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Sticking With Your Financial New Year’s Resolutions

Sticking With Your Financial New Year’s Resolutions

New Year’s resolutions have a long history, but not everyone feels the need to dedicate time to changing habits or improving their life in other ways at the end of each year. If you are on the resolution bandwagon, you are far from alone. More than 45% of all adults in the United States resolve to change something in the upcoming year, and some of the most common commitments are to financial well-being. Some decide to spend less and fatten up their savings, while others create goals for major purchases like buying a house. Paying off debt falls into one of the most frequently cited resolutions, too.

While decisions present a clear opportunity for change, not everyone meets their goals with ease. In fact, only 8% deem themselves successful in reaching a New Year’s resolution by the end of the year. If you’re concerned with how you might live up to your financial resolutions for this year, consider these helpful tips.

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Get to know Your Why

The first step to meeting the financial goals you’ve set for yourself in the upcoming year is having a strong understanding of why you’re trying to achieve them. It’s great if Betsy down the street is trying to pay off her mortgage, or Tom at the office wants to start investing in the stock market, but your goals should be unique to your bigger picture.

Putting more in your emergency fund by spending less throughout each month may allow you to avoid debt, like short-term loans or high-interest credit cards when a big expense comes up; similarly, working toward paying off your credit card balance means you’ll have more to use for travel or retirement savings. Knowing the why behind your resolution is one part of the process that allows you to stick with it throughout the year.

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Try Autopilot

Achieving your financial resolutions often comes down to willpower, but did you know you have a reliable partner in the process? Automating financial activity – from paying down debt to saving for a rainy day – is one of the easiest moves you can make toward changing your financial life. Nearly all financial institutions give you the ability to set up automatic transfers from a checking account into a savings account, and others even provide a way for you to direct deposit funds into savings from your paycheck.

Employers who offer a retirement plan give you the chance to set up automatic contributions each pay period, making saving for the long-term a breeze. If you’re working on paying down debt, most lenders give you the opportunity to establish automatic payments either for the minimum amount due or a little extra. Whatever you’re working toward this year, setting your goals on autopilot is a helpful practice.

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Make them Realistic

Another lynchpin in meeting your financial resolutions is knowing you can indeed accomplish what you’ve set out to do. That starts with being realistic about what you can feasibly set aside for savings, retirement, debt, or investing by taking a close look at your cash flow. No one wants to spend time budgeting out every last penny of their paycheck, but doing so gives you an opportunity to uncover overspending or gaps in your plan. Once you have a solid idea of what you’re able to use for your financial resolutions, set your sights on achievements that are within your reach – and your budget.

Get a Partner in Crime

The final tool to being successful in the new year is finding an accountability partner. Whether they hold your hand when you fall off the resolution path, or they give you a slight (or hard) nudge to motivate you, having someone who understands why you’re trying to achieve something different can be a lifesaver. Friends, family, and co-workers can be great accountability partners, but don’t forget you have professional options, too.

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Financial New Year’s resolutions are no different than resolving to lose weight or spend more time with your family. They take a heavy dose of commitment from the start, and even more clarity as to why you’ve added them to your big to-do list. Adding in these tools will help you stick with your financial resolutions, no matter how big or small they may be.

Featured photo credit: money/https://pixabay.com/en/money-dollars-success-business-1428594 via pixabay.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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