Being in debt can be overwhelming, but it doesn’t have to be. Sitting down to make a plan of action to pay off your loan will help take some weight off your shoulders.

Don’t Neglect Monthly Expenses

Throwing every last dollar you have at your loans is no way to live a healthy balanced life. The bills you need in order to live – groceries, rent, utilities – should always be paid first. You may have other monthly expenses that cannot be skipped such as student loans, car payments, childcare, etc. You may be able to shop at another grocery store to lower your expenses or have a relative take over some aspects of childcare a few times a month to save money. But don’t get into the habit of skipping payments on your essentials.

Do Build An Emergency Fund

The importance of an emergency fund may not be fully realized until you’re in a crisis. The last thing you need during a difficult situation is to wonder how you’ll come up with the money to fix it. Most experts recommend an emergency fund that covers three to six months worth of living expenses. This may not be feasible for everyone, so try saving for a goal of $500, $1000, or $2000. It may feel illogical to save this money when it could be going toward a debt payment, but an emergency fund can help to insulate you from going further into debt.

Don’t Steal From Your Future To Pay Off Debt

If you’re thinking of cashing out a portion of your retirement savings to pay off some debt, think again. More often than not you’ll incur early withdrawal penalties and taxes, which will result in you losing out of money now AND in the future.

Do Read The Fine Print

It’s an unfortunate reality, but some lenders will have a clause that requires a fee to be charged if you completely pay your loan off before the due date. It’s important to calculate whether you’ll save more money by paying off the loan on time and incurring no fee, or paying off the loan early, saving some interest, and obtaining a prepayment penalty.

Need More Guidance? We’re Here to Help

Debt can be stressful, but it’s not unmanageable. If you really need more personalized advice, you can feel free to visit one of our offices and speak with a financial advisor. We can help you create a plan for getting your finances on the correct track.