If you’re still struggling with student loan debt, that can be one of the main reasons why it can be challenging for you to save money on a low income. But, still, it’s an important goal, especially if you are looking to invest in a new vehicle, for example. You can definitely find creative ways to save more money and take incremental steps towards your goals. This article rounds up three great tips that will help you eliminate your debts and accomplish your financial goals.
Tackle Your Debt
Even if you still haven’t graduated from college, you can do your research, make a plan, and choose the right debt repayment method for your financial situation. Two popular methods are the debt snowball and the debt avalanche method.
The debt snowball method is a very effective way to reduce your debts, and it includes making extra payments on your smallest debt while paying the minimum on the other debts. With this method, you list the debts from the smallest to the largest debt, based on their balance, while you do the opposite with the other method, based on their interest rate.
With the debt avalanche method, your priority is the debt with the highest interest rate. So, again, you pay the minimum on all the other debts, and you use the remaining portion of your income for the debt with the highest interest rate. There are advantages and disadvantages associated with both of these methods, but if you want to learn more, read this article about debt snowball vs debt avalanche method. It provides useful information, and it will help you make your decision.
However, it’s worth mentioning that with the debt avalanche method, you will need a longer period of time to see results, while with the debt snowball method, you’ll immediately see some results, and you will be encouraged to keep going and pay off your debts. This is why a lot of people choose the debt snowball method, even though with the debt avalanche method, you will pay pays less in interest over the long run, which makes your debt generally less expensive.
Do a Balance Transfer
Your budget will also help you understand if a large portion of your debt is credit card debt. As a student, you might use your credit card to pay for unexpected expenses, for instance. Actually, over 36% of the college students in the USA owe more than $1,000 in credit card debt.
Fortunately, a good option is a balance transfer that will help you achieve substantial progress in paying off your debt balances. Furthermore, you will find a lot of credit card companies that have a 0% interest promotional period that lasts from 6 to 12 months. This means you can use the interest-free period to reduce your debts significantly.
Stick to a Budget
To fully reach your goals, you need a budget. Luckily, there is a lot of courses and free resources online that can help you to build a good budget for your needs. But, make sure to stick to your plan and review your goals every month. For example, you might notice that you’re spending too much money on unnecessary items, or you notice that certain months are more expensive for you, then you can adjust your budget accordingly and cut down on variable expenses. For example, you could cancel certain memberships that don’t align with your goals. This approach could help you to save more money.
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