Get Debt Free

Embarking on a debt-free journey in 2024? You're not alone. Let’s dive into practical steps, strategies, and real-world wisdom to make this the year you break free from financial burdens.

Quiet Resolutions, Loud Results: The hushed New Year’s resolution for many?

Freedom from debt.

If you're eager to escape the clutches of debt, welcome aboard. We're about to discuss when to pay off debts, where the funds will come from, and how to navigate your path to financial freedom.

10 steps to Debt Freedom

1. Create a Detailed Budget:

• Why: Understand your income, expenses, and identify areas where you can cut back.
• How: Use budgeting apps like Monarch Money or You Need a Budget (YNAB) to track your spending.

2. Prioritize High-Interest Debt:

• Why: High-interest debt accumulates quickly and can become a significant financial burden.
• How: Focus on paying off debts with the highest interest rates first while maintaining minimum payments on others.

3. Snowball Method:

• Why: Gain momentum by paying off smaller debts first, creating a sense of accomplishment.
• How: List debts from smallest to largest. Pay the minimum on all, and put extra funds toward the smallest debt. Once paid, roll that payment into the next smallest debt.

4. Negotiate Interest Rates:

• Why: Lower interest rates mean more of your payment goes toward the principal.
• How: Contact creditors and negotiate for lower interest rates, especially if you have a good payment history. (I have had several clients get permanent or temporary relief this way!)

5. Debt Consolidation:

• Why: Streamline multiple debts into one, often with a lower interest rate.
• How: Consider a personal loan, balance transfer credit card, or debt consolidation program. (Be wary of intro rates and additional hard-inquiries on your credit score at inopportune moments).

6. Increase Income:

• Why: Extra income accelerates debt repayment.
• How: Explore part-time jobs, freelance work, or selling unused items to boost your income.

7. Emergency Fund:

• Why: Prevents adding more debt when unexpected expenses arise.
• How: Save a small emergency fund (e.g., $1,000) before aggressively tackling debt.
  • Here is an emergency fund calculator

8. Cut Unnecessary Expenses:

• Why: Free up money to put toward debt repayment.
• How: Identify non-essential expenses and cut back on discretionary spending.

9. Financial Advice:

• Why: Professional guidance can provide personalized strategies.
• How: Seek assistance from nonprofit credit counseling agencies. I also send clients to Value, Money Coach to help with budgeting and debt paydown.

10. Stay Committed:

• Why: Consistency is key to long-term success.
• How: Regularly revisit your budget, track progress, and stay focused on your debt-free goal.

Bonus Tip: Educate Yourself:

• Why: Knowledge is empowering.
• How: Read books, attend financial literacy classes, and follow reputable personal finance blogs.

A note on stopping debt before it starts:

Do not incur expenses before you have the money to pay for the full expense. That is, don't pre-commit your future income.

We see people commit to giant home remodels, vacations, weddings, etc....based on the income they're *going* to have in the future.

Two things can go wrong:

1. You never end up actually getting that income. Your company stock price plummets (and your RSU (Restricted Stock Unit) grants are worth 1/4 as much). You get laid off. You quit for health reasons.

2. Other, big, unavoidable expenses pop up (surprise!) that need your income to cover. You total your car. Your A/C unit dies in the heat of summer. You have a health issue.

In all cases...Now What?

I'll tell you what, even if you can find a way to pay the bills, it is soooooo stressful. You always feel like you're paying for your past instead of making progress.

Save the money first THEN buy the thing or experience. I can't tell you how *awesome* it feels to buy something *knowing* that you have the money for it already sitting there ready to pay.

Ready for personalized advice?

I’m Charlotte Galamb, CDFA and financial advisor in Cary, NC here to guide you toward a long-term financial wellbeing based on your goals and values. Together we build you a plan for the next chapter and financial independence. Schedule a free intro call >

Need help with more of the basics? Consider reaching out to money coach Ms. Value – she works with clients to build healthy habits around money

Additional Resources:

• National Foundation for Credit Counseling
• Federal Trade Commission - Dealing with Debt
• My Basic Financial Check-In

Remember, getting out of debt is a gradual process. Be patient, stay committed to your plan, and celebrate small victories along the way.

Charlotte Galamb is a financial advisor at Raymond James in Raleigh, North Carolina, helping people navigate life transitions and secure their financial futures. For more information, visit her website or email charlotte.galamb@raymondjames.com.

While familiar with tax provisions of the issues presented herein, we, as Financial Advisors of RJA, do not give advice on tax or legal matters. Discuss such matters with appropriate professionals. The information provided is for educational purposes only, we do not guarantee that the foregoing material is accurate or complete. and does not constitute a recommendation. Opinions expressed are those of Charlotte Galamb and not necessarily those of Raymond James or Raymond James Financial Services. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment or financial decision, please consult with your financial advisor about your individual situation.