Manage Credit and Debt
Maintaining a healthy credit score and controlling your debt has significant impacts on your financial health and well-being. Your net worth will significantly increase if you can manage your debt.
Tackle Your Debt
A short-term strategy to tackle your debt is first understanding how long it will take to pay it. Use this debt payment calculator to examine how long it will take to eliminate your debt.
After you know how long it will take you to pay your debts, aim for these best practices:
- Always pay on time.
- Pay more than the minimum payment due on credit card debt – start with the highest balances first.
- Make extra payments when possible to reduce the outstanding balance.
Prepaying Your Mortgage
When you can afford to do it, consider making an extra payment to the principal on your mortgage. Even a small amount like $25 extra each month can save you thousands of dollars in interest payments over the life of the loan.
Monitor Your Credit Report
For a mid-term activity, monitor your credit report for an entire year to see if you can raise your credit score.
You can pull your own, free credit report once a year from each of the three nationwide credit reporting agencies: Equifax, Experian and TransUnion. Because you can request up to three per year (one from each of the three major agencies), it is recommended that you request one every four months to keep a continuous track of your record.
Order your free credit report at Annual Credit Report.com.
Live Below Your Means
Living below your means doesn’t mean you have to live poorly, but it does mean you evaluate your choices and always consider the future consequences of your spending.
Which of these ideas can you make long-term strategies over the next five years? See if you can save some money while still living comfortably:
- Switch to a low-cost phone plan, discontinue your land line or ditch some mobile devices
- Get rid of cable (at least the premium channels) or go to bundled services
- Keep your car longer or take public transportation
- Live in a smaller home or apartment
- Eat out less often, but eat well when you do go out
- Switch banks to avoid costly fees
- Try clothing swaps or thrift stores before buying something new
- Do your own home improvement projects
- Pay in cash rather than charging on credit cards