Treating your 30s just like your 20s in terms of money management is a big mistake. When you reach the milestone of beginning a new decade, it’s time to get serious about taking the reins of your financial life. The last thing you want to do is normalize debt so it becomes your ongoing way of life throughout your 30s. And that means you have to face any debt you’ve carried over from your younger years head-on. Here are five tips for defeating debt in your 30s.
Be Transparent About Finances
If you’re going to defeat debt, you have to acknowledge it. Firstly, this means addressing any debt denial you may be experiencing. It’s perfectly normal to feel intimidated in the face of debt—possibly for an unknown amount. But transparency will help you chart your journey.
It’s also important to communicate with your partner if you have one. In your 20s, your finances may have been primarily your business. But if you intend to build a life with someone, you both need to be completely honest about income, debt and future goals.
Pay More Than the Minimum Balance
Are you paying the minimum balance on any or all of your credit cards? If so, you’re only extending your debt repayment timeline and sinking yourself further into debt courtesy of accumulating interest. In an ideal world, you’ll be able to pay your balance in full each month so no debt carries over from month to month. But start with baby steps – pay more than your minimum each month.
Consider Your Options for Debt Relief
If you’re carrying significant credit card debt from earlier years, it’s worth exploring options beyond merely budgeting. These include:
- Debt consolidation: This strategy involves taking out a lower-interest loan to pay off high-interest credit card debts. Its success depends on then repaying this loan.
- Debt settlement: Debt settlement typically involves working with a partner like Freedom Debt Relief to save up enough money to negotiate with creditors for a lower settlement.
- Balance transfer: Transferring your balance from a high-interest card to a low-interest card can help make repayment more manageable. However, doing so does require consumers to pay a fee.
- Cash-out refinance: Homeowners can refinance their mortgages and take out the difference in cash, which they then use to address their high-interest debts. Mortgage repayment takes longer, but at a lower interest rate.
Trim Non-Essential Expenses
There’s no wrong time to evaluate your non-essential spending. For example, by the time you’re in your 30s, you may have racked up numerous cable and streaming charges—possibly even without realizing how significantly they add up. As USA Today notes, “adding up the cost of all your services can be a sobering reality check,” even if each seems relatively harmless on its own. Apply this same principle to food and travel costs, then cut what you can.
Keep Building Your Emergency Fund
Emergency funds tend to fall to the bottom of the pile when people are ordering their monthly expenses by priority. Why? Because emergencies always seem hypothetical until they happen. Then they’re real, and there’s usually a bill to pay.
In your 30s, you should actually be increasingyour emergency fund contributions. A good rule of thumb is to have at least three to six months’ worth of living expenses, although more is always merrier when it comes to savings. Trimming the non-essentials will help you pay down your debts and hopefully bolster your emergency fund.
Your 30s are the perfect time to defeat debt once and for all. Use these five tips as you work toward becoming debt-free.