February 12, 2016
By Michelle Conerly
With the holidays over and the New Year upon us, it’s a good idea to establish a strong financial basis you can lean on throughout the rest of the year.
But for some still reeling from their holiday spending, it might seem like a daunting task.
Albert Manley, operations manager at Express Financial, said now is the time to follow these few simple tips that will help you start the New Year off in prosperity.
Manley said if you’ve got revolving debt—like a credit card balance—pay more than the minimum so that you can pay it off more quickly. Also concentrate on one debt at a time.
“A credit card is to be used, not abused,” Manley said.
For some young people who’ve just received their first credit card, while being able to swipe might feel empowering, Manley said to be aware of your spending.
“You can keep a small balance on it all the time—not more than $100,” he said. “But be careful with revolving debt. Don’t run that balance up when you can’t pay it off.”
Manley said many cards offer advantages like airline miles and that if travel is something you’re interested in, you should look into those special deals from local banking institutions.
“Let the card work on your behalf,” he said.
One option for homeowners trying to pay down old debt would be acquiring a home equity loan. To consolidate debt into a home equity loan, you concentrate on single payments that are spread out over a long period of time. And if you can afford it, just like credit cards, always pay more than the minimum balance.
Manley also said that the interest that piles up on your home equity loan is tax deductible, which could equal a tax break in the following year.
Building good credit will pay off in the long run, too, he said, especially when it comes time to make a major purchase like a car or a house.
“When the time comes to make those major purchases, you could save up a sizeable amount to pay it off quicker,” he said. “But with good credit, your credit is there, your ability to pay is there, and certainly you’re willingness is there. It’s a no brainer for the bank to approve your loan.”
And lastly, it’s important to instill good financial management throughout the family. For instance, parents should make it a point to speak to their teenagers about creating good financial habits early on.
“I think it’s one of the most important conversations to have with a child that will be leaving the nest soon—to teach them about budgets and staying within your ability to pay,” he said. “Budgeting is the most important thing to teach before they go out the door, and it’s our jobs as parents to teach them.”
