Debt Repayment Tops List of New Year Goals

National Foundation for Credit Counseling® (NFCC®) poll uncovers top financial priorities for 2017.

The rise of consumer confidence in the last quarter of the year may have led many to open their wallets more freely during the holiday shopping season. For some, that meant more frequent credit card use. The beginning of the New Year means that it’s time to pay the tab for the last one. Credit card debt that carries over from month to month brings interest and fees that are added to the cost of purchases, making it more of a challenge to manage. The year-end online poll conducted by the National Foundation for Credit Counseling® (NFCC®) revealed that four-fifths (80%) of those who responded have placed debt repayment at the top of the list for goals to achieve in the year ahead.

“It’s a sobering moment when the credit card bill arrives in January and reveals a mountain of debt fueled by holiday spending,” said Bruce McClary, spokesperson for the NFCC. “January is a good time for planning to get debt under control before it becomes unmanageable.”

While not an easy task, there are some tips that can help support a successful plan to repay debt this year. Here are a few things to consider:

1. Examine every detail related to each debt. Balances, transactions, interest, fees, terms and conditions. Don’t leave any stone unturned, and be sure to ask questions along the way. Knowledge is power when managing debt, so it is best to have the most information before putting a plan into action.
2. Faster is better. High interest rates and lengthy repayment schedules are a costly combination, so make plans to accelerate the payoff of balances so they cost less over time. How the goal is reached can be through the ladder method or the popular debt snowball process. Either way, the key is to pay more than the minimum whenever possible. Whatever it takes, it’s worth the extra effort to find room in the budget to make that happen.
3. A dead end doesn’t mean there are no solutions. If there is no extra money to be found in the budget or elsewhere, and debt still looms large, reach out to get help from trusted sources. Talk to the lender, but also work with a nonprofit credit counseling agency to uncover possibilities for a balanced budget and an affordable way to manage debt.

Repaying debt can be a very long process, especially when it involves a mortgage or auto loan. Making a plan is the first and most important step on that journey. Putting the plan in motion should be the next priority, and one that shouldn’t wait. Over time, the results will be the reward for making the plan and being committed to the goal.

The actual poll question and results are as follows:

“Among the following choices, what is your top financial priority in the New Year?”

1. Paying down debt 80%
2. Growing personal savings 5%
3. Buying a home 10%
4. Buying a car 2%
5. None of the Above 2%

Note: The NFCC’s December Financial Literacy Opinion Index was conducted via the homepage of the NFCC website (http://www.NFCC.org) from December 1-31, 2016, and was answered by 1,834 individuals.