What a Money Skills for Newlywed Couples year! Whether you’re a newlywed, soon to be married, or have shared many years with your spouse, December has been a busy month. We want you to hit the ground running in 2014, so this month in our Money Skills for Newlywed Couples series, we talk about how to tackle debt in the New Year.
Paying off debt is a popular resolution. But accomplishing this task takes planning, and there’s no time like the present to get started! We have some Money Skills for Newlywed Couples steps to help you begin.
1) Money Skills for Newlywed Couples: Take a good, hard look at your current financial situation.
- Before you can pay off your debt, you need to know how much you have! Make a list of all the accounts in which you owe money. This should include your credit cards, car and student loans, and mortgages as well as the interest rates associated with each of those accounts. Then write down how much money you owe toward each.
- The New Year is also a good time to check on your credit report. You’re entitled to one free credit report every 12 months from each of the three major credit reporting agencies. The official website to order these credit reports is www.AnnualCreditReport.com. We recommend you bookmark that site. Go over the credit reports carefully. Mistakes happen!
- After reviewing your credit reports, figure out your debt-to-income ratio. This will help you figure out how much of your gross income you can put toward paying off debt.
2) Money Skills for Newlywed Couples: Create a budget!
- Now that you know what you owe and how much you can afford to pay off, put it in your budget. If you haven’t made a budget already, now is the time to do it. Make a list of all your weekly, monthly, and yearly expenses. Then decide which expenses are most necessary. Think hard about your wants versus your needs.
- After prioritizing your budget and finding ways to cut expenses, decide how much of your savings can be put towards paying off your debt. Maybe even consider using gift money or tax refunds.
3) Money Skills for Newlywed Couples: Organize your debts.
- Your plan of attack can be prioritized by the balance of each debt or the interest rate.
- If you decide to order your list by interest rates, a good strategy is to tackle the highest first. It will grow the fastest, so the sooner you pay it off, the better. Just don’t forget to continue paying at LEAST the minimum balance on all your other accounts. You don’t want to default. When the debt with the highest interest rate is paid off, move to the next one on your list.
- If your list is organized by the balance of each debt, you may want to consider paying off a few small debts first, even if they have low interest rates. Getting those debts off your list should help motivate you to tackle larger debts.
A few more Money Skills for Newlywed Couples tips:
See if you can negotiate lower interest rates with creditors. There’s certainly no harm in asking.
After paying off a credit card, consider keeping it open! Your credit score is partially determined by taking a look at how much credit you have available and how much of it you use.
Keep track of your spending! No budget is perfect, and life has a habit of throwing a few curve balls our way. You may need to make adjustments throughout the year.
Paying off debt FEELS GOOD! Whenever your frugal lifestyle gets frustrating, or you make a mistake, just think of how great it will feel to not have to worry about debt. It will motivate you to keep going even if you slip up a few times.
We’ve enjoyed reaching out to all the readers of INBride Magazine this year, and we hope our lessons about budgeting, goals, and saving stick with you in the New Year. There’s much more to come! You can always visit www.IndianaInvestmentWatch.com and while there, you can download a copy of our Money Skills for Newlywed Couples!