2024 has arrived, and it’s time to make fresh financial resolutions. If one of your financial resolutions is to stay out of debt in 2024, you have come to the right place. Today, we will discuss several tips to stay debt-free in 2024.
Financial tips to stay debt-free in 2024
1. Create a Stringent Budget:
Develop a monthly budget that includes all your income and expenses. Usually, people set a budget to get out of debt. But that shouldn't be the only time when you must create budget categories for your expenses. A personal budget helps you stay out of debt, save dollars, and build an emergency fund.
The trick is to develop a budget that works for your financial life. Do a thorough analysis of your budget at the end of every month. See if you spend more than the allocated funds on a specific category. Make adjustments in your budget accordingly.
2. Build an Emergency Fund:
Save 10% of your monthly income so you can have a significant amount in your emergency fund by the end of December 2024. Calculate the amount you need to cover your living expenses for six months. Set the deadline and amount you need to save accordingly.
Choose a high-yield savings account with a 4% interest rate and transfer a specific amount every month.
3. Live Below Your Means:
Avoid unnecessary expenses and strive to spend less than you earn. Embrace healthy money habits and a frugal lifestyle. This includes cooking at home with simple ingredients, buying what you need, reusing, and recycling.
4. Track Spending:
Keep a close eye on your spending habits to identify where you can cut back. Keep all the receipts in a folder and note them based on two factors:
Type of expense
The amount you are spending
These figures will help you make informed financial decisions later.
5. Avoid High-Interest Debt:
Focus on avoiding high-interest debts first to save on interest payments. Even if you are short of cash, try to avoid high-interest debts like credit card debt and payday loans. High-interest loans increase the likelihood of getting into debt due to the compounding interest.
6. Use Cash:
Consider using extra cash only for necessary expenses to avoid increasing your credit card balance.
7. Limit Credit Card Use:
Use credit cards only for necessary expenses. Make sure your credit utilization ratio is below 30%. Don't pay the minimum amount every month. Try to pay the total amount every month so that you don't accumulate debt in the future.
8. Negotiate Bills:
You should try to negotiate any kind of recurring bill, but some are easier to do so with than others. This is usually the case in businesses where customers can easily switch to a competitor. Some of these are:
Cable television
Cell phone connections
Newspaper
Insurance premiums
Interest on credit cards
9. Avoid Impulse Purchases:
Think twice before making impulsive purchases and prioritize needs over wants. If you want to buy a big-ticket item, wait at least one month before making a large purchase.
10. Regularly Review Your Finances:
Schedule regular reviews of your financial situation to make adjustments as needed. This includes your debts, investments, expenses, savings, budget, income, etc.
11. Educate Yourself:
Stay informed about personal finance, investments, and financial planning. If you are juggling multiple debts, read about debt consolidation, personal loans, balance transfer method, balance transfer fee, credit history, various debt payoff strategies, etc.
12. Invest Wisely:
Create an investment portfolio & consult with a financial advisor if needed. Invest in stocks, mutual funds, REITs, commodities, ETFs, etc. Avoid keeping money in one sector.
13. Cook at Home:
Reduce dining-out expenses by cooking meals at home. Watch YouTube videos on simple cooking recipes. You can also read articles online for getting amazing cooking recipes.
14. Refinance Loans:
Explore opportunities to refinance loans to secure better interest rates. The current refinance rate is 7% for a 20-year fixed-rate mortgage. According to CBS News, mortgage rates are expected to drop to 6%. So, that's a good time to refinance your mortgage loan.
15. Limit Subscriptions:
Evaluate and cancel unnecessary subscription services. Do you read all magazines and journals? Do you watch movies on all the OTT platforms? If not, it's time to reduce your subscriptions.
16. Comparison Shop:
Shop around for the best deals before making major purchases. Check out the price online and offline if you want to buy a gadget. Who is offering you the best price? Compare and then decide.
17. Avoid Cosigning:
Refrain from cosigning loans, which could put your credit at risk. Be it your children or your friends, avoid cosigning unless you are sure of the borrower's capability and the intention to repay the loan.
18. Monitor Your Credit Report:
Monitor your credit report for inaccuracies and signs of identity theft. Dispute the errors on your credit report and remove the negative items to boost your credit score.
19. Set Financial Goals:
Define short-term and long-term financial goals and work towards them.
- Short-term goals - Buying a car or investing in mutual funds.
- Long-term goals - Buying a house.
20. Negotiate Debt Settlements:
If you have multiple debts, negotiate with creditors for possible settlements or payment plans on a personal loan. Call 800-530-OVLG, get a free consultation and enroll in a debt settlement program. Our financial coach will negotiate with your creditors and settle your credit card debt.
21. Increase Income:
Explore opportunities to increase your income through side gigs or additional skills. Create a freelancer account on Upwork or Fiverr to get new assignments.
22. Say No to Unnecessary Debt:
Commit to saying no to unnecessary debt and make informed financial choices.
Remember, staying out of debt is an ongoing process that requires conscious financial decisions. Regularly reassess your financial habits and adjust as needed to stay on the path to financial stability.
