3 smart debt relief moves to make this June (and 3 to avoid)
June is upon us and soon, summer will be in full swing. However, if you have debt that you're having a difficult time dealing with, you likely have other things on your mind. But, you're not alone. Debt is a normal challenge to face across the United States and there are multiple solutions to it - albeit, some more effective than others.
With so many moves you can make with regard to your debt, it can be difficult to determine which moves are smart and which you should avoid, particularly now in which inflation is still a concern and interest rates are high. Against this backdrop, it's important to know which smart debt relief moves to make this June and which to avoid.
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3 smart debt relief moves to make this June (and 3 to avoid)
To secure the most effective debt relief option, it's critical to know what steps to take and which ones to avoid. Debt, especially high interest debt, can be challenging to deal with. But, there are a few smart moves you can make to start putting your debt behind you this June.
Act now
First and foremost, you should act now. If you wait too long, you could be facing higher interest rates ahead. That's because the Federal Reserve meets on June 11 and 12, 2024 to discuss monetary policy. And, with inflation remaining persistent, the Fed could decide to increase its benchmark federal funds rate following the meeting.
If that happens, interest rates on any variable-rate debts you have could rise as your lenders may use the federal funds rate as a benchmark for what they'll charge you. So, act now before rates have a chance to go up and your debts become more expensive.
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Discuss your options with a debt relief expert
Making payments on your debt may be challenging in today's inflationary environment. But, a debt relief expert can help. There are several debt relief solutions that could be worth consideration. And, a debt relief expert will be able to help you navigate those solutions to find the one that best fits your needs. In doing so, you may be able to cut the monthly cost of your debt, making it easier to afford today's higher cost of living.
Consolidate at a lower rate
Another thing to consider that can produce savings in today's inflationary environment is debt consolidation. "Consolidating debt streamlines your finances by bundling multiple obligations into a single, potentially lower-interest payment," explains Michael Broughton founder and CEO of the credit building app, ALTRO. "This approach can enhance your cash flow management and could accelerate your debt repayment journey."
While there are smart moves you can make with your debt this June, there are also a few moves you should avoid. This includes:
Adding new debt to the mix
Considering today's high interest rates, it's wise to avoid taking on any new debt. After all, taking on new debt means that you could find yourself paying high interest rates on another account or building higher balances on your current accounts - increasing your monthly debt expense.
Making minimum payments
Simply making minimum payments is typically a bad idea. But, doing so with today's high interest rates can become even more costly. Since these types of payments will be used to pay interest, you'll make little headway on your principal balances unless you make larger payments - which means you could be in debt for quite some time if you don't adjust your payment strategy.
Ignoring your debt
Finally, it's never a good idea to ignore debt. Ignoring debt "can lead to accumulating interest, late fees and potential damage to your credit score," explains Evan Patzer, a retirement strategizing specialist at the financial planning firm, LifeWealth Solutions.
And, if you ignore your debt for too long, your lenders may take you to court and win a judgment. If that happens, it could put your income and property in jeopardy. So, it's best to work with your lenders if at all possible, and if not, reach out to a debt relief professional to address your debts before any of the above consequences have a chance to come to fruition.
The bottom line
Debt doesn't have to be challenging. Making wise decisions this June with your debt could help you reduce your monthly obligations while fast tracking your debt payoff journey. So, act now and get in contact with a debt relief provider. Or, use a debt consolidation loan to reduce your monthly expenses and simplify the payoff process. But, whatever you do, don't add new debt to the mix, avoid minimum payments and never ignore what you owe. Find out how a debt relief expert can help now.
