According to the Federal Reserve, the average American household carries over $8,000 in credit card debt. Reducing this debt can significantly improve financial wellness and readiness for retirement.
Today, we dive into potential ways to reduce your debt and shield your family from it, too.
Debt Consolidation Strategies:
1.) Learn About Balance Transfers
A balance transfer is a way to potentially save you money on interest payments and simplify your debt by moving high-interest credit card debt to a card with a lower interest rate.
2.) Assess if a Personal Loan Makes Sense
Personal loans can make your payments more predictable and possibly reduce your overall interest by consolidating multiple debts into one loan with a fixed interest rate, often lower than credit card rates.
3.) Look into Retirement Plan Loans
Retirement plan loans can provide funds to pay off high-interest debt. They can have potential risks, like penalties and reduced retirement, so be sure to check with your Financial Planner.
4.) Set Up a Debt Management Plan
A structured approach, through a credit counseling agency, can help you pay off your debt faster and more efficiently. This will allow you the ability to set up a plan to consolidate your debts into a single monthly payment, often at a reduced rate.
5.) Tap into Home Equity
A Home Equity loan of LOC allows you to borrow against the value of your home. This will typically offer you a lower interest rate compared to unsecured loans. It will put your home at risk if you’re unable to repay the loan. Check with your Financial Planner to weight the risk vs. reward.
6.) Now, Shield your Family from Debt if your income were to disappear = Life Insurance
Things to ask yourself:
What would happen to your family’s financial obligations if you were no longer around?
Mortgage payments, education, day-to-day living expenses
How would your family maintain their current lifestyle without your income?
Think about the long-term impact on their standard of living and well-being.
Would your family have enough savings to cover immediate expenses?
The average funeral cost is between $7,000 and $12,000.
How would any residual debts be handled in your absence?
What legacy do you want to leave for your family?
Life Insurance can be a way to leave a gift for future generations.
Are you adequately insured based on your current income and financial obligations?
Review your policy with your Financial Advisor to ensure it aligns with your evolving needs and family situation.
Achieving financial wellness is about more than reducing debt – it’s about planning for the unexpected and securing your family’s financial future. Debt consolidation can offer immediate relief, and life insurance provides a safety net that ensures your loved ones are protected if your income were to disappear.
Remember, the peace of mind that comes from knowing your family is protected is priceless.
- Check back next week where we delve into the topic: Invest In Your Future
At Core Income, a dedicated FMO, IMO, or insurance brokerages dedicated to serving Advisors, their staff and their clients.
Our mission is to help advisors deliver financial certainty by supporting them through Actuarial Risk Management, Elite Responsiveness, and Collaborative Partnerships.
Contact Us: For more information or to schedule a consultation, visit our website at Core Income or call us at 800.541.7713.
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