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Breaking Free From Debt: Your Ultimate Guide to Financial Freedom

Are you feeling overwhelmed by your finances and struggling to gain control over your budget? You're not alone. Many people find it hard to break the cycle of debt, but there is hope. In our webinar, Breaking Free From Debt, we address budgeting best practices, debt management strategies and free resources available to help you reach your financial goals.


Table of Contents

What is Debt? Is it a Bad Thing?

Debt, is basically, the amount of money borrowed by one party from another. While the notion of owing money might instantly make you cringe, it's important to note that not all debt is bad. Sometimes, people borrow money so they can make large life investments like buy a house or pay for school, which they couldn't do without a loan. However, the challenge arises when you borrow more money than you can comfortably pay back, casting a shadow over your financial freedom and stability.

Knowing what kind of debt you have and making a plan to pay it back little by little is key. Controlled and thoughtful borrowing can serve as a boost towards achieving personal and financial milestones and turn debt into a helpful tool for your future. 

What Exactly is a Budget and What Are the Best Ways I Can Track Spending?

A budget is the blueprint for managing the money coming in and out of your account. Think of it as your financial roadmap, designed to direct where your money should go—from paying bills to saving for a home. The first step to is knowing where your cash is going right now.

When it comes to managing your money, there are a bunch of tools—like budgeting apps and spreadsheets—that can help show you the way. At Georgia United our robust Online Banking provides free budgeting resources to our members, where you can set up a strategy to pay off your bills and set savings goals. These tools are like having a buddy to help you keep track of how much you're spending compared to your budget. Getting into the habit of checking on your spending helps you make smarter choices that will fit with your financial goals. 

I Have a Lot of Monthly Debts. Where do I start?

Navigating large monthly bills, like credit card debt requires a blend of strategy and discipline. The first step to tackling debt is to figure out how much you owe, who you owe money to and the interest rates you’re being charged. Some common debt payment strategies are the snowball and avalanche methods, and debt consolidation. 

The snowball method, encourages you to pay off your debt from smallest to largest. This method focuses on the quick wins of clearing out your balances one after another. Once you have finished paying off the smaller balance, you then move onto the next bill until you have paid everything off. Alternatively, the avalanche method, prioritizes debts with the highest interest rates, and then work your way down, saving you more money on interest in the long term. Both ways have their benefits, and the right choice depends on what feels best for you and your unique situation.

Debt consolidation is a process in which multiple debts are combined into a single loan payment with a lower interest rate. Loan refinancing and transferring credit card balances are a couple of common ways you can consolidate debt. This single bill can be beneficial if you have multiple debts at various financial institutions with higher interest rates. However, if you tend to overspend then this method could be risky because of the perceived financial freedom of only having one bill. 

Most importantly, the foundation of any successful debt reduction plan is to stop adding more debt. Making regular payments and watching your spending will slowly but surely turn that big pile of debt into something much smaller and more manageable, eventually freeing you from debt altogether.

How to Fix My Credit Score?

Fixing your credit score requires patience and a strategic plan. First, take a good look at your free credit report and scan it for any items that may be impacting your score. If you catch an issue on your credit report, you can dispute it online with credit reporting companies and they will start an investigation. After that, the main way to fix your credit is to practice good money habits. Keeping small balances on credit cards and paying them off completely each month not only will boost your score, but also show lenders that you are good at managing your money, making you a valuable candidate for more favorable loans in the future. 

Another easy method is to do a credit card balance transfer and move high interest rate credit cards to a lower interest rate one. Balance transfers can reduce your monthly payments and consolidate numerous credit card bills into one combined monthly payment. Just make sure to find a card with no annual fee, low or no balance transfer fees and an extended period of low percentage annual percentage rate. 

Keep in mind, fixing your credit score takes time and is more like a marathon than a quick dash. Sticking with these habits over time will lead you to better financial health and a stronger credit score.

Let Your Money Work For You

The path to financial well-being isn't always easy. At Georgia United Credit Union, we understand and are here to help. We offer products and services specifically designed to help you get out of debt, like no balance transfer fees on our credit cards and loan refinancing options. We also provide members the opportunity to skip their loan payment because we know that life happens and sometimes you need some room in your budget.

We are dedicated to providing you the tools and resources you need to finally break free from debt. Schedule an appointment to speak with our team about your financial needs today or give us a call at 888.493.4328.


Content provided for informational purposes only and should not be interpreted as legal advice on any subject matter.