This show involves entrepreneurs standing boldly in front of a panel of business tycoons—also known as The Sharks—pitching their business ideas, trying to secure funding.
But there’s good news for all you viewers at home: You don’t have to stand in the spotlight on the set of Shark Tank to get some highly useful financial advice. Shark Tank star Kevin O’Leary has some guidance for consumers to kick off the new year.
Here’s what O’Leary recommends in terms of tackling your debt:
- Come up with a plan to speed up principal payments.
- Tackle credit card debt first, as this kind of debt tends to have the highest interest rates.
- Make eliminating debt a tangible resolution or goal with a timeline.
In other words, it’s counterproductive to focus on other short- and long-term financial goals without prioritizing debt repayment.
Why It’s So Important to Eliminate Debt A.S.A.P.
Sometimes managing your personal finance feels like trying to juggle multiple objects. You’re thinking about income, debt, savings, retirement and more. It can be difficult to decide what to prioritize to give yourself the best outcomes.
Many experts, like O’Leary, make a case for paying down debt as soon as possible. Why? Because the accompanying interest rates on debt tend to rack up more debt, digging you into a deeper hole over time. If you’re accruing interest on your principal balance and its interest, your debt will only build over time unless you have an assertive plan to stop this cycle.
There are even situations in which paying down debt is more important than saving. It’s still important to build an emergency fund, of course, because this can help keep you out of further debt. But Money makes a case for paying off high-interest debt, like 15-percent APR credit card debt, over padding your savings account because the return rate will be higher.
Strategies for Reducing or Eliminating Your Debt
Exactly how you go about working on your debt will depend on factors like its type, the amount you carry, etc. Every debt elimination strategy comes with pros and cons, which you can only learn through researching your options.
Consumers with significant debt near or exceeding $10,000 may be considering debt settlement. Looking up Freedom Debt Relief reviews will reveal the strengths and challenges associated with enrolling in a leading program of this type. On one hand, you’ll gain access to experienced consultants, an online dashboard to keep you informed of your progress and trained negotiators who will contact your creditors in an attempt to settle for less than the original balance. On the other hand, you’ll only reap the benefits if you stick to the program for its full duration, and you’ll pay a percentage of your enrolled debt to access these services.
You can do the same type of “cost-benefit analysis” for any debt relief strategy. Considering debt consolidation? Make sure you know the risks and possible rewards of taking out a loan to cover your high-interest debts. Curious about balance transfers? Make sure you thoroughly understand the terms and conditions of any new credit cards you open for the purpose of transferring your existing balance—like whether there’s an introductory period for low or no APR. Trying to decide if bankruptcy is your only option? Talk to an experienced attorney and make sure you understand the severity of taking such an action before moving ahead.
If you’ve decided to take a do-it-yourself approach to debt repayment, get organized. Most people choose to either avalanche or snowball their payoff, which will dictate whether you start with your smallest balance first or the one with the highest interest rate.
Paying off your debt should be a top priority this year so you can end the harmful cycle of building more debt on what you already owe.