With 2023 in our rear view mirror, it’s time to kick off 2024 with some new year’s resolutions. Most resolutions can be as simple as working out more, eating healthier, saving money or starting a new hobby. While there are a million resolutions you could make, your WWFCU Financial Gurus have a suggestion for you: learning how to take ownership and control of your finances! Let us help you start taking the necessary steps to make 2024 your year for financial success!
Normalizing Talking About Finances
Discussing one’s finances has long been a sensitive subject and a topic most people try to avoid. If you find discussing financial matters stressful, awkward or simply taboo you aren’t alone! A 2018 Capital Group survey found that almost everyone would choose to discuss anything, including politics and religion, before discussing money and finances. The Financial Gurus are here to encourage you to break that stigma and normalize talking about your finances. Here are some tips that might help:
- Look for educational classes or seminars within your community.
- WWFCU recently hosted a presentation on Financial Wellness at the Westland Public Library. This is a great way to gather information, resources, and engage in group discussions about money matters. Plans are in the works to hold another presentation this Spring, so be on the lookout for a date and time!
- Try talking to someone you trust regarding your personal finances. Asking for advice from a family member, friend, or a financial counselor is a great way to become comfortable with talking about money matters.
- WWFCU has four certified financial counselors on staff to professionally assist you in reaching your goals and taking control of your financial health. For more information, give us a call to set up an appointment.
As the old saying goes, money makes the world go round. Everyone wants it and everyone needs it to take care of life’s basic necessities. Most consumers tend to borrow money to make big purchases, so you are not alone in having debt. According to Experian data collected in 2021, the average American holds a debt balance of $96,371. This statistic shows that many people are in the same situation, and no one should feel ashamed of their financial condition.
Paying Off High Interest Credit Cards & Loans
If you find yourself overwhelmed with multiple debts and you’re not sure where to start, we suggest increasing your minimum monthly payment or rolling up your debt. This method is also referred to as “snow balling” your debt.
The first step is to take a hard look at all of your debts, including credit card and installment loans. Determine which one has the highest interest rate and target this loan first. By looking at your monthly expenses and budget, you should have a pretty good idea of what you have left at the end of the month. (The WWFCU Financial Gurus can help you with starting a budget too!).
Let’s say you’ve found an extra $100 a month you can put towards your bills; you will want to apply this extra amount to your minimum monthly payment on the highest interest rate card or loan you have. If you can continue to do this every month it will help you pay the balance off sooner. Once the first debt is paid off, take the additional $100 plus your minimum payment on the paid off debt, and apply that to your next highest interest rate loan/credit card. Try to continue this process until all your debt is paid down. This technique can help you save significant amounts of interest if you keep up with it every month, which helps you keep more money in your pocket in the long run!
- Here is an example: You have a credit card with a $2,000 balance with an interest rate of 18% and a minimum monthly payment of $35.00. By paying just the minimum, it would take you 131 months (about 11 years) to pay that balance off and you would be paying $2,574 in interest. By using this snow balling technique, the addition of $100 to that minimum payment every month, you’d have the balance paid off in just 17 months and only pay $278 in interest. That’s a savings of $2,296! Utilizing a financial calculator is a great tool to help you get these figures. We have a loan payment calculator on our website under products and services that you can use to calculate trade lines.
WWFCU Offers Consolidation Loans
Wayne Westland Federal Credit Union offers consolidation loans, which could be a great solution to help you pay down your debts. A consolidation loan may be a good option for you if:
- You’re having trouble keeping up with multiple payments/bills and would find it easier to have just one payment each month.
- The minimum payments on your credit cards don’t seem to be bringing your balance down at all.
- You have high or varying interest rates.
The benefits of consolidation loans can be priceless. Consolidation loans can offer set monthly payments, lower interest rates than credit cards and can potentially save you money in the long run. Some other benefits include:
- Reducing multiple debts into one single monthly payment.
- Ability to pay off debt earlier due to lower interest rates (Rolling up your payments helps with this also).
- Potential to lower your monthly payments.
- Can improve your credit score.
- If you use collateral (equity in your home, paid off vehicle) you could qualify for an even lower rate and get those debts paid off even sooner.
With consolidation loans it’s critical not to fall back into old spending habits. If you are using a consolidation loan to pay off credit card debt, try not to use those cards moving forward unless absolutely necessary. Only charge what you know you can afford to pay off in full each month. Also, try not to extend the loan term length any longer than necessary. The goal is to get out of debt as quickly as possible, not to prolong it.
The path to better finances starts with changing your habits. Some of these changes will be easier than others, but if you stay committed to this transformation, you’ll end up with great money management skills that will serve you throughout your life – and just think you’ll have more money in your pocket too!
If you need help with creating a budget, debt management, consolidation loans, or other ways to start on your path to financial control in 2024, reach out to WWFCU and the Financial Gurus today. Don’t forget to ask about our consolidation loans and great rates!