By now, your credit card bills are arriving, and you see just how much over your budget you went during the holidays. All is not lost! You can take back control of your finances and make a fresh financial start by implementing these simple and practical tips.
1- List your debts
Before you can create a plan to pay off your debts, you first need to know how much you owe. Start by listing each debt or loan account (not just your credit cards), specify the total amount owed, the minimum payment, and the current interest rate for that debt.
2 – Pay more than the minimum on your credit card each month
Credit card companies display the length of time to pay off your balance and the total amount of interest if you only make the minimum payment each month. The amount you saved on the holiday sales will be nullified if you only pay the minimum each month. Pay whatever extra you can, even if it’s $10 more towards your debt each month.
3 – Decide your spending goals
Don’t be too hard on yourself if you went over budget during the holiday season. Make this a lesson learned and start the year by creating new financial goals to put your daily purchases in perspective.
Identify annual expenses such as back to school supplies, summer camp, and holiday shopping, and start saving now, so you’ve got money set aside to pay for these expenses when the time comes.
4 – Set alerts to pay your bills on time
Credit card interest rates are high enough. Avoid missing payments, which is one of the contributing factors to your credit score, and paying exorbitant late fees by making at least the minimum payment before the due date each month. Sign up for text and email alerts to ensure you pay your credit cards, student loans, utilities, car loan, and other bills on time.
5 – Create a realistic household budget
Learn what money is coming in and going out by connecting all of your bank accounts to your FinLocker. Create a budget for your known regular expenses, such as mortgage or rent payment, groceries, utilities, medical insurance, phone, internet and cable, gas/transportation to work, childcare, etc. Deduct the total of these expenses and payments for your debts from your household income. If you’re close to zero or get a negative number, take a second look at your non-essential expenses to see where you can save. You need to have money left from your household budget if you want to achieve any of your spending goals.
6 – Have a no-spend day
The FinLocker Spending Analysis widget will help you identify areas where you mindlessly spend money each day. Whether it’s a $5 coffee on the way to work, a $10 sandwich and chips for lunch, or a family-sized pizza on the way home from work, it quickly adds up. Challenge yourself to have one no-spend day each week. Make coffee at home, pack your lunch, and make dinner with the family when you get home. Keep a couple of pizzas in the freezer to end the week with a relaxing pizza and movie night at home.
7 – Give yourself a splurge budget
We all have a spending category that we can’t seem to tame. Living within a budget shouldn’t be something that you begin to resent. Instead, permit yourself to have an occasional indulgence. Take out $20 in cash each week to spend on what’s important to you – a coffee each morning, lunch, or save your cash allowance each week to buy a new pair of shoes.
8 – Unsubscribe from sales emails
Reduce temptation from arriving in your inbox by unsubscribing from all store emails. Start by unsubscribing from every store where you shopped online in November and December. Every time you receive an email from a store, scroll to the bottom of the email and click the Unsubscribe link. The Federal Trade Commission requires all businesses to include an obvious way for subscribers or shoppers to opt-out of their email “advertising” messages.
9 – Call vendors to request discounts
Set aside 5 minutes each day to call your credit card company, cable/internet provider, and other vendors you pay monthly to ask for a discount for your continued loyalty. To have leverage, you must be paying your bills on time and be an established customer. Ask your credit card company for a lower interest rate. Review your internet/cable plan, look at competitor companies’ plans, ask for a discount to stay with the company, or request they match the “new customer” rate offered by their competitor.
10 – Create long-term savings goals
When you’ve gotten used to saving for the smaller annual expenses, you can look at saving for high-cost purchases or long-term goals. Create Goals in FinLocker for a vacation fund, emergency fund (aim for 3 months of your salary), retirement, a down payment on a car or home. Open a separate savings account to put aside money from each paycheck to reach your goals. Even better if you can directly deposit a set amount into the account from each paycheck.