If you’re like many others, you may be hoping to improve your money management skills in the new year. As you’re thinking about your goals for the year ahead, make these resolutions to get financially fit.
Becoming financially fit means not only improving your finances for the year ahead, but also for the long term. One step you can take now is to consider adding more money to your retirement fund. If you’re not sure how much you should be contributing or what the best retirement account is for you, meet with a trusted financial advisor for more personalized assistance.
Before you can truly make progress on your financial goals, you have to know where you stand. One way to get a snapshot of your finances is to check your credit. You’ll want to look at both your credit report and your credit score.
Visit www.AnnualCreditReport.com to review your report for free. When reviewing your report, you should look at all information closely to check for errors or signs of fraudulent activity. If any information is incorrect, contact the company reporting the information and the credit reporting bureau to open a dispute.
Unlike credit reports, there are no organizations required to provide you with a credit score for free. However, many financial institutions, like PSECU, offer free credit score service* to qualifying members.
No matter how much of a planner you are, you’ll encounter unplanned expenses throughout the year – whether it’s something as small as a flat tire or as serious as an unexpected medical issue. To make these times less financially stressful, start setting money aside in an emergency fund now. Aim to establish an emergency fund with enough money to cover three to six months of expenses.
If you’re juggling multiple student loan payments, look into options for consolidating your student loans into one monthly, lower-interest payment. For some people, consolidation makes it easier to manage payments and pay off debt sooner. For others, however, consolidation isn’t the best option. What works best for you could depend on the types of loans you have, the interest rates, and whether or not you’re planning to go back to school, among other factors.
Make sure you understand your health insurance benefits and read all bills and EOB (Explanation of Benefit) forms closely. An EOB form will show you what you were charged for each office visit or procedure you had done and what your insurance did or did not cover. It’s important to review these and any bills from medical providers to make sure you’re not being incorrectly billed or missing out on coverage your insurance is supposed to provide.
Whether your goals are financial or not, make sure you document them somewhere. It doesn’t have to be a formal outline of your plans – a simple note stuck to your bathroom mirror can work. Seeing your goal written down somewhere not only serves as a reminder, but it can also make you more likely to achieve it.
To be financially fit, it’s important to understand all the details of your debt. Even if it feels intimidating, push yourself to face your debts head on. Make a list of everything you owe, including amounts and interest rates. This will give you a realistic picture of where things stand.
Once you write down your debt, make a plan to pay it off. Learn more about the snowball and avalanche methods to determine which debt reduction strategy will work best for you.
As you’re looking at ways to pay down debt, consider moving high-interest credit card and loan balances to a new card with a lower rate. Balance transfers can be an ideal solution if you’re struggling to pay off your loans or credit card debt, or if high interest rates are keeping you from making much of a dent in your overall balance. Balance transfers are easy to complete, too. Most financial institutions offer balance transfer checks or allow you to transfer your balance through a simple process online.
As you consider a balance transfer, watch for fees that may eat away at your savings. Also, pay close attention to what the interest rate will be on the debt after any special introductory offers you receive.
If you own your home, you may be able to refinance your mortgage to reduce your interest rate, cut payments, or tap into home equity. If you’re not sure about refinancing, check out our guide to home refinance options and get help determining if you should refinance your mortgage.
As with a mortgage, you can refinance an auto loan to reduce your interest rate or cut payments. You’ll want to make sure you’re working with a lender who can offer a lower rate. Before you refinance, you’ll want to consider the following items, among other things: any early payoff fees from your current lender; your current monthly payment and what it will be with a new loan; and the status of your credit, which will impact your ability to be approved for a new loan. If you still have questions, contact your potential lender directly to get help determining if this is a good move for you.
Whether you’re planning a summer vacation or hoping to avoid going into debt during the next holiday season, you should establish a special savings account for these purposes. Setting aside small amounts of money at a time can help you avoid charging these expenses in the future.
Whether you’re looking to refinance a loan or set up a special savings share, contact us today to learn more about how our products and services can help you become more financially fit. And if you’re looking to brush up on your financial knowledge, visit our financial wellness resource page for articles, videos, and tips on everything from building your credit to protecting yourself from fraud.
*PSECU is not a credit reporting agency. Members must have PSECU checking or a PSECU loan to be eligible for this service. Joint owners are not eligible.