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Knocking out debt at the start of the new year

Posted at 8:40 AM, Jan 14, 2019
and last updated 2019-01-14 10:48:15-05

TUCSON, Ariz. — Over the holidays some of you may have racked up that credit card to buy gifts and prepare for holiday meals. And now starting off the new year, you may be left with a little bit of debt.

Todd Anderson, the managing partner at Anderson Financial Group says its simple. Keep track of what you're buying. When it comes to debt, ignorance is not bliss.

"The thing that I want everyone to think about more than anything is to plug your income leaks. Because debt happens, we know that. The question is, is it the debt of timing or is it a debt of lifestyle," said Anderson.

Anderson says, how to get rid of your debt comes down to figuring out how to better use your money first.

Here are some tips Anderson has on what to avoid:

  • Store-based credit cards, due to their high interest rates.

"So when we talk about plugging your income leaks, that's one of them. It's avoiding high-interest debt. Just about any store these days will take a Visa card, MasterCard, American Express, those will typically be at lower interest rates than your typical department store card," said Anderson.

  • Consolidating, refinancing or transferring debt.

"Debt consolidation isn't necessarily a bad thing, if we can re-consolidate that back down to a lower interest rate, for instance, But unfortunately, the tendency happens to be that we consolidate that debt and we charge up again. So we haven't gotten rid of the debt we've just moved it," said Anderson.

Some management tips to improve how you monitor your money:

  • Use your banking app so your phone can alert you of your spending activity.

"Every credit card can send you an alert if you'd like it to. And so sometimes its just an awareness situation," said Anderson.

  • Simply carry cash.

"I mean it's a foreign concept to an entire generation these days, but carry cash. Starbucks - use cash. Lunch - you use cash. Avoid the temptation of those impulse buys," said Anderson.

  • Lastly, create a cap. An amount you make, based on your budget, that you do not go over.

"For some people it's $10, for some people its $10,000, we can't dictate that based on your need and your income. But the fact of the matter is, everybody does have a number. So what I encourage everyone to do is to know your number and you never make a purchase above that number without a cooling off period," said Anderson.

If you can live without it for a week or two, its probably an impulse buy. But if you circle back around and end up needing it, at least there was some thought before buying it.