Celebrate financial independence

Financial independence means you are unchained by the stress associated with debt and interest payments. Saving money for your future and focusing on your top financial priorities brings peace of mind. If you live debt-free, then you already know the satisfaction. However, if you have credit card debt, car payments, student loans, or medical bills, the fear of missing payments can weigh heavily on your mind. If you are one of the millions of people in this situation, don’t worry. There are steps you can take to achieve financial independence.

• Get the details on your debt and payments
• Create a realistic budget
• Prioritize your debt repayment
• Leverage available saving resources to help reach goals

Gather the details on your debt

It’s essential to create a detailed list of all your debts. Be sure to include the amount you owe to each creditor, along with their interest rates and their monthly payments. If you are unsure about who your creditors are, you can use free credit report services such as annualcreditreports.com. This service does not harm your credit rating. Once you have a clear idea of what your debt looks like, you may want to contact your creditors to ask for lower interest rates or an end to late or over-limit fees. It doesn’t hurt to ask.

Create a budget

Most people that struggle with debt done have adequate spending controls. When working toward paying off debt, the best thing you can do for yourself is to set a realistic budget. Set spending limits and stick to your plan. Keeping an account of every little expense will make you think twice before splurging. The article Starting the year off right provides some helpful tips on how to get your budget back on track.

Prioritize repayments

Focus on settling your debt with the highest interest rates first, such as credit cards, car loans, and personal loans. These debts will eat into your savings accounts and don’t offer any tax benefits. If this task seems daunting, you may want to consider consolidating your credit card debt and other unsecured debt into a single monthly payment. Companies such as Money Fit offer services that could help.

If you fall behind on your mortgage payments, contact your mortgage lender immediately to avoid foreclosure. Many lenders will be willing to work with you if they believe that your situation is only temporary. Some lenders may agree to update the terms of your mortgage by extending the repayment period to reduce your monthly debt.  

Leverage resources

If you are struggling to pay off debt and save money for retirement, you may want to consider working with a credit counselor. Reputable counselors can help you with managing your money and debts, set a workable budget, and offer free educational resources and workshops. Counselors will go through your entire financial situation and help you develop a personalized plan to help deal with your money problems. The United States Department of Justice provides a list of approved credit counseling agencies.

Remember that reaching financial independence is a marathon and not a sprint. Don’t get discouraged by the slow process and stick to your plan. By maintaining your debt repayment and savings goals, you will work toward long-term investment plans, and soon you will celebrate financial independence!

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This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.