4 of the Best Personal Finance Tips for 2020
It’s a new decade! Start it off on the right foot by making a smart investment in your financial future. Unsure where to begin? Reach out to your Fiduciary Advisor in Orlando, and start with these four smart financial moves.
Consolidate Credit Card Debt
If you’re like the rest of us, you have credit card debt, and that interest rate may be higher than your mortgage, auto and student loan debts combined. By consolidating your credit cards, using a transfer balance card, or applying for a personal loan, you’ll be able to control and potentially lower your debt. If you’re unfamiliar, a credit card consolidation loan is an unsecured loan ranging up to $100,000 and requires repayment within about 2 – 7 years.
Refinance Student Loans
Currently, the student loan refinance rate is extremely cheap. It’s starting at about 1.9%, and if your rate is higher than that, which it most likely is, then now is a great time to consider refinancing.
When you refinance, you consolidate all of your loans into a single student loan, with a lower interest rate and one single monthly payment. There aren’t fees or repayment penalties associated with refinancing, so the process itself is straightforward and you’re able to pay off your loans earlier too.
Improve Your Credit Score
Your credit score can benefit your life, or be a detriment, depending on how strong it is. FICO scores are the most frequently used and range from 300-850, the higher the number, the better the score, and raising your score isn’t that difficult: By better managing your credit card usage and using less of your available credit, your score will increase. It will also increase if you’re able to increase your debt to income ratio. Simply meaning, generating more income, lowering your debt, or ideally do both of those things. Adjusting your debt to income ratio may be easier said than done, so one of the best ways to make your credit score better is by paying on time, even if it’s just the minimum, and never skipping a payment. If that is a struggle, speak to your financial advisor, and implement calendar notifications, reminders, and a structured budget every month.
Start an Emergency Fund
Hopefully, 2020 will be successful and uneventful, but it’s unlikely you’ll go through 365 days without something unplanned. Accidents and emergencies happen, so you need to be prepared! The Federal Reserve states that almost 40% of Americans do not have the cash to pay for an emergency. Whether that is unexpected unemployment, damage to your home, or a medical expense, you need to have some money available. Make the unforeseen problems more easily dealt with and establish a financial emergency fund now. Ideally it is at least 6 months of cash, or liquid assets than can be immediately used to cover any and all unexpected emergencies.
Make 2020 a strong financial year for you and your family. Be prepared, be diligent with payments and consolidate or refinance if the opportunity presents itself. Consult your fiduciary advisor and get started right away.