Now that 2018 is here, New Year’s Resolutions season is in full swing. And while it’s usually a popular choice to say you’re going to get out of debt or take better care of your finances, that can be a tough proposition, especially if you don’t know how to get started. That’s why I’m giving you a few helpful tips for brainstorming a plan to becoming better off financially.
Make A Management Plan
Although it sounds obvious, not making a plan is one of the biggest mistakes people make when trying to get a grasp on their finances. Quite simply, money is something that needs to be accounted for regularly, or you’ll end up in the same uncomfortable positions you started in. One good place to start in managing your finances is to check on your credit score.
Your credit score is not only a reflection of your current debt obligations and financial health; it also indicates your potential to get a loan at a decent rate. All of these things impact your potential for financial success. Additionally, it’s also good to check if there are any outstanding debts you may have forgotten about or could negotiate down, and monitoring your credit score can help you catch if someone is using your identity fraudulently. If this is overwhelming to you, then talking with a credit repair agency is never a bad place to begin.
Make a list of what you currently owe, as well as what the balances and interest rates are. This will help you gauge which debts are costing you the most money and help you decide what to pay off first. Furthermore, it’s also important to budget the other aspects of your life, such as incidentals, entertainment, fixed monthly expenses, and a savings. If you haven’t started putting some money aside yet, there’s no better time to start than now; as GoBankingRate notes, 69 percent of Americans have less than $1,000 in their savings, which can be a dangerous position to be in if an emergency ever came about. By planning ahead, you’ll be in a better place.
Find Available Options
As you’re compiling a more accurate picture of your current finances, one of the next things to consider is what options you may have available to you to combat this debt. While it might sound counterintuitive, with the right credit score, taking on another loan to consolidate your current debts can be an excellent option to boost your credit score. A balance transfer, for example, can provide the opportunity to pay off your current debt with a lower interest rate or better rewards.
According to Wallethub, the average American is holding over $8,377 in credit card debt, which may not sound terrible until you consider that this balance is in addition to all other debts, like mortgages, car payments, and student loans. Take a look at your current financial standing to see if there is anything you can transfer to a lower interest rate or do to reduce fees. For example, if a credit card offers 0 percent interest for 12 months and you know you can pay everything off in that time frame, then it would be an advantageous route. Overall, the goal is to pay the least amount of interest on what you owe while improving your credit.
Despite investment being an option that most people believe requires a lot of capital to participate in, that couldn’t be further from the truth. In fact, this has been one of the few tried-and-true, long-term strategies that can actually provide returns on what you spend. Young people in particular are skeptical of investments; a survey conducted by Wells Fargo and published by CNBC showed that over 53 percent of millennials said they would never trust the market. And while the crash of 2008 is a significant contributor to this outlook, there are way more ways to invest than just the stock market.
While retirement plans like IRA’s and 401k’s can be excellent options for long-term, sustainable growth, you won’t see a return on those investments for decades. While you should certainly be looking to build a nest egg for the future, if you’re looking for more short-term gain, then taking a more risk-oriented approach might be more to your liking. For example, going after a proven ICO like Trust Token or a cryptocurrency like Ripple has been promising, with a booming industry and the potential for huge returns. Finally, never put in more than you’re willing to lose when it comes to risk-oriented financial decisions, as this is one mistake a lot of early investors make.
With so many different options to restructure your finances, which one do you consider the best route to take?