Erin Cox, an associate Extension specialist for Family and Community Economics at Virginia Cooperative Extension, shares valuable insights to assist consumers in the new year. By creating a plan, making a budget, and sticking to it, one can take control of their finances. Health and financial well-being are closely intertwined, and it's crucial to be proactive rather than passive with money matters. If possible, seek help from those with successful financial management skills.

Empowering Consumers to Tackle Personal Debt in the New Year

Create a Plan and Stick to It

Having a well-thought-out plan is the first step towards better financial management. It allows you to set clear goals and track your progress. By making a budget, you can allocate your income effectively and identify areas where you can cut back or save. For example, consider tracking your daily expenses for a week to get a clear picture of where your money is going. This might reveal unnecessary spending habits that can be adjusted. Sticking to the plan requires discipline and self-control, but the long-term benefits are worth it.Another aspect of creating a plan is setting financial goals. These could be short-term goals like saving for a vacation or a long-term goal like buying a house. Having specific goals gives you something to work towards and helps you stay motivated.

Pay Off Credit Card Debt Quickly

The snowball method of debt repayment is highly effective. Starting with the smallest debt first gives you a sense of accomplishment as you quickly eliminate one debt after another. It also provides psychological motivation to keep going. For instance, imagine you have three credit card debts - one of $1000, one of $2000, and one of $3000. By focusing on the $1000 debt first and paying it off quickly, you gain momentum and confidence. This approach can help you get out of debt faster and reduce the overall stress associated with debt.In addition to the snowball method, it's important to make consistent payments towards your credit card debts. Even if it's a small amount, every payment counts and helps reduce the balance. Consider setting up automatic payments to ensure you never miss a due date.

Be Cautious of "Buy Now, Pay Later" Options

While "buy now, pay later" options may seem convenient, they often lead to overspending. Consumers often underestimate the total cost of their purchases when spread out over time. For example, a $100 purchase with a 0% interest payment plan for 6 months might seem affordable, but if you end up making additional purchases during that time, the total cost can quickly add up.Moreover, missing a payment can result in steep fees and penalties. These additional costs can further burden your finances and make it harder to get out of debt. It's important to be mindful of your spending and only use these options when necessary.

Use Your Skills to Create Gifts Instead of Buying

Offering a lesson or creating a handmade gift using your skills can be a meaningful and cost-effective alternative to buying gifts. For instance, if you're good at painting, you could create a custom painting for a loved one. This not only shows your thoughtfulness but also saves money.As Erin Cox mentioned, one of the greatest gifts she received was a "make and take" dish. Such gifts have a personal touch and are often cherished more than store-bought items. It's a great way to express your creativity and build stronger relationships.

Virginia Cooperative Extension's Help in Personal Finance Areas

Budgeting is a fundamental aspect of personal finance, and Virginia Cooperative Extension provides valuable information on the best practical ways to track income and expenses. This helps individuals manage their money more effectively and make informed decisions about their spending.Debt management is another area where the extension offers useful information. From various strategies for paying off debts to tips on avoiding new debts, they provide comprehensive guidance to help consumers get out of debt and stay out of it.Estate planning is also an important service offered. Planning for the future and having proper documents in place, such as a will and estate plan, ensures that your assets are distributed according to your wishes and provides peace of mind.Youth programming is focused on educating young people about the basics of finances from an early age. Through simulations and education, they help instill good financial habits in the next generation.Community financial education involves partnering with services to teach basic money skills. This helps the entire community improve their financial literacy and make better financial decisions.Other resources like the Master Financial Education Volunteer Program, "How to Make Your Money Go Further, 2020", "Managing Prosperity, 2022", and the Farmer Financial Health and Wellbeing Assessment provide additional support and tools for financial management.About Cox: Erin Cox is an associate Virginia Cooperative Extension specialist with a master's degree in social work and 13 years of experience as an agent in the field. Her work has allowed her to identify community challenges and develop innovative solutions to complex financial issues.Interview: To schedule a live or recorded interview, contact Margaret Ashburn in the media relations office at mkashburn@vt.edu or 540-529-0814.