Strategic Financial Resolutions for Someone With Debt
- You can set financial goals at any time—it doesn’t have to be at the start of a new year.
- Worthwhile financial goals include paying down debt, following a budget, and putting more cash into your savings account.
- As you work toward your goals, you’ll build new habits, which may help you pay off your debt sooner.
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Many people set resolutions at the start of the new year. But you don’t have to wait until next January to commit to goals that help you improve your life. If you’re currently navigating debt, it may be helpful to choose one or more financial goals to work on.
Are you looking to improve your financial wellness? Here are a few strategic financial resolutions for someone with debt.
Reduce Your Debt
Debt can stand in the way of reaching other important financial goals. Committing to reducing or getting rid of your debt is a great strategic resolution that can help you get closer to the financial future you want.
If you’re setting a goal to pay down your debt, you’re in good company. According to Fidelity Investments’ Financial Resolutions Study, 36% of those polled plan to pay down their debt this year.
To make a realistic debt repayment plan, you’ll need to know where your finances stand, which includes knowing how much debt you have. But don’t let your total debt balance overwhelm you.
Want to make your debt feel more manageable? Break your larger debt payoff goal into smaller, more manageable goals. For example, when creating a debt repayment plan, consider setting smaller debt payoff goals to focus on.
Let's imagine you have $12,000 of debt you need to pay off. You might commit to eliminating $3,000 worth of debt within the next 10 months. That works out to a much more manageable $300 per month. Smaller goals can feel more approachable.
Once you pay off your first $3,000 of debt, you can focus on eliminating another $3,000 of debt.
As you reduce the amount of debt you owe, you’ll save money on interest and be much closer to reaching financial freedom.
Spend Less Money
Deciding to spend less money is another strategic financial resolution for those tackling debt. It’s not uncommon for those in debt to struggle with their spending habits. But you can reel in your spending by creating new habits.
Reducing your spending could allow you to put more of your money toward debt repayment. Many people lack a clear picture of their spending habits. You can determine which spending habits need to change by reviewing your spending over the past six to 12 months.
You may be making frequent impulse buys, paying for services you rarely use, or paying more than you realize for some purchases. Take a look at your bank and credit card statements to see what changes you may want to make.
Ready to change your spending habits?
Here are some actions you can take to reduce your spending:
Cancel subscription services and memberships you rarely (or never) use
Pause and rotate some services, like streaming apps
Downgrade to a cheaper plan or service
Negotiate the cost of some of your bills (like internet or cell phone service)
Create and Follow a Budget
Budgeting is a strategic financial resolution that aligns well with the goal of spending less money. Budgeting can make a big difference in transforming your finances. New to budgeting? It’s never too late to start. Following a budget could help you achieve a debt-free life sooner.
Cutting out unnecessary purchases, reducing impulse purchases, and setting new spending limits are all strategic moves to free up more money for debt repayment. It can take time to adjust to following a budget. But it’ll get easier the more you practice.
Be sure to include debt repayment in your new monthly budget. You may better stay on track toward your financial goals by treating your debt payments as bills that must be paid.
Save More Money
No matter where you are in your financial journey, it can be beneficial to have emergency savings. When you're dealing with debt, it may feel like building a savings fund isn’t a top priority. But if you save more money, you could avoid taking on new debt if an unexpected expense pops up.
Consider committing to saving for emergencies. If you’re paying down debt, but don’t yet have an emergency fund, even setting aside a small portion of your income every month could help. It’s okay to start with a small savings goal.
You might commit to contributing $500 to your savings account within the next six months. That works out to about $83 a month, or just about $20 a week. You can always set a new, bigger goal after you save your first $500. Every dollar you save adds up and will make a difference in improving your financial health.
How You Manage Your Money Matters
It’s possible to change your current financial situation. The best way to do that is to find areas where you need to improve and commit to making small, but lasting changes.
Reducing your debt, spending less money, and saving for emergencies are all excellent financial resolutions that could help you improve your financial wellness.
If you need guidance as you navigate your debt journey, don’t be afraid to ask for help. You don’t have to do it all alone. It can be helpful to speak with an expert. Once you know more about your options for debt relief, you can make more informed decisions.
Author Information
Written by
Natasha Etzel
Natasha is a contributing writer for Freedom Debt Relief. She is a veteran professional financial writer. She provides realistic strategies to help readers improve their knowledge and change their financial situations.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How do you reset financially?
When looking for ways to clean up your finances, sometimes you might feel like you need a more drastic reset of your financial life. Doing a reset of your personal finances might include filing for bankruptcy, enrolling in a debt management plan, or settling your debts. Debt settlement means getting your creditor to agree to accept less than the full amount you owe but consider it payment in full. You can negotiate your own debts, or work with a professional debt settlement company like Freedom Debt Relief.
Is the avalanche or snowball method better?
The debt avalanche method of debt repayment is better than the debt snowball method if saving money is your goal. The debt avalanche approach focuses on paying off debt with the highest interest rate first, so you could save money on interest and pay off your debts faster.
The debt snowball method doesn't focus on interest savings. That's because you start working on paying the debt with the lowest balance first. You may leave your high-rate debts for later in your repayment process, especially if they have large balances. The benefit of this approach, though, is that paying off small debts could help you stay motivated.
How do I get back on track with debt?
There are two ways to get ahead financially: Spend less or earn more (or both). The idea is to free up more money to put toward debt repayment. Paying more on your unpaid debts could help you get your accounts current sooner. If you can’t get a handle on your debt no matter what you try, explore debt settlement. This is when you convince your creditor to accept less than the full amount you owe but consider it payment in full.