Nearly half of all Americans make at least one New Year’s resolution, which is typically a vow to quit smoking, lose weight or start exercising. A quarter of these resolutions go out the window within a week, and more than half bite the dust by the end of June. Plans to reduce debt, spend less money and use money more wisely are among the top ten popular pledges, and this month we’re bringing you some great ideas for how to make these goals a reality. Caregivers, home care aides and loved ones can all find something useful in these New Year’s Financial Resolutions.
If you do set some financial resolutions for 2018, taking a bit of time to crunch the numbers can show you how to spend your money more wisely.
- Spend less money
Comparison shop your insurance:
- your car is a year older, and your driving record is 12 months more impressive. Now is a great time to shop around to see if you’re getting the best price from your current carrier.
- if the value of your home changed, or you got rid of a lot of clutter, then you may be paying too much to insure your belongings or your home. Even if you don’t find a better rate, you’ll feel more comfortable knowing you’re paying the right amount.
- Refinance your loans: the rule of thumb says that just a one percent difference in the rate can make the costs of refinancing pay off. You can refinance your mortgage, consolidate certain types of student loans, and even refinance your car loan.
- Check all your subscriptions and auto-pays: this is a great time to review your card and bank statements to see what your recurring charges you’re paying. So often we sign up for things, and then stop using them or forget to cancel the service. This is good financial hygiene, just like cleaning out the lint trap in your dryer, or changing the batteries in your smoke alarm. Streaming services, online newspaper or magazine access, or software subscriptions are great examples of sneaky charges.
- Check your lifestyle assumptions: do you really need a landline? Do you really need cable? Do you really need that gym membership you never use? Do you really need a second or third car? How many Lyfts would you have to take to spend more than the annual fuel, insurance, registration, repair and financing costs of a back-up car? Take a hard look at some of your lifestyle choices, and decide whether you can cancel, reduce or replace some of these things.
- Comparison shop your insurance:
- Reduce your debt
- Lower your interest rates: the average American has more than $8000 of credit card debt, so chances are you have some too. The first and easiest step to reduce the interest rate you pay on your balance is to ask for a lower one. Some companies will lower your rate rather than lose you altogether.
- Pick away at the card or loan that charges the highest rate first: the math isn’t complicated. No matter how high the balance, compound interest means you’re paying more to the card with the highest rate. Bring that down and then go after the next highest. It can be psychologically satisfying to pay off smaller accounts completely, but unless you’re paying annual fees or service fees too, focus on the interest rate.
- Use money more wisely
- Sign up for credit monitoring, so you know exactly who is using your credit. (It should only be you, but remember the Equifax breach)
- Sign up for a cash back site like eBates. This site gives you a certain percentage of cash back from every online purchase you make, if you connect to the retailer’s site from their site.
- Choose your cards carefully: a common-sense strategy is to use a cash-back card for things that you buy consistently and pay off monthly. If you’re currently using your debit card for certain monthly things, put those charges on a cash back card and commit to paying them off each month as you incur them. Put any longer-term debt on a 0% interest card by balance transfer, because you will pay that off more slowly.
If your main resolution is to raise your financial IQ, then WalletHub’s Financial Literacy quiz is the best, first step for you!