If you are like most people you probably have a few New Year’s resolutions in mind. Now is the perfect time to take action as we roll into a fresh new year to have the life you have dreamed of, and that includes financially. Take these few simple steps to ensure your 2017 is one of solid financial footing.
1. Make/Stick to your budget — use your online banking tools, or websites like mint.com, to create and monitor your spending. Set a budget limit for variable spending categories like groceries, entertainment, clothing, and dining-out. Be sure to set alerts for your budget limits to send you email or text messages as you near your budget so you don’t overspend.
2. Boost your savings — track your excessive spending and lower your budget limit in that category, sending those extra dollars into your savings category. Keep your loose change or one dollar bills in a container rather than letting them go towards frivolous purchases you don’t really need. Commit to, and execute, a savings percentage increase where you increase your monthly % saved by 1% each month. It is also helpful to have an automatic checking to savings draft in place at your bank so the money gets automatically moved over each month.
3. Lower your interest rates — before making another minimum payment or even attacking your debt balance, contact your creditors and negotiate a lower interest rate. If you are in good standing with a creditor they are likely to grant your request. If you aren’t in good standing or have a history or being late with payments, explain your financial hardship in a written letter and mail them the request for a lowering of the interest rate by explaining the lesser rate will help you maintain your payment.
4. Attack your debt balances — once you know how much extra you have to spend after your monthly essential expenses are outlined in a budget, you’ve put money into your savings and negotiated a lower interest rate with your creditors, funnel as much of your extra cash into one debt account. Choose an account with the lowest balance and pay as much above minimum as you can for as many months as it takes to pay it off, keeping other accounts paid at minimum in the meantime. Once you have paid one off, use the same strategy on another account and continue this process.