How to Get Your Finances Back on Track
It’s a new year, but that doesn't necessarily mean that last year is fully behind you — not if you’re still facing bills and carrying debt from the holiday season.
Here are a few quick tips to get past all that, and to avoid a similar situation in the future.
Cope with your post-holiday debt
You may be tempted to put off the bills, but that would be a mistake, resulting in late fees and, worse, harm to your credit score.
Make a plan for paying off these balances, starting with the account that’s charging the highest interest rate. Once that’s gone, move on to the next-highest rate, and so forth.
Live within your means
Create a budget that outlines your essential expenditures by category, along with projected costs for each. The key word is “essential,” because everything else is fair game.
At this point, discretionary spending is your enemy. That means taking a hard look at how often you dine out, go to the movies, or splurge on other forms of pricey entertainment — and cutting back.
Know where you stand at all times
In this day and age of smartphones and mobile banking, there’s little excuse for not knowing just how much money you have in your various accounts.
Financial institutions such as First State Bank offer customers apps for their phone, through which you can check your balances, transfer funds between accounts and pay bills. This should keep you from losing to overdraft fees money that you could be putting toward your debt.
If cutting overhead isn’t enough, you may wish to explore options to increase income. Can you volunteer to work overtime or extra shifts? Is a temporary part-time gig for you or a member of your family in the cards?
As tax season nears, you should get a clearer picture of what you can expect from Uncle Sam. If you'll be getting a refund, commit to using a portion — say, 50% — to reduce your debt.
You may not need to start living an ascetic life, but the more you can sacrifice and set aside to pay down your debt, the better your chances of improving your credit score — and a return to modest discretionary spending.
Peter Lewis, NerdWallet
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Posted on Thu, January 28, 2016
by First State Bank