Spring Cleaning Your Finances
Something about spring inspires us to clean up our environment, from our homes and offices to our finances. It’s a great time to think about your finances and what you can do to manage them better.
Here are four tips for spring cleaning your credit:
1. De-clutter your wallet – Do you carry credit cards that you never use? Credit cards sitting in your wallet may tempt you to overspend, so store them in a safe place rather than carry them with you. Don’t, however, automatically assume you should just cancel a card you don’t use. Closing an account affects your ratio of credit available to credit used – a factor that helps determine your credit score. Before you make a credit move of any kind, better understand how your action might affect your credit.
2. Automate your billing – Late or missed payments can pull down your credit score. Clean up this part of your credit by automating bill payment. Many creditors now allow you to sign up for online billing that will not only deliver your monthly statement to your inbox, but alert you when a bill is coming due or becomes past due. Most also offer automatic payment options that allow you to choose a date on which to have payments automatically withdrawn from your bank account every month. Automation is a great way to ensure you never miss a scheduled payment.
3. Review your credit report and score – Check your credit report for errors and take steps to correct any that you find. If your score is lower than you would like, you can then start to take steps to improve your credit score.
4. Pay down debt – Debt is costly. By reducing your debt, you’ll lower the amount of money you waste paying interest. There are two schools of thought for paying down debt, and either can work for you. There are different strategies for paying down debt. One philosophy says to get rid of the highest interest debt first since that costs you the most money every month. On the other hand, choosing to focus your pay-off efforts on the smallest amount of debt – say that credit card that you owe $1,000 on – can help you reduce debt faster. Plus, you’ll get the sense of accomplishment that comes with paying off a debt. Decide which route works best for you, and create a payment plan as part of spring cleaning your credit. Figure out what works best for you and manage your credit card deb as an ongoing project.