New Year’s resolution: Debt free in 2015

Farm Forum

BROOKINGS — According to a survey conducted by GoBanking Rates about 25 percent of individuals include paying down debt on their 2015 list of New Year’s Resolutions.

“Paying down debt not only helps your credit score, which can lower interest rates on future loans, but also relieves a lot of stress on individuals and families,” said Carrie Johnson, Assistant Professor & SDSU Extension Family Resource Management Specialist.

If you’re among the 25 percent, Johnson shares some smart money tips to help you achieve your goal.

Tips to paying down

Know How Much You Owe: Knowing what debts you currently have is the first step in becoming debt free. You need to know who you owe and how much you owe them.

Johnson suggested that readers use a net worth tool found on to help them organize their debts and encouraged them to update this tool annually.

Stop Digging Deeper in Debt: If you are truly trying to get out of debt, stop charging more. Use cash for purchases and do not put purchases on a credit card.

Make a Plan After: Once you determine how much you owe, it’s time to decide how you are going to pay off or pay down, your debt.

“It isn’t enough to just say you are going to pay off debt; you really need a good plan to see how you are going to get there,” Johnson said.

She said there are many online tools to help you visualize how long it will take to pay off debt and offer different methods to paying off debt.

A monthly budget is key to this plan. “A budget helps you track your income and expenses,” Johnson said.

Visit for a monthly, online budgeting tool.

Be Realistic: We would all love to pay off all of our debt within a month, but we know that isn’t very realistic. When you are making your plan, realize that it may take all year or even longer to be debt free.

Johnson said there are several questions you need to answer to understand what debt free means to you.

“Can you truly be debt free, or are you just planning on getting rid of higher interest rate credit card debt? You probably won’t be able to pay off a mortgage or student loans in one year. How drastically are you planning on changing your current standard of living? Where are you going to find the extra money to pay down debt? After tracking your expenses, can you find extra money to use towards your debt?”

Get Help if Needed: Find a credit or debt counselor to help you if needed. If you have more debt than you can possibly try to tackle yourself find a professional who can help you through the process.

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