Top Tips for Managing Debt

Presented by Marc Aarons

It won’t come as a surprise that 77% of American households have debt of some sort—especially as inflation hits a 40-year high and prices on just about everything skyrocket.

When you couple that with the fact that three in five people report living paycheck-to-paycheck, it’s easy to see the challenge facing American families this year.

That said, if you find yourself trying to tame consumer debt while living paycheck-to-paycheck, you’re not alone. The good news is there are small ways to ease the financial squeeze and lessen future fallout.

Here are five:

1. Avoid new debt. If possible, avoid new debt right now. As interest rates rise, save and pay cash for non-essential purchases.
2. Always pay on time. Consider enrolling in auto-pay when possible. Remember, payment history makes up 35% of your credit score, so it’s critical for your future financial health to make payments on time.
3. Activate the debt snowball. Here’s how it works. Make a list of your debts, with the lowest balance first. Pay the minimum payments on all but your smallest debt. Send extra funds there until it’s paid off, then use that money to throw at the next largest debt.
4. Add to your emergency fund. Building an emergency fund of 3-6 months of living expenses feels daunting—especially in this inflationary environment. But keep at it as you’re able! Every dollar you can set aside now will help you build a safety net and stay out of debt when unexpected expenses come your way.
5. Assess various side hustles. Paying off debt is one of my top tips for clients, but increasing income is close behind. Consider if a side hustle is right for you. The gig economy is exploding, and you can easily find a profitable side hustle to start with little or no money.

If you have questions or would like to discuss your financial situation to ensure you’re making the best decisions for you and your family, given the current climate, I’m here to help. Reach out anytime.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.