Living a healthier lifestyle is a popular New Year's resolution, but getting fit financially is also a huge incentive for many New Year’s resolution makers in the coming year.
Angie’s List went to its highly rated financial experts for some advice to help get your finances back on track.
- Prioritize your debt: Examine your debt and develop a plan to pay it off. Look closely at the interest rates you are paying, rather than the balances due. It might be tempting and emotionally gratifying to pay off the lowest debt first, but it makes better fiscal sense to first pay off the debt with the highest rate.
- Pay more than the minimum: If you continue to pay only the minimum balances on your interest-laden debt, you’ll likely be spinning your wheels for a while. Instead, establish a monthly budget that allows you to put extra money towards your highest-interest debt first. Once that debt is paid in full, take the money you were paying monthly towards that bill and apply it to the debt next in line and so on. Remember, this plan will not work if you continue to add debt to your existing lines of credit.
- Save while you pay: Put savings at the top of your priority list, rather than the bottom and make certain you set aside additional money each month in savings to prepare for any unexpected expenses. The best way to save is to have money deposited directly into an account. If you get a raise at work, give your savings a raise, too. Once you have paid off all of your debt using the tips above, continue placing the funds you had paid monthly towards the debt in a savings account until you have enough to meet your living expenses for six months.
- Avoid bad habits: Attach a note to your credit cards asking yourself if that purchase is really necessary. If your friends or family are all about shopping, eating out, or living for the moment, then it’s important you let them know that you can no longer indulge in those activities. If they are really your friends, they will support you. They might even be relieved.