Improvement in 2021
After enduring a year of many challenges and hardships, it’s finally time to turn the page on 2020. And like every new year, there also comes the New Year resolutions. Yet this year seemingly brings new focuses to our resolutions after all we have experienced this past year. Many will focus on topics like health, family, or even some of the other resolutions that we hear about every year. One resolution that may stick out among the many possibilities is managing our finances. There is no question that a lot of people faced financial difficulties in the last year – which is sure to have many wondering what they can do to avoid the same result in 2021. To help get you off to a good start, here are 5 ways to help reach your financial New Year resolutions:
1. Get to know your budget
Understanding and getting a general overview of your monthly expenses and incomes is always the best starting point. Take the time to go through what bills you have, and how much each costs every month. It even helps to do a little math and break down what any quarterly, semi-annually, and annual costs are on a per month basis. Also be sure to include how much you put into things like your 401K and savings (or even how much you would like to put into them). Once you include what income you make per month, simply compare and see how much you have left over. Based on this, you can gain valuable information on what decisions to make, such as cutting out certain expenses.
2. Watch out for interest
Sure, you may have been approved for a loan or a line of credit, but sometimes you can get sucked into a high interest rate. Higher interest rates means longer to pay off the loan (less money off the principal each payment) and more money out of your pocket by the end of the loan. If you have a credit card with unpaid balances, then that means being shackled to even more debt. Be sure that you are paying attention to your interest rates when applying for any sort of loans or lines of credit. If you can get yourself a low interest rate, that’s a great start; if not, then make sure you evaluate your options to handle it. This could mean anything from debt consolidation to simply making sure your credit card balance is paid every month.
3. Pay off that debt
This seems easier said than done, but it can be important to note. Leaving high balances to be paid on lines of credit negatively affects your credit utilization. If your credit utilization is too high, your credit score can take a dip. Nurturing your credit utilization can go a long way to building your credit. Even making small payments on your balances throughout the month can be beneficial to your credit score. Start checking in on your credit card accounts during the month to monitor how much of your limit has been used up. From there, you can either adjust your spending or make small payments. Simply doing this process will help you begin building better financial habits in 2021.
4. Debt-to-Income ratio
Something else to monitor is your Debt-to-Income ratio. It helps to give a picture of how much your income, on a monthly basis, goes towards payments on your different types of debt. Reducing this ratio as much as possible can reward you. For instance, it will help you receive future loans and lines of credit because you will show the ability to pay off that debt. You also will have more of your income available to use for what you want.
5. Refinance your auto loan
Not many know that you can refinance your auto loan, which holds lots of great benefits. Refinancing can help you lower your interest rate, which will help cut down your principal faster – and save you money on interest in the long run. We also help reduce monthly payments on auto loans at an average of $144 per month. With a lower payment, your Debt-to-Income ratio goes down and you can use that extra savings to pay down your other monthly balances. That means you can also improve your credit utilization to increase your credit score. Auto refinance can jump-start your New Year Resolutions for a financially healthy future.
By refinancing your auto loan with iLendingDIRECT, you can get on the road to a great 2021.