Start the New Year Off Right!
Losing weight is the most common New Year’s resolution, but becoming a better money manager isn’t far behind. If you’d like to get your spending in shape, too, adopt some of these resolutions this January.
Analyze your spending
Some financial institutions offer apps or calculators that help you split your spending into categories, such as housing costs, grocery expenses and entertainment. There are also many third-party apps with similar features. These tools show you where your money is going and help you identify areas — such as spending on entertainment — where you might be able to cut back.
Check your credit
You’re entitled to one free credit report per year from each of the three major reporting agencies: Equifax, Experian and TransUnion. Request a different one every four months through AnnualCreditReport.com to keep a close eye on your credit. If you find serious errors, tell the reporting agency. According to federal law, it must investigate your claim, usually within 30 days.
Your credit has a major impact on whether or not you’re approved for mortgage and car loans, as well the interest rates you’re charged. Having a high score will make it easier for you to qualify for loans with low interest rates.
Take the thought out of bill payments
Your monthly bills all arrive at different times, from different providers, in different forms. What if you could manage them all in one place?
Online bill pay isn’t terribly new, but if you haven’t tried it yet, you should. You can receive and view all your bills, make or schedule payments, and review your payment history in one platform. This makes it harder to misplace any important information.
Payment history makes up a large part of your credit score. If you make payments on time and in full, it will improve your score. Online bill pay is a good way to ensure that you don’t miss any payments.
Revisit your mortgage and insurance policies
We tend to set it and forget it once we’ve signed up for insurance. But if you shop around every year, you might find a better deal on auto, home or health insurance.
In a similar vein, it’s a good idea to examine the terms of your existing loans, particularly if you’ve raised your credit score since you qualified. If you refinance, you could qualify for a lower interest rate, which would reduce your monthly obligations.
Developing or improving your money management skills is a great way to kick off the new year. And if you stick with it, the dividends are just as positive as the benefits of regular workouts at your gym.
Peter Lewis, NerdWallet
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