Experts warn that 2023 will be a difficult year in economic matters. And if we add to this panorama that the cost of living increased 13.12 percent last year and the usury rate for consumer and ordinary loans was set at 43.26 percent for January, Colombians must control their spending and think carefully about whether it is necessary to acquire new debts.
Therefore, the goal that many homes of start the year debt free becomes more important. To achieve this goal, David Nieto Martínez, director of the Finance program at El Bosque University shares several recommendations.
(Also read: Keys to save money now that price increases are coming in January).
«There are different options that allow people to save and take control of their expenses. The most important thing is that they get into the habit of doing this exercise daily and thus better understand their personal finances and correct what they are doing wrong. Additionally, It is important that we understand that being debt free will allow us to make investments to increase our wealth«said the expert.
Prioritize obligations
Models such as ‘the snowball’ propose that cover the smallest obligations In order to start generating more cash flow and paying the largest ones, this will allow them to be paid in less time and save money on interest payments.
(Of interest: List of school supplies: tips to save on your purchase).
Analyze the economic situation
One of the main aspects that must be taken into account and that must be done realistically, is a list of all the economic pending that will be taken, in order to avoid over-indebtedness which cannot be covered later.
Determining debts and creating a budget
They can be short, medium and long term in order to create a budget in which they are given priority to needs such as: food, housing, services, among others, so as not to spend on necessary expenses.
Avoid advances on credit cards
It is not advisable to pay debts with more debts, since additional costs are assumed which leads to the initial indebtedness rising. It should also be considered that the interest rates for advances are quite high, adding the management fees that you already have with the financial institution.
(Also: Layoffs: so you can find out how much interest comes to you in this 2023).
Avoid ‘ant’ expenses
The small expenses that are made to buy red wine, cigarettes, empanadas, among others, are not taken into account when making the budget, since we think that they do not represent a large sum of money. However, it is one of the expenses that generates the most cash outflows and that Finished our cash flow.
Look for savings alternatives
There are many financial savings instruments such as CDTs, fiduciaries, savings accounts, among others. Some experts mention that it should be save 20 percent of total incomebut in case this cannot be fulfilled, a fixed value of savings must be allocated in any of the financial vehicles mentioned, in order to promote this, under the income conditions that one has.
Consider Purchasing
They have always been a useful tool when it comes to improving people’s financial conditions, allowing them to have a financial relief by covering debts with very high interest rates, however, it is necessary to evaluate that the conditions proposed by financial institutions favor saving time and interest.
(Keep reading: Do you see the prices of new cars through the roof? Watch out for the most achievable).
Do not use severance pay to pay debts
Layoffs are savings that should be focused on housing, education or be a ‘cushion’ if the person is left without a job. Therefore, it is necessary to look for other alternatives for the payment of debts.
