With just about a month left in 2018, you might be thinking about how you can make things better financially next year, and you’re not alone. More than 50 percent of people said their 2018 New Year’s Resolutions were money-related, according to a GOBankingRates survey. As you prepare for the new year, start by following these easy ways to reset your finances in 2019 and set sail for a bright financial future.
1. Create a Budget and Stick to It
People who don’t work off of a budget sometimes find that their money runs out before they get their next paycheck. To start a budget, add up all of your monthly expenses and subtract them from your net pay. You might discover that you are spending more than you are making, and you’ll need to adjust your spending to stay out of debt. Start by seeing where you can save money. Then, decide what to do with the money you save, such as having it automatically deposited in a savings account each month. To easily start a budget, try using a handy budgeting app.
2. Bundle Your Insurance Policies
If your home and auto insurance policies are with different carriers, consider bundling them with one company to score big savings, and depending on what state you live in, that savings can be even great. The national average premium discount for bundling home and auto policies is slightly over 16 percent. To give you an idea of how much you can save, a recent study by insuranceQuotes found that residents of Louisiana and Mississippi saved the most at an average of $590 and $520 per year, respectively, whereas residents of Hawaii and Vermont scored the least amount of savings at $188 and $175 per year.
3. Increase Your Retirement Contribution
You can opt to steadily contribute the same amount to your retirement accounts throughout your career. Or you can choose to gradually increase your retirement contributions by a set dollar limit or certain percentage to maximize your savings. One way to do this without it putting a strain on your budget is to increase your 401k contributions with each pay raise you receive since you’re already used to living on less. For 2018, the annual contribution limit for 401k accounts is $18,500, which will increase to $19,000 in 2019.
4. Look at Your Credit Reports
If you’re not in the habit of monitoring the information on your credit reports, you might want to start. Mistakes on your credit report can keep you from getting the best interest rates available to you. Things like old debts that should have expired, a former spouse’s bad debts, accounts that are reported more than once and payments that have been applied to the wrong accounts are all fixable errors that can result in a boost to your credit score and help you get better financing rate offers. But if you don’t take action to review and report credit mistakes, your score could be suffering.
5. Consolidate High-Interest Debt
Having multiple sources of high-interest debt can put a dent in your budget and keep you from making the most of your finances. One solution is to consolidate your debt into one loan at a lower interest rate. With a personal loan, you can expect fixed monthly payments at a typically lower interest rate than credit cards. For example, PenFed Credit Union personal loans have no origination fees plus rates currently as low as 6.49% APR on loans from $500 to $25,000. Your rate, however, will be determined by your credit score so make sure it’s at its best before you apply.
6. Start Using Cash-Back Credit Cards
When you use a credit card, especially for the bulk of your purchases each month, it makes sense to have one that includes cash-back rewards, which you can use to boost your savings account. Some of the best cash-back credit card offers feature up to 5 percent back on essentials like gas and groceries. Passing up the chance to get cash-back rewards is like leaving free money behind.
7. Refinance Your Mortgage
It makes financial sense to refinance your mortgage if you could get a lower rate, a fixed rate or a shorter term — moves which could save you some serious cash over the life of your loan. According to Dave Ramsey, the best mortgage refinancing deal is a 15-year loan with payments that don’t exceed 25 percent of your take-home pay. But before you make the leap, think about whether you’re planning to stay in your home for more than just a few years. Otherwise, it might not be worth it.
8. Refinance Your Student Loans
Just like refinancing a mortgage, refinancing student loans can help you reset your finances for a better 2019. A lower interest rate will mean you’ll pay less money out of your pocket over the long term. Before you refinance, make sure the APR, not just the payment, is lower than what you are currently paying.
Also, if you refinance a federal loan into a private loan, you might go from a fixed to a variable interest rate, which can end up costing more than your original loan. Additionally, if you refinance from federal to private, you might lose the benefits associated with your federal student loans like income-based repayment options and loan forgiveness programs so make sure to do your research before making a decision.
9. Re-Evaluate Services and Subscriptions
You can find some extra money in your budget if you take the time to re-evaluate the services and subscriptions you’re currently paying for. Look at the bill for each service or subscriptions and ask yourself:
- Are you actually using the service?
- Are you and someone else in your household both paying for the same service?
- Do you have multiple subscriptions for similar services that you can reduce down to one?
- Can you cut it from your budget?
- Can you change plans or options so it costs less?
- Can you negotiate with the provider to get the service for a lower cost?
If you’re able to eliminate just $25 per month from your budget this way, you’ll save $300 per year.
10. Ask for Lower Interest Rates
First, compare your credit card rates to the national average credit card rate to see where you stand. According to the Federal Reserve, the national average rate for credit cards was 16.46 percent as of Oct. 5, 2018. Find out what APR you’re currently getting and shop around for other credit cards offering low rates. Next, use this data to negotiate with your current creditor to get an APR that will save you money every month. If that doesn’t work, apply for a balance transfer credit card with a lower rate.
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