Spring cleaning often focuses on dusting the cobwebs out of the home or tackling the garage after a long winter of stashing everything there. Yet, it’s also the perfect time to spring clean your finances. With a little focus on your financial health now, you’ll be ready to make better decisions throughout the rest of the year.
Here are some tips to help get your finances in order this spring:
- Review Your Budget and Cut Out Unnecessary Expenses
Now is the perfect time to look through your budget to find opportunities to trim back on unnecessary expenses. While many people only review their expenses when money is tight, it’s something you should be doing regularly to help eliminate wasteful spend and maximize your savings potential. Why pay for something you don’t use or need? Take a look at all of the subscriptions you have and look for other expenses to cut as well. Once you review your existing budget, you’ll have a better idea of where your financial health stands. You should also make the most of any money you save on eliminated expenses. Consider placing those funds in a high-interest savings account so they can earn interest.
- Check Your Credit Report
You should review your credit report at least once every 4 months. Unauthorized activity on your credit report could indicate identity theft, which you’ll want to straighten out as soon as possible. A 2021 Consumer Reports investigation also found that more than one-third of consumers found mistakes in their credit report. Inaccuracies on your credit report can potentially hurt your credit score just as much as unauthorized activity, so you’ll want to look out for and resolve those as well.
Luckily there are three different credit bureaus – Experian, Equifax, and TransUnion. Since you are entitled to a free credit report from each credit bureau annually, you can stagger your free reports throughout the year and keep tabs on your credit. You can request free copies of your credit reports at AnnualCreditReport.com.
When reviewing your credit reports, pay attention to the following:
• Are all of the accounts yours? If not, dispute them.
• Is your address correct? Any address discrepancies could indicate someone else is using your personal information.
• Are there accounts that are in collections or past due? If so, you’ll want to pay those accounts to bring them current.
• Are there any judgments against you that need to be taken care of?
• If you have a high credit utilization ratio, consider paying down your credit cards.
• Have you been dinged for any late or missed payments? Make an effort to avoid those in the future.
If you find that your credit reports are accurate, but your credit history is unfavorable, there are ways to improve your credit. One route you could go is applying for a credit builder credit card. These types of credit cards are usually fairly easy to qualify for and can help you improve your credit by making regular, on-time payments.
- Tackle Existing Debt
One thing you’ll want to address when reviewing and cleaning up your finances is any outstanding debt that you might owe. Credit cards in particular can have astonishingly high interest rates, so if you are carrying a substantial credit card balance, you’re essentially throwing money away every month by paying interest charges.
Here are some ways you can start tackling debt repayment:
• Create a debt repayment plan. Consider following the debt snowball method, putting your effort into paying off the account with the lowest balance, then moving on to the account with the next lowest balance, and so forth, until all accounts are paid off.
• A credit card payoff calculator can help you determine how much of a monthly investment it will take to pay off a card in a certain timeframe.
• Consider taking out a new credit card with a low introductory APR, and transferring your existing credit card balances to it so you can consolidate your debt onto one low- or no-interest card. This will allow you to save on interest and pay down your collective credit card balances faster.
• A consolidation loan is another way for you to potentially save on interest fees. These types of loans allow you to roll multiple debts into one account so you can make one fixed, monthly payment.
Spring is a great time for cleaning all aspects of your life, including your finances. By taking some time to cut back on your expenses, review your credit reports, and formulate a debt repayment plan, you can be well on your way to a brighter financial future. And there’s no need to go it alone! Whether you’re looking for a high-interest savings account to help maximize your budget cutbacks, or looking for a credit card that can help you repair your credit or consolidate debt, Bank5 Connect can help.