Stretch Your Dollar: The best ways to pay off debt in 2021

Stretch Your Dollar

(WTNH) — We are four weeks into the new year. If you haven’t put your financial goals into motion yet, what are you waiting for?

A Fidelity Investments survey found that nearly 4 in 10 people are in “survival mode” in 2021.

Researchers found that:

  • 46% of people are worried about the pandemic’s impact on the economy.
  • 35% are worried about unexpected expenses.
  • 34% are concerned about rising costs of food and other day-to-day daily essentials.

The good news is, if you fall into any of those categories, it’s never too late to set yourself on the path for success.

“Setting a goal to save is great,” said Stacey Watson, Senior Vice President of Life Events Planning at Fidelity Investments. “Having a specific amount to save each week can help you track your progress and watch small changes add up.”

Financial Consultant John Caserta suggests there are two ways to pay down debt: Tackle the higher interest rate first method, which may instantly save you money on interest, or start by knocking out the bills with the smaller balances first.

“I wouldn’t underestimate the psychological win paying down those smaller debts first, developing that momentum to tackle that bigger debt down the road.”

It can be overwhelming having so many bills with different deadlines, so he suggests consolidating if you can, then developing a plan from there. Just beware of the timelimits on those 0% APR credit cards.

“The reality is, if you don’t pay it off in that timeframe that zero percent exists, you may end up in a situation where you may end up paying more than you would’ve originally paid.”

Another healthy financial habit to adapt? When you have a big financial event coming whether it’s a vacation, an upgrade at home or the holidays, have a repayment plan build into the purchase. Give yourself X number of weeks or months to pay that project off and stick to it. The advanced plan may also help you budget a reasonable spending limit.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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