The Boston-based Fidelity Investments had conducted an online survey about financial resolution among a huge number of people recently. According to that survey, 84% of people have confirmed that they are looking for saving more in the New Year 2020. They are not interested in taking out loans or increasing debt. They want to reduce their financial obligations instead. This survey is very crucial when national consumer debt is now huge at around $4 trillion. The survey has proved that people are now trying to reduce their debt amount. They are considering saving, spending less, and reducing debt as their new year resolution goals.
Financial experts are appreciating this initiative taken by consumers. They said the best way to make sure to achieve something is to be specific about the goal that you want to achieve. Financial experts are hopeful about people’s success in leaving debt-free life in the coming year and the improvement of the economy of the country. They said that people are now focused on their goals. So, they can get success in their venture.
It is clear that people want to pay down their debt. They want to save money instead. But, to save more, getting out of debt is important.
Start planning to become debt-free in 2020
If you want to become debt-free this year, you have to start planning fast.
Follow the below tips
Analyze your past financial year
Before making new financial resolutions of debt-free, take out time to review your current financial condition and find out what you have done with your finances last year. For instance, how much you have earned or saved, what you owe, and so on. If you can’t scrutinize your present financial state, don’t hesitate to take professional debt relief help.
Discuss your financial goals with your family
Don’t be in a hurry while making financial plans. Go slow so that you can win the financial battle easily. For this, you have to take out time and discuss finances with your family members regardless of their ages.
For instance, talk to your spouse and children about financial matters like debt repayment, education, insurance, mortgage, car loan, retirement, and so on. This way, you’ll be able to meet your current debt pay off goals.
Repay your current debts fast
Debt-free is synonymous with happy finances. So, what are you waiting for? Make a debt repayment strategy, arrange your dollars, and pay off your debts as soon as you can. Repay the debt with the highest interest rate first and then move on to the next highest interest debt. Continue doing it unless you get rid of all your debts. By following this strategy, you’ll be able to manage debts better and become debt-free easily, along with saving money on interest payments.
Give a boost to your credit score
Besides managing your credit card debt, you should also think of the ways to improve your credit score. Let’s find out some of them:
Check your credit report at regular intervals
Your credit score gets affected due to some errors on your credit report. Ask for a free copy of your credit report and check it thoroughly to eliminate any error. You can talk to the credit bureaus and get your errors rectified.
Avoid closing old credit accounts
The length of your credit history is important when it comes to your credit score. It makes up about 15% of your FICO score. If you close your old credit accounts, it’ll shorten your credit history, which will harm your credit score. So, it’s advised that you should keep your old credit accounts open.
Start improving the overall health of your finances
After paying off your current debts, you need to improve the overall health of your finances so that you can stay debt-free forever. To do so, you have to follow these tips:
Calculate your net worth
Before you start planning for coming debt-free years, you must keep a note of your net worth; that is, the amount you own minus your liabilities. It portrays your present financial condition. Make it a target to increase your net worth; because a healthy net worth means you have a strong financial backing.
Find out where your money is going
Unless you know where your money is going, you won’t be able to improve your finances. Check out your credit card bills and bank statements, or use a notebook or other financial tools to keep a track of your expenses. Find out the areas of excessive spendings and look for ways to minimize them.
Take advantage of automated savings
Besides tracking your expenses, try to automate your savings. It’s the best technique to save more. It’ll also help you spend less on unnecessary and less important items. Thus, you can save your money for something fruitful. Moreover, you can set up auto payments with your bank for a mortgage, insurance, car loan, cable, and utilities, to avoid late fees in case you couldn’t make the payments on time.
Secure your financial future to taste financial freedom
If you want to enjoy your golden age, you have to start planning for it. So, once you are set with other goals, you can start saving money to secure your financial future.
Start saving more
Don’t limit your financial planning to make debt payments only. Think of where you want to see yourself financially after 10 to 15 years and take steps accordingly to reach there. But, try to make realistic goals, which you can achieve within this period.
Max out 401(k) contributions
Are you taking full advantage of your employer's retirement policies? If no, then do it now. Try to max out your 401(k) contributions.
Protect your credit information from fraud
Do you know that identity-theft and other frauds can make your credit score suffer? So, you must take steps to keep yourself away from such frauds.
So, these financial tips can help you to draw a perfect financial picture. But, you have to follow these tips deliberately to make the changes. Remember, these steps will lead to great achievements.