April is Financial Literacy Month – Step 2 of Building a Solid Financial Foundation by Chantay Moore
The second step of establishing any financial plan is to manage your debt. Notice I didn’t say pay off all your debt, I said manage it. Living above our means and constantly paying for things on credit, has put most Americans in a cycle of debt that they will rarely see a way out of because of the theory compounding interest. Its interesting most creditors are big financial institutions like banks. Banks charge us upwards of 18% on average to have a credit card with them, but, pay us less than 1% when we save our money in their savings accounts. Then they tell us, “Oh, just pay the minimum balance on your credit card or loan”, because they know they will profit thousands of dollars more on the interest that we pay on our debt to them than the actual principal being paid back.
We believe in ending this cycle of debt. First, let’s stop spending money we simply don’t have. Ask yourself, “Do I currently have enough cash to pay for this item outright?”. If you don’t have the money to buy it in cash, then you don’t need to buy it at all. Next, let’s put a plan in place to pay off our debt, one balance at a time. List out of all your debts balances in order by interest rates from highest to lowest. Plan to pay the minimum amount due on all debts and only apply any extra funds to the highest interest rate debt first. Continue this process until that first debt is paid off and then apply it to any other debt balances 1 by 1, until all your debt is paid off. We’d be happy to help you put together your debt reduction plan, speak with one of our licensed financial professionals: https://www.nafls.com/financial-advising-services/
Please feel free to reach out to Chantay Moore directly at: