I’m sure it’s no surprise that many of my New Year’s resolutions are related to personal finance. While there are many goals on my list for the year, I know that I need to get my finances organized before diving in. I think it’s important to be organized before taking on any type of goal especially when it comes to money.
If you’re ready to make this one an awesome year for reaching financial goals, here’s how you can clean up your finances beforehand.
Revisit Your Budget
No budget should ever be set in stone. Needs change, income changes, and bills change. If you haven’t reviewed your budget in a while now is the time to do so.
Look at all of your expenses and see if there are any you should cut back or any areas that need a budget increase. If you feel like you’re getting ripped off by any company (phone and cable bills are known to unexpectedly spike) call the company and negotiate a lower bill. If they won’t give you a better deal consider switching to a new company.
Also be sure to review your income and make any necessary changes to your budget. If you find yourself with some freed up money match it to a financial goal.
If you have a hard time keeping up with your spending you can try out one of the many free online budgeting programs. Personal Capital is one budgeting program that is free and that will track your spending for you. All you have to do is link up your bank and credit card accounts, and it will put together your transaction history for you.
Free Tool To Use: Personal Capital
Review Your Interest Rates
If you have credit card debt or a mortgage now would be a great time to review your interest rates.
If any of the interest rates on your credit cards seem steep call the credit card company and ask for a lower rate. A lot of the time credit card companies are more than willing to lower your rate as long as your credit is good and you’ve paid on time each month. It’s definitely worth a try. The worst they can say is no.
If they do say no, you could always consider opening a new credit card with a 0% balance transfer. That could save you a lot of interest payments this year while you pay off your debt.
Now would also be a good time to check on mortgage interest rates. If you took your mortgage out in the days of high interest you could save a bundle by refinancing with a lower rate. Call around to a few banks and see what options you have.
Check Your Credit Report
You get two free credit reports per year. If it’s been awhile since you last checked your credit report do so now. Checking your credit report every six months is a smart way to make sure you haven’t been a victim of identity theft. Just look at what happened at Target!
It’s also important that you check your credit report for any errors and have them corrected if you find them.
You can also check your credit score for free on sites like Credit Karma. These sites provide you “credit report cards” advising things you can do to improve your credit.
Free Tool To Use: Credit Karma
Having your pay direct deposited and your bills automatically deducted from your bank account is a great way to stay on top of things. By automating your finances you won’t have to worry about forgetting to pay a bill, transfer money to savings or add to your investments.
For those who receive irregular pay this can be a bit tricky. However, you can automate a smaller portion of your finances. For example, if you often forget to pay your credit card bill on time consider having just the minimum payment automatically deducted from your bank account. This way you’ll never have to worry about paying late fees or having your interest rate spike. You can always go back and pay more on the bill.
Make a Plan for Your Financial Goals
The New Year marks a clean slate for you. If you’ve struggled to pay off debt, save, or invest money you can have a fresh start in 2014. It's time to rethink your money goals!
Set your financial goals and make a plan to reach them. Be sure to map out a solid route to reach your goals. Be specific. How much money will it take each month to pay off your debt? How much money do you need to save/invest each paycheck to be where you want to be?
The more specific you make your goals the more likely you are to reach them.
Let’s make 2014 an awesome year for reaching finance goals!
What kind of financial goals have you set for the New Year?