Prepare for the future by reducing debt

This article was originally published on Monday, 21 January 2013 as the Money Matters article in the Guam Pacific Daily News (PDN).  Click here to subscribe to the PDN.

The beginning of the new year symbolizes rejuvenation and preparing for new benchmarks in our lives.

Most of us have resolutions concerning our health and well being. The past two weeks of this month, I have given some suggestions to consider when creating a financial New Year’s resolution. These tips can help you pursue your larger debt goals, or simply help keep your debt balances low and your finances in shape.

Look into refinancing debt. You may have several debts that are not going to be paid off in the next two years or so. With rates at near record lows, look into refinancing loans or your mortgage before rates start to climb. Take advantage of the many banks or money loaning institutions that offer very low fixed rates. Nobody likes to pay extra money on interest. By refinancing you can cut those rates considerably, especially if your credit score is healthy. You may save yourself hundreds to thousands of dollars.

Reduce your debt. Look at your debts. Which one has the balance with the highest interest rate? Focus on getting that paid off first. Many of us try to pay the debt with the smallest balance when in reality, to save the most money, pay off those that have the highest interest rates. Try to make extra payments or add $20 to $30 more to each payment you make. This will help you pay off your debts faster and can save on interest. Once that debt is paid off, apply those payments to the debt with the next highest interest rate and so forth.

Prepare for retirement. Do not count on Social Security. These benefits may not be around in the future. Even if Social Security is available when you retire, it’s certain that you will not be able to cover all your living expenses with this monthly check. If your employer offers a retirement plan, participate, especially if your employer’s plan matches your contributions. Try to contribute your maximum amount. If you can’t afford to put in the maximum contribution, try to put in enough to get your company’s full matching contribution if one is offered. If you receive a pay raise, put that extra money toward your retirement fund. Any money that is saved toward retirement is money well spent. Over time, a properly managed account can grow into a nice nest egg. You also may receive additional tax benefits by contributing to your employer’s plan or to a Roth account.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at To read past columns visit the Money Matters blog at


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