Washington County Weekend Post

Debt can quickly sneak up on a person. However, it can take much longer — sometimes decades — to get out of debt. And that's a big concern when considering just how much debt the average person has incurred. Northwestern Mutual's 2018 Planning & Progress Study says the average American has about $38,000 in personal debt, excluding home mortgages. A survey from the insolvency firm MNP Ltd. found that 31 per- cent of Canadians do not make enough to cover their bills and 46 percent are a mere $200 or less away from failing to pay debts at month's end. Researchers in the Unit- ed Kingdom analyzed data from 1.4 million credit card holders and found that peo- ple typically choose ineffec- tive methods to paying off debt. These tips can make it easier to get rid of debt. Stop the flood `Avoid new debt at all costs. Stop using credit cards, cease taking loans, do not buy any big-ticket items, and scale back on general purchases. Learn about avalanches and snowballs The avalanche method is a way to pay off debt. According to NerdWallet, a popular online financial resource, the debt ava- lanche approach encour- ages debtors to pay off debts with the highest interest rates first. That seems like an effective way to get out of debt quickly. However, in a 2016 investi- gation for the Harvard Business Review, research- ers found that the snowball method, which prioritizes paying off the smallest debt balance first and then mov- ing on as debt amounts increase, is the most effec- tive strategy. It tends to have the most powerful effect on people's sense of progress because they gain momentum by watching debts disappear. Cut back temporarily Cut back nonessential spending, such as cable subscriptions or gym mem- berships for the time being. R epurpose that extra money to pay off existing debt. Get a lower interest rate Customers can call cus- tomer service centers to see if they can lower debt by negotiating a better inter- est rate, says Credit.com. Since much of a credit card payment goes toward monthly interest charges and not toward the actual balance, this can be a way to get a handle on debt. Some people prefer to use a balance transfer to get a lower rate on another card and try to pay off the bal- ance before the promotion- al rate expires. Consolidate or settle When debt is so sub- stantial that debtors cannot see the light at the end of the tunnel, they might ask a creditor to accept a one- time, lump sum payment to satisfy the debt. Debt con- solidation companies also can help by negotiating with creditors and stream- lining debt into one pay- ment per month instead of many. With an effective plan in place, people in debt often can dig themselves out of financial peril. 2A • WASHINGTON COUNTY POST • SUNDAY, DECEMBER 29, 2019 GMTODAY.COM Build Your Home Improvement Business! Connect with area consumers looking to build, remodel or improve! Advertising is open to WCBA members and non-members. Special WCBA Home Building & Remodeling Expo section runs inside the Sunday, February 2 Washington County Post and the Thursday, February 6 Daily News. AD DEADLINE: FRIDAY, JANUARY 24 WCBA 2020 FEBRUARY 7, 8, 9 While the holiday sea- son is a wonderful time of year, it can also put great financial strain on individ- uals going into the new year. The demand of holi- day spending can lead to worry of unpaid credit card bills, which can lead many to put themselves on a strict "money diet." As you reflect on the past year and the goals you want to set for yourself, you may want to put financial well- ness at the top of your list of resolutions. But financial wellness is not just about achieving a specific dollar amount in terms of savings, advises Amanda Clayman, finan- cial therapist and Pruden- tial's financial wellness advocate. Instead, Clayman recommends establishing overall healthy money habits when it comes to your finances in 2020. It's about being both practical and less reactive when it comes to decisions around money. Here are some tips for how you can improve your financial wellness heading into the new year. 1. Set up monthly "money dates" "One of the smartest things we can do for our bottom line is simply reviewing our finances," says Clayman. "Dedicate time each week or month (whatever you can do, just keep it consistent) to tack- ling your money manage- ment. These intentional 'money dates' with yourself and/or your family or part- ner could help you save money throughout the year." During your money date, review where you are in terms of your budget process, debt you are trying to reduce and your savings plan. Have unexpected expenses come up recently? Focus on how you can han- dle those, and better pre- pare yourself to cope with similar expenses in the future. 2. Be in a good headspace Clayman acknowledges that most people find deal- ing with money stressful, which can cause them to avoid examining these issues or discussing them with spouses or family members. "It's perfectly normal to feel anxious about money from time to time," Clay- man says. "When this hap- pens, take a break and come back to the task when you can think with a clear, productive mindset." Dealing with difficult money issues when you're feeling emotionally stress- ed can lead to less rational decisions. Instead, review the issue when you're more likely to be able to step back and see the big picture without overreacting. 3. Practice "Unsubscribe Sundays" Clayman recommends that you take a few minutes every week to unsubscribe from the many promotional emails that clutter up your inbox. These might tempt you to shop impulsively when you don't want or need to spend the money. After the holidays is a great time to tackle this, as your online purchases may have gotten your name on a few too many email lists. 4. Get a money buddy It can be helpful and encouraging to share your goals for the future and compare notes with some- one who cares about you - and who may have experi- enced some of the same struggles along the way. "This not only keeps us more accountable, but we're able to make it fun and create a stimulating discussion," advises Clay- man. "Involve your partner, friends and family in your financial wellness journey." 5. Keep your resolutions positive, not punishing In an effort to achieve your financial wellness goals, focus on the positive rather than the negative. Clayman notes: "As opposed to saying you want to cut spending, think instead of what you want to put that saved money toward, and attach a specif- ic number to it. This pro- cess will help you keep track of progress and ulti- mately reward you for get- ting there." This New Year's, make money resolutions you can stick to, not just for your bottom line, but for your overall well-being and peace of mind. "Remember that the path to financial wellness is very personal and in no way linear," says Clayman. "There's no better time to begin the journey to a healthier money mindset than today." For information, advice and tools for investing in your financial wellness and establishing healthy financial habits, visit Prudential Financial. How to make financial wellness your New Year's resolution How to get out of debt ... and stay that way

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