Several Americans make New Year’s Resolutions to help them achieve their goals. Many want to pay down credit cards, and some want to save more money in the coming year. Here are five attainable financial goals that will help you overhaul your personal finances.
1) Know your credit standing
You get one free credit report each year from each of the 3 major credit bureaus. Get your annual free credit reports from Equifax, Experian, and TransUnion to get a complete picture of your credit situation. These reports offer a more complete look at what’s in your credit file than a simple FICO score. Here are instructions for exactly how to get a free credit report.
2) Create a plan to repair credit if needed
There are a few things you can do to start building good credit right away. Making a budget that you can live with is the first step. Bringing any delinquent accounts up to date and making payments on time will help repair credit, as well.
After you’ve made on-time payments for a few months, it may help to consider a credit-builder loan to add positive activity to your credit report.
3) Eliminate poor spending habits
One way to keep spending in line with your budget is to use the envelope method. Making a budget work for you is critical if you want to reach your financial goals. Remember, adopting new habits takes time, so be patient and adjust your budget as necessary until it works for you.
4) Introduce good spending habits
If you don’t have a budget, now is a great time to create a simple list of expenses and income. Remember to include your plan to save a little bit each month to cover seasonal expenses.
Living with a budget is a smart way to make your money work harder for you. If you aren’t sure how to start, check out our article on Tips for Building (and Sticking to) a Budget.
5) Reduce/eliminate credit card debt
High interest credit card debt takes a long time to pay off. It’s nearly impossible to make real progress by paying the minimum amount each month. Doing so mostly covers interest, and reduces your principle very little.
Installment loans offer equal, fixed payments for a specified term. This allows you to know your monthly payment and work it into your budget. Each payment reduces the principle as well.
Do you want more information about how to make this your best year? Stay tuned for our next set of New Year’s Resolutions to help you reach your financial goals.
For more great information on all things credit-related, head to our 'Basics of Credit' reference page.