Tackling high-interest debt is one of the smartest ways to strengthen your financial foundation, especially during uncertain times. LendingTree chief consumer finance analyst Matt Schulz shares practical strategies for paying down debt, building your emergency fund, and staying focused on long-term financial goals.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
You highlight three steps people can take: paying off high interest debt, building your emergency fund, and sticking with your long-term goals. Let's start with paying off high interest debt. What do Americans need to know?
Well, it's really all about kind of firming up your financial foundation so you're ready for whatever comes in this time of uncertainty. But it's really great way to start is to knock down that high interest debt. And the good thing to know is that there are options. A 0% balance transfer credit card is a great option. And there are even, there's even a card out there now that will give you two full years without accruing any interest on that card. But something like a low interest personal loan can be a good call, too. And you can even call your credit card issuer and ask them for a lower rate on that credit card. That works more often than people realize.
Your second point is actually about building your emergency fund. So, what should people do in order to make sure they're taking the right steps to build out that emergency fund?
Yeah, again, it's about firming up that foundation and even though the Fed has put a pause on cutting interest rates and that's bad news for folks with debt, it's good news for savers because high-yield savings accounts are still giving 4+ percent. So, even just a little bit of savings put into those types of accounts can add up to real money over time. And having that money in that emergency fund gives you a little bit of cushion and a little bit of financial wiggle room in case we see the spike in prices that a lot of people expect.
So, a lot of people also think that they need to choose between paying down debt and saving. How do you recommend finding that balance?
Honestly, you need to do both. Uh, it's easier said than done, for sure. But having, having some emergency savings once that credit card debt gets down to zero is the way that people can snap out of that cycle of debt that they find themselves in because for too many people, when you get that card balance down to zero, if you have no savings, the next time your dog has to go to the vet or you have a flat tire, that money just goes back on that credit card and that wheel of debt keeps spinning. Having some emergency fund keeps you from having to automatically put that stuff on that card going forward.
