💰Get rid of debt

Jun 30, 2024

Happy July, Money Makers! This year is flying by faster than you can make money off a high yield savings account but don’t underestimate the power of starting now instead of never. It’s a great day to get ahead of your finances so your future self will thank you. Let’s get into it!

- Milan


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“Debt-to-Income Ratio (DTI)”

Today, let's talk about an important financial metric: the debt-to-income ratio (DTI). The DTI ratio measures the amount of your monthly income that goes towards paying off debts. It's calculated by dividing your total monthly debt payments by your gross monthly income and then multiplying by 100 to get a percentage. Lenders use this ratio to assess your ability to manage monthly payments and repay debts. A lower DTI indicates that you have a healthy balance between debt and income, making you more attractive to lenders for loans and credit.

Managing your DTI ratio is crucial for maintaining financial stability and securing favorable loan terms. To lower your DTI, start by paying down high-interest debts, which can reduce your monthly obligations and free up more of your income. This is called the Avalanche Method and you can learn more about it here. Additionally, avoid taking on new debt and consider increasing your income through side hustles or freelance work. Regularly monitoring your DTI can help you stay on track and ensure that your debt levels remain manageable, paving the way for a more secure financial future.


Negotiate Lower Interest Rates

High interest rates can significantly increase the amount you owe over time, making it harder to pay off your debt. By negotiating a lower rate, you can reduce your monthly payments and save money on interest, allowing you to pay off your debt faster. Start by contacting your credit card company or lender, and explain your situation. Highlight your good payment history and loyalty as a customer, and don't be afraid to ask for a lower rate or explore other options they might offer.

Successfully lowering your interest rate can lead to substantial savings, which can be redirected towards paying off your principal balance more quickly or boosting your savings. It’s a straightforward strategy that many people overlook, but it can make a big difference in your financial health. Remember, lenders want to keep good customers, so it’s often in their best interest to accommodate reasonable requests. If you’re looking to get ahead of your money, here’s how.


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