By MomWise Ogechi Ucheatu
Are you at a point where you feel like you work so hard, yet you are unable to save enough? Do you feel like you constantly have to live from pay check to pay check never really having more than enough? The issue of debt is very real and the numbers are quite concerning. According to USA Today, “the average American household carries $137,063 in total debt, which consists of about $16,883 in credit card debt, $29,539 in auto loans, $50,626 in student loans and $182,421 in mortgage loans.” The question becomes, how do we reduce debt and finally break free from the paycheck to paycheck cycle?
As Mothers and co-partners in making decisions, financial planning should be at the top of our priority list. Each year, we should make conscious efforts to look through the numbers, determine our current financial standing and devise ways to reduce our total debt. The decision to pay off a credit card balance or readjust your monthly mortgage payment can have a positive net effect on your household income and this can also increase your ability to save.
At the beginning of this year, my husband and I sat at the dinner table and we had a very candid conversation about ways that we could reduce our total debt. Our two main debt areas were the mortgage and our auto loan. After looking closely through our mortgage statements and monthly mortgage payments, we soon realized that when we purchased our home 5 years ago, we were not fully educated about the impact of a Private Mortgage Insurance (PMI) on our long-term mortgage payments. PMI is simply a protective insurance required by the lender when a borrower makes a down payment that is less than 20 percent.
At the point when we purchased our home, the loan advisor did not fully educate us about the pros and cons of PMI so we signed those papers and moved into our home with excitement! Fast forward to 2018, we realized that we had been paying for the PMI which did not count towards our principal. We were pretty much like throwing money away which could have been used for other household needs. Therefore, we called the bank, determined our total PMI, and then paid it off in full. This in-turn, reduced the amount of our monthly mortgage payment.
Debt is a very real issue. The bible says in Deuteronomy 15:6, “The Lord your God will bless you as He has promised, and you will lend to many nations but will borrow from none.” Therefore, it is so important for wives and mothers to have these tough conversations with their spouses and take practical steps to reduce debt.
For some families, it might be a decision to consolidate your credit cards and pay off the balance. For others, it could be a discussion about your auto loan. Would you rather have less debt or purchase a newer model of your car which might come with a higher monthly payment? These candid conversations can help us rise above debt and live free from the pay cycle.
To learn more about ways to reduce debt, please visit the links below for some practical tips and tools on debt management:
- How to pay off Credit Card Debt: https://bettermoneyhabits.bankofamerica.com/en/debt/how-to-pay-off-credit-card-debt-fast
- How to Reduce Student Loan Debt: https://www.studentdebtrelief.us/knowledge-base/how-to-reduce-your-student-loan-payments/
- How to get rid of Private Mortgage Insurance: https://www.bankrate.com/finance/mortgages/removing-private-mortgage-insurance.aspx
- How to pay off your Car Loan early: https://www.payoff.com/life/money/6-ways-to-pay-off-your-car-loan-early/