Unlocking Financial Freedom: Overcome Debt with Savings Strategies That Work for You

By: Ruth Cedeno, NYLAG Senior Financial Counselor and Brendan Regan, NYLAG Financial Counselor

Since the pandemic, New Yorkers have become increasingly reliant on credit card debt to pay for necessities. According to a recent reportby the New York City Comptroller's office, credit card debt in NYC is 11% higher than in August of last year. Many families are increasingly struggling to save money from their paychecks every month, focusing instead on paying for necessities like food, clothing, and housing.

We know that sometimes there will be challenges beyond our control,like income disparities, educational inequities, predatory lending, and limited access to homeownership. We also know these challenges disproportionately affectcommunities ofcolor, creating what is called a racial equity gap. However, at FEAU we believe we can help you navigate these financial hurdles more effectively by showing you practical tools that you can apply to your financial goals.

The truth is that when you are caught in the cycle of accumulating and paying creditcard debt, there is little money left over to invest in savings, which is why it is extremely important develop a plan to reduce debt, allowing you the financial flexibility to save money, invest in yourself, and grow your wealth!

Let usintroduce you toa simple, yet powerful tool to help mitigatethese challenges: A SAVINGS GOAL.A savings goal involves creating a plan to help you achieve a certain amount of money, whether to pay off debt, save for emergencies, or to help you achieve another goal, like saving money to rent an apartment. Auseful acronym you can use for your goals is:

S: Start Small - developing a savings goal can be intimidating, but when one starts with a goal to save a small amount of money, and then is able to achieve that goal, it can be a great wayto motivate yourself to continue saving money.

M: Motivate Yourself - Celebrate small wins to encourage continued saving.

A: Acknowledge Priorities - Treat your savings goal as essential, not an afterthought.

R: Reassess Regularly - Regularly check your progress and adjust goals as needed.

Over the past few months, we'venoticed a growing number of consumers struggling to navigate their finances. Factors like inflation, job losses, and economic downturns have led many to rely more heavily on credit to meet everyday expenses. While this situation may feel overwhelming, there are several practical steps you can take to begin working toward your savings goals:

1. Builda budget: track your income and expenses to see where you can cut backwhile covering essential expenses like rent, groceries, and utilities. If you have money left over,prioritize paying off high interest credit card debt.
2. Automatic transfers: set up automatic transfers to a savings account each pay period. Depending on your specific situation choose an amount that is reasonable and realistic. Perhaps youcan start with $10 per week. The key here is to start!
3. Consolidatedebt:Consider a debt management program, in which it can help you lower your interest rates, fees and minimum payments to help you save more money and pay down credit card debt faster.
4. Cutunnecessaryexpenses:Let'sgo back to the budget and look atsmall thingslikesubscriptions, unused memberships, bank fees or services.
5. Seek Financial Counseling: Remember, you'renot alone while creating a savings plan and goals. A Financial Counselor can help you create a savings plan for your situation and if debt is getting on the way a Financial Counselor can help you review options available to get out of debt.

Ultimately, developing asavings plan, and using practical strategies to help achieve a savings goal, is essential to achieving financial stability and wealth. High credit cardsdebt, as well as a lack of money in savings, can lead to the feeling that one is bogged down by their finances. Being able to save moneyand pay off debt can not only help you feel more financially stable butcan open further doors to help you grow your wealth.

Still have questions?

NYLAG Financial Counselors help you create a plan to secure a financially stable future.

• If you are currently working with a NYLAG financial counselor, reach out to them now to discuss your student loan options.

• Connect with a NYLAG financial counselor.

Back-to-School Financial Planning: Tips for Managing Expenses

Real Stories, Real Solutions: How Financial Counseling Can Unlock Your Path to Loan Forgiveness

Back To Basics: Understanding Essential Student Loan Concepts

Battling Financial Fraud in the Big Apple

Why Estate Planning Matters for Everyone, Regardless of Income

Safeguarding Your Finances: Top Five Strategies to Prevent Fraud