The trees are in full bloom in many parts of the U.S. As warmer weather approaches, there’s no better time to tackle spring cleaning. Don’t forget to include your finances along the way. The steps below will help you breathe new life into your accounts and manage your debts more efficiently.
Ready to start? Begin by:
Auditing yourself. Dust off your budget and give yourself an audit. Look through old bank statements and credit card bills, circling discretionary and entertainment expenses. Add up the total and let it sink in. Did you spend too much? Could you afford to cut back in the future? Self-analysis is the first phase of a fresh start. Rejuvenate your finances by making better choices this spring.
Going green. You probably dug up some dirt during your self-audit. Wasteful habits and careless spending probably aren’t limited to entertainment costs. While some expenses like rent and groceries are unavoidable, the bottom line is always subject to change. Consider making an environmental shift to help save money—and the planet—in the process. Use less paper products, LED light bulbs, and cut back on long showers. Your efforts will help you save on utility bills while also reducing your carbon footprint. You can’t lose.
Lowering rates and raising limits. Credit card balances can cast a dark cloud over the brightest intentions. Don’t allow debt to overshadow your mood this spring. Call your creditors and ask for:
- A lower interest rate. Accruing interest can add months or even years to your credit payoff plan, making it harder to save money and control debts. If you’ve been a good customer, ask your creditor to lower your interest rate as a sign of goodwill. If they won’t budge, float the idea of transferring your balance elsewhere and see what they say.
- A higher credit limit. Credit utilization accounts for 30 percent of your credit score. The ideal ratio is 25 percent or less—meaning that you should never charge more than 25 percent of your total credit limit. A quick way to improve your ratio is to ask for a higher credit limit. For example, if Caroline has $5,000 in credit card debt with a $15,000 credit limit, her utilization ratio is 30 percent. If she asks for a limit increase to $20,000, her utilization ratio will drop to 25 percent. Simple math can lead to large credit score payoffs. Take advantage of the options available to you.
Cashing in on physical space. A cluttered mind lives in a cluttered house. Disorganization is a common cause of poor money management, a catalyst for overspending and credit damage. Get serious about spring cleaning this year by cleaning your mind andyour home. Sort through your stuff and ask yourself a few questions:
- Have I used this in the past year?
- Do I still like it?
- What is it worth?
Take your unwanted items and benefit from their value. Place an ad on Craigslist and wait for buyers to come knocking. Invest your earnings into savings or debt reduction. The result will improve your physical and financial life, putting you in the right mindset for an organized future.
Saving for happiness. Credit repair is a lifestyle choice. Much like a healthy diet, it’s easier to maintain with a reward at the end of the tunnel. Keep yourself on the right track this spring by saving for a source of happiness. In addition to retirement and liquid savings, set aside some cash for something you want, whether it’s a new mountain bike or a trip to the coast. Enjoying your earnings is an essential part of living responsibly. Don’t deny yourself a balanced life. Invest in your credit health on every level.