying down debt
Making a plan to pay off debt is an excellent goal, but be kind with yourself. If something happens along the way and you need to adjust your strategy, that’s okay. These tips can help you create a realistic plan that sets you up for success and fuels your motivation to keep moving forward.