5 Tips to Get Credit Debt Under Control in the New Year

5 Tips to Get Credit Debt Under Control in the New Year

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Chances are, you’ve asked yourself “How am I ever going to figure this debt thing out,” or, “How can I maximize and maintain the good credit I already have?” According to the US Debt Clock the average US citizen carries personal debt of $56,322, which includes a combination of mortgage, student loan, and credit cards, so you’re not alone. The New Year is a great time to review your financial goals, whether you carry debt or not, have a less-than-stellar credit rating, or have worked hard to keep your score high. Here are some tips to keep you in the green in 2018!

Follow the 50-30-20 Standard of the Financially Wise

50% of your net income after taxes should be earmarked for living expenses like rent, utilities, and car payments. 30% should go toward nonessentials like dining out, shopping, and personal care. The remaining 20% goes right into savings. Set up an automatic savings plan, and direct deposit this portion of your paycheck directly into your savings so you don’t see it, don’t move it, and you won’t feel as tempted to spend it.

Don’t Carry Credit Card Debt

Once you have an automatic savings plan in place, don’t spend more than you have. If you absolutely must to buy something on loan or a payment plan, make it a one-time expense and accommodate into your regular cash flow. Then, pay your credit card balance(s) in full every month. You may need to give up spending on other things to accommodate a purchase, whether it’s a must-have or a want-it-so-bad. Hard, yes, but seeing that savings balance and your credit score grow will make up for it later!

Keep a Budget

You hear this advice a lot, but there is a good reason. A budget is great to adopt, and it doesn’t need to be painful. Many websites and apps can help track how you spend money. Budgeting does require time and some effort to setup and maintain, but once you make it a habit, you’ll be able to track and maintain your spending and saving goals.

Create a Date Night (or Day)

Get down and dirty with your finances each week. Check in and schedule a time to review or adjust your budget, plan for upcoming expenses and track progress toward your goals. Embrace educating yourself on financial matters. Make your money date as important to keep as any romantic date, as credit health plays just as an important a role in your life!

Stalk Your Score

The more you know about your credit report and credit score, the more power you have. Checking your credit report and correcting errors can benefit your score in a big way. Get an overview of your credit history from one of the many sites that offer a report for free and review closely for errors like late payments, amounts owed that are incorrect, or old accounts. Follow through and remedy any concerns with those credit bureaus.

Pay Your Bills on Time

Payment history is the most important factor in your credit score (generally 35% of the score). Set up payment reminders or enroll in automatic payments through the creditor or your bank so you’ll never forget.

Small, daily steps into the New Year and beyond will help you master your credit in no time! Just take that first step, and the next, and the next will get easier. Being smart about your financial health doesn’t mean you can’t enjoy and treat yourself every now and again. Learn to live in the now while also thinking beyond and into your future.

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