The Best Money Moves for a Successful 2020
November 27, 2019 |
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Have you ever heard the old saying, “Hindsight is 20/20?”
Well, since next year is 2020, we’re calling it “The Year of Perfect Vision.” Perfect financial vision, specifically.
And to help you get some foresight into 2020, and make it the most successful year ever for your finances, we’ve put together our best tips for making the most of your money.
Understand your credit score
When was the last time you looked at your credit score? Have you ever looked at your credit score? Did you even know you had a credit score?
Take some time right now and join one of the free credit programs like FreeCreditReport.com or Credit Karma, and see what your current score is. Both of these sites provide information on your scores from 2 of the 3 major credit reporting companies (TransUnion, Equifax, and Experian). And because of the way they operate, you can check your score without it dinging your credit (which happens when you apply for loans or financing).
A great credit score will be between 720-850. A good credit score is between 690-719. A fair score is between 630-689. And a bad score is anything below a 629.
So what’s your score?
Improving your score, even by a small amount, can make a real difference in the kinds of interest rates you get when you apply for car or home loans, personal loans or financing. And there are some really simple ways you can improve your score quickly.
- Pay off your credit card every month
- Set up automatic payments for recurring bills so you’re never late again
- Pay down or pay off high interest rate debts like credit cards
Once you understand your credit score, and work to improve it, you’ll be on the move towards a truly successful 2020.
Understand your debt
Almost everyone has debt. Credit cards, car loans, mortgages, student loans, medical bills. They all stack up. This week, take some time to make a list of your current debt, the interest rates, and the monthly payments you’re making.
Arrange that list so the ones with the highest interest rates are on top. Those are the ones you want to pay off first. High interest rates are a killer, and can drag down your credit score. If you want to be more financially secure in 2020, pay off those high interest rate debts. Credit cards are usually the ones with the highest interest rates, and if you can remove that debt, it can really make a difference.
Once your score is stronger, look into refinancing some of your other loans. You might be eligible for a lower interest rate on your car loan or mortgage, which could save you a lot of money.
And consider increasing your monthly payments, even if it’s just by an extra $20 or $50 a month. Anything you pay on top of your monthly bill goes directly towards the principal (the amount you borrowed), which means there’s less to collect interest on, and so you’ll end up paying less in the long run.
Understand your savings
Does your company offer a 401(k) plan? Are you contributing to it? You should be. This month, take a look at your 401(k) and see how much you are contributing from each paycheck. At the minimum, you should be contributing 6%. Remember this is your retirement savings, so the more you add to it now, the more time it’ll have to earn interest and the more you’ll have when you retire.
If you can afford it, look into increasing your contributions for next year. Even a 1% increase can make a big difference by the time you retire. Make a note to check this every year, and see if you can afford another 1% increase until you hit the max.
If your company offers a contribution match, make sure you’re at least contributing the minimum to earn that match. It’s free money for your future.
If your company doesn’t offer a 401(k), look into opening an IRA.There are two different kinds of IRAs, so you need to research and see if one makes more sense than the other. Contributing what you can up to the max each year will help you secure your future.
And lastly, take a look at your personal savings accounts. How much is just sitting in that sad little account, not earning anything? There are better ways to save your money to make sure it’s earning its keep.
- Money market accounts are a great way to earn interest over time without many restrictions or penalties
- CDs can earn more interest faster, but have more restrictions and guidelines
- High interest savings accounts are great because it’s the same as your current account, but actually earns you money
Make sure you set aside a specific amount of money, or a specific account, to act as your emergency fund. Even if next year is “The Year of Perfect Vision,” we can’t predict emergencies like busted pipes, medical events, car repairs, job loss, meteors crashing into your roof. Most people believe that having between 6-12 months’ worth of your current salary in your emergency fund will help protect you for the future.
Now that you understand everything about your finances, you’re ready to make 2020 the start of your amazing financial journey.