Debt-Free Living – Strategies to Incorporate in Your Personal Financial Plan

debt-free living, financial freedom, financial planning
April 29th, 2024 0 Comments

Living debt-free is a dream for many Americans that can seem perpetually out of reach, but this doesn’t have to be the case. Minimizing or even eliminating your debt should be a cornerstone of any personal financial plan. In addition, when the best financial planning guidance is followed, you may be amazed at how quickly you can reach that debt-free goal line. 

The best financial plans begin with the expertise of a wealth and investment management professional, and this is where Saddock Wealth can step in and help. As an experienced and dedicated wealth management group, Saddock Wealth can provide invaluable expertise on all types of strategic financial plans, including how to eliminate debt in a strategic way that grows your wealth over the long term. 

Meanwhile, it never hurts to take initial steps towards a debt-free lifestyle, which starts by taking stock of your financial situation and what you can do next to pave the way towards complete financial freedom. 

The First Step is to Understand Your Current Debt Obligations 

When most folks think of outstanding debt, they think of the obvious, like credit cards or personal loans. However, debt entails everything from car loans to mortgage payments and medical bills to any payments you make on a routine or sporadic basis that includes interest.  

So, the first thing to do if you want to achieve a debt-free life is to make a list of your current debts. Be sure to account for the principal owed, the interest rates, and any additional factors (like fixed interest rates versus variable interest rates, future balloon payments, etc.). Essentially, you want to make note of any debt or loan where the underlying borrowing conditions may change in the future. 

Consider the Key Strategies for Debt Reduction 

Determining how to pay off your debt most effectively has more than one solution, and there are a few debt payoff methods to consider before moving forward. 

The Debt Snowball Method 

In this method, you prioritize paying off the debt with the lowest balance first, regardless of interest rate or other factors, while continuing to pay the minimum on other accounts. Once the debt or loan with the lowest balance has been eliminated, you can move on to the next lowest debt and progress from there. This effectively “snowballs” so that you are continually saving money on interest payments and is a good option if you have multiple debts – like multiple credit cards and /or mortgages. 

The Debt Avalanche Method

In this method, you prioritize your debt with the highest interest rate and pay off that loan or debt first before moving on to the next highest interest rate. This saves money faster and is a good option if you have similar outstanding balances spread out across multiple loans with drastically different (or high) interest rates. 

The Debt Consolidation Method

Best achieved with the assistance of a financial expert like Saddock Wealth, the debt consolidation method allows you to combine all your high interest debt into one monthly payment with a lower interest rate. This can save a lot of money in both the short term and the long term on interest payments. Additionally, it is a very good option across the board, especially for individuals concerned about outstanding debt and struggling to keep up with multiple payments. 

The Debt Relief Method 

Debt relief is another option that is best pursued with the assistance of a professional. Therefore, this entails changing the terms of your debt or outstanding loans to more favorable conditions. You should explore your debt relief options if you have several outstanding loans or debts – like medical bills, personal loans, or credit cards – that you do not expect to be able to pay off within five years or more. 

Achieve a Debt-free Life with Our Experts at Saddock Wealth  

Living a debt-free life isn’t impossible, but you need to start by implementing the right strategies to achieve your financial goals. Keep in mind that the above list of strategies is just the tip of the iceberg, and the best plan for your debt-free ambitions should be specifically tailored to your financial situation, risk tolerance, and what you want to achieve in the future. 

This is where Saddock Wealth can help.  

Reach out to our client-focused team today to start a discussion about how you can improve your financial situation from the ground up. Our team of financial experts can help you create a specific and detailed plan that works with your finances and your life.  

With guidance and assistance every step of the way, you’ll find that the path to a debt-free life isn’t as unobtainable as it may initially seem, and that financial security and financial freedom are well within your reach.  

Contact us today.  

Financial Planning