You already know how minor lifestyle changes can save money in a major way. But what about the big steps you can take to reach your goal of financial freedom? Professor Pig has a few tips to start you off on the right foot.
Moderate Your Mortgage
Earlier this year, the Fed indicated they plan to immediately raise interest rates by 0.25 percentage point and raise it further at each subsequent meeting this year. As the funds rate increases, your goal of homeownership can seem farther away. If you’re in the process of buying a home, ensure you’re getting the best rate by comparing rates from multiple lenders. If you already own a home, refinancing before rates go up can help you save thousands over the life of the loan. Be sure to ask about closing costs and other fees before you make the swap to ensure you’ll save more than you spend!
Study Your Student Loan Terms
For the 2021-2022 school year, rates on federal Direct Loans and older variable-rate loans have increased. Subsidized and Unsubsidized loans for undergrads are 3.73%, while Unsubsidized loans for graduate and professional students are 5.28%. Since the interest rate increase impacts the amount you’ll repay over the life of the loan, it’s an excellent time to review your loan agreements and prepare. If you have good credit, you may qualify for a lower rate with a private student loan, but keep in mind that private loans don’t offer the income-driven repayment option of a federal loan. A new payment plan could lower your monthly payment by several hundred dollars if you qualify.
Clear Your Credit Cards
If paying off credit card debt is one of your financial goals, plan to pay off as much of your balance as possible before rates go up. The higher interest rate will make your goal of being debt-free more expensive and take longer to achieve. One tried-and-true method of eliminating credit card debt is to pay off each balance from smallest to largest. Reach out to your credit card provider to request a lower interest rate if you cannot settle the entire balance this year.
Drive Down Car Payments
Refinancing your auto loan is another great way to save money! If your credit has improved in recent years, you may be eligible for a better, lower interest rate. If you can reduce your monthly payment, you may save hundreds on interest over the life of the loan.
Refocusing your attention on reducing or eliminating your most significant expenses can help put you on the road to financial freedom and reaching your other savings goals much faster!