5 Personal Finance Tips to Follow Throughout the Year
Personal Finance Planning: For upon |No matter what time of year it is, you’ll want to keep these great personal finance tips in mind. Unfortunately, you can’t hit the pause button on time, and every month or year that passes that you’re in debt is another you’re losing to the clock. Here are five personal finance tips to follow throughout the year.
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Pay Down Debt Every Chance You Get
This tip is one that everyone should follow. Whether you’ve got massive amounts of debt or just a few lines of credit, you should always be actively paying down and eliminating your debts. Debt-free is a new wealth, and the only way to get there is to invest some money into it. You may have to make some personal sacrifices along the way, but it’s well worth it in the end. Personal Finance Planning.
Start with your smallest debts first and utilize the snowball effect to gain traction and start chipping at your larger debts. By age forty, you should aim to be either debt-free or nearly there. This means putting a lot of financial resources into eliminating the debt you have and retaining enough discipline to prevent yourself from getting into further debt. Personal Finance Planning.
Even if you only have a few dollars to put towards our debts, a little is better than nothing. Every time you chip away at your debt, you get that much closer to becoming debt-free. Debt-free is not only financially beneficial, but it can take a serious load off of your mind and reduce your stress levels. Debt-free is the way to be! Personal Finance Planning.
There is help available for those looking to create a more informed financial plan. While a financial advisor won’t help you get out of debt, if you’re looking to invest your money in say, a retirement fund, an advisor can help you craft a plan to do so. You can find the best financial advisor on Carefulcents.com. Personal Finance Planning.
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Avoid Late Payments/Collections
Avoiding late payments is a tip you absolutely should follow; as well as avoiding having accounts sent to collections. Normally, a creditor will try to reach you several times in regard to your past-due balance before referring it to a collections agency. This means that you have plenty of chances to answer the phone and work out a repayment plan that avoids collections. Personal Finance Planning.
Late payments can make your credit score drop, and don’t look very good on your credit report. Collections accounts look even worse, showing potential lenders that you’re not able to meet your financial obligations. Set reminders for yourself a week or two ahead of time if you’re continuously missing payment dates. This will ensure that you not only remember that the payment date is approaching, but also that you have time to prepare the money to meet your obligations. Personal Finance Planning.
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Keep Your Credit Utilization Low
Financial experts suggest that your credit utilization rate should be at least below 30% of your total credit limit. That means if you have $2,000 in total lines of credit, you should only be using 30% of it, or $600. You’re probably thinking “what’s the point of having $2,000 in credit if you can’t use it?” The purpose of a credit limit isn’t for you to spend every dollar, but to give you a good idea of how much lenders are willing to entrust you with. Personal Finance Planning.
Keep your credit utilization rates low so that your credit score is affected in a positive way. Those with higher balances tend to have more trouble making their monthly payments, and end up in collections or with late payments far more often than those who only utilize a small portion of their credit.
Credit shouldn’t be used for everything, to begin with. If you’re unable to afford the lifestyle you’re currently living, you’ll need to make some adjustments either to your income, lifestyle, or both. Funding a lifestyle you can’t afford with lines of credit is a surefire way to end up buried in debt and collections. Personal Finance Planning.
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Fund your Emergency Fund
If you don’t already have an emergency fund, you should be putting money towards one every month. Even if you only put a few dollars toward it, it’s better than nothing at all. Ideally, your emergency fund will be enough to fund up to six months of living expenses in the event that you’re injured, out of work, or for whatever reason cannot meet your monthly obligations for a short period of time. Personal Finance Planning.
An emergency fund should be a priority for everyone; whether you’re a wealthy real estate mogul in Florida or an administrative assistant on the East Coast. A fully-funded emergency fund will help mitigate the overall cost of an emergency and protect your financial status.;
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Check Credit Reports/Score
Did you know you can get a free credit report once per year at annualcreditreport.com? The site is secure and is the only credit report site that is authorized by the federal government. Once per year, you can get all three of your credit reports from the three reporting agencies. Personal Finance Planning.
It’s important to review your report and score at least once per year to stay updated with what’s happening to your credit. Not being in the know can be costly, especially if a penalty you didn’t know you had sat on your report for months or even years. Check your report and your score!
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