New Year’s Saving Resolution #1: Get Out of Debt

January 4, 2013
By Sean Naron, Consumer Federation of America, Administrative and Advocacy Associate

As 2013 begins, make sure to give your finances a checkup and discover if you need to make saving your New Year’s resolution. You may discover that you have debt you need to pay down. The best investment most borrowers can make is to pay off any debt with double-digit interest rates they may have.

Try to pay more than the monthly minimum: When you make only the minimum payment, you pay more in interest over the course of the loan. By increasing your monthly credit card or loan payment you will save money by paying less interest and will increase your credit score by showing an ability to repay and decreasing your account balance.

Target either the largest or smallest existing debt: Have multiple credit cards or loans with double-digit interest?After making sure you’re paying at least the minimum payment to all of your credit cards and loans, review your statements to find the range of interest rates you are being charged. There are two different directions you could take: either pay down the account with the highest interest rate first, or target card or loan with the smallest outstanding balance first. Make consistent payments and once one debt is entirely paid, allocate the money you were paying towards the next balance.

Create (and stick to) a budget. If you’re not exactly sure how your credit card statement or loan became so large, figure out where your money goes by recording your daily transactions, and then find ways to save. Budgeting will help you control your expenses and sticking to your budget will keep you from overusing sources of credit in the future. Try to budget so miscellaneous money that, if not used by the end of the month, can be put away for additional savings or used to pay down your debt even faster!

Be patient: Getting out of debt will not happen overnight. You will easily be tempted to continue to accrue additional debt. But by targeting specific debt, paying off as much as you can, as quickly as you can, and sticking to your budget, you will help yourself and your family save successfully for the future; he best way to start the New Year.

Are you ready to get out of debt? Join America Saves today and create a plan to pay down your debt. Once you begin to pay down your debt visit www.DebtMovement.com to join thousands of others who are paying down debt as well.

More articles about paying down debt:

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Katie Bryan | November 23, 2013

    Tip to #Save: Pay off Credit Cards as Soon as Possible. http://ow.ly/FJyDM via @Bankrate

Saver Stories View all »

Transforming “I Can’t Save” to “I Will Save”

Written by Guest Blogger | January 13, 2016

You will not believe what it took to completely change my life. About three years ago, the HR Administrator of the corporation where I worked (as a temp with no benefits) forwarded an email to me. Fifteen seconds. One small act of kindness. That's it - that's all it took!

Read more...

The Gift of Homeownership

Written by Tammy G. Bruzon | August 5, 2015

Quaneka Willis, a single mother of three children, was receiving rental assistance through the Housing Authority of the City of Milwaukee when she decided to take control of her finances. So, in September of 2013 she attended the Make Your Money Talk program and pledged as a Wisconsin Saver. In less than 12 months, she had maximized her savings and was beginning the process of purchasing her first home.

Read more...

Starting and Continuing a Personal Finance Journey

Written by Sara Cooper | December 23, 2013

When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer Business Institute during her sophomore year of high school, she began her personal finance journey. The program required participants to open a savings account.

Read more...

Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving