Tips from finance experts: 'If you only do one thing, do this'

To finish the year in a better fiscal position, get started now

Carmen Chai
Personal Finance Writer
Covers tech, fraud, and credit card protection stories.

Tips from finance experts: 'If you only do one thing, do this

 

“Pay off credit card debt,” “Save up an emergency fund,” “Stick to a budget” – these are all common New Year’s resolutions for Americans hoping to smarten up with their finances.

But these financial goals are very broad, which could set you up for failure. Personal finance experts say you need to create specific, realistic and measureable resolutions.

CreditCards.com asked representatives from major banks, credit counseling agencies, national financial organizations, along with other experts, to name one thing they recommend you do this year to improve your financial outlook.

1. Tackle your debt strategically.

Making a dent in debt or even erasing debts altogether, is a popular New Year’s goal, says Dan Matysik, vice president of personal loans at Discover.

Be strategic in how you pay off your debts – specifically, determine how much you can commit to repaying and where you’re funneling these payments.

“When you are looking at your budget in the new year, one of the things you may be evaluating is how much you can put toward paying off debt,” Matysik says.

“If you have high-interest debt across different products, it may be beneficial to consider debt consolidation options,” he adds, by consolidating all your debts into one lump sum with a lower interest rate, such as a personal loan. “That way, you can have one monthly payment and potentially a lower interest rate and payment, costing you less in the long run.”

2. Automate your finances.

Brian Ford

Brian Ford

Many New Year’s resolutions are tricky to keep, says Brian Ford, SunTrust Financial well-being executive. The nice thing about financial resolutions, he says, is that you can automate some of the heavy lifting.

“If I could completely automate my exercise and eating routines, I’m confident I would be a lot healthier than I am,” he says.

“With money, you can. From saving for travel or your next big purchase, tracking expenses, paying bills and even investing for retirement, you can set it and forget it.”

Set aside an hour or two and automate your bills or transfers to savings, Ford says.

3. Don't give up using credit entirely.

You may be tempted to stash away your credit cards to spend less, but doing so may come with penalties, says Rod Griffin, director of public education at Experian.

“Make sure you use your credit periodically,” Griffin says. “Just a small purchase you pay off in full every month or two is enough. Credit scores require an account to have a minimum of three months of recent activity to be included in the calculation, and often as much as six months.”

“If you don’t use your credit, it might not be there when you need it most,” he says.

4. Create an emergency fund.

Katie Bossler

Katie Bossler

As you’re making your 2018 budget, figure out how much you can sock away weekly, bi-monthly or monthly, and funnel that money directly into a savings account, says Katie Bossler, a certified credit counselor at Green Path Debt Solutions.

“Put a set amount – say $20 or $25 a week – into an emergency reserves fund,” Bossler says. “Then you’ll have some funds on hand to pay for that window repair or broken water heater. And you’ll keep the expense off your credit card.”

5. Embrace technology from digital wallets to biometrics.

If you haven’t already, this may be the year to get up to speed with payment tools, such as digital wallets or mobile banking apps, says Ben Colvin, North America SVP of enterprise security at Mastercard.

“Safe and convenient mobile shopping is at your fingertips with digital wallets like Masterpass, Apple Pay or Samsung Pay,” he says. “This technology masks your card number for added security and simplifies the checkout process.”

Digital payments can be used online, within apps and in stores.

Embrace biometrics, too. That’s one way banks and card issuers are aiming to abolish the password.

“Fingerprints and facial recognition are the newest and safest ways to prove your identity in mobile payments, as you are the only person who can access your device,” says Colvin. “If you’re using alphanumeric passwords, make them complex with a mix of upper- and lower-case letters, numbers and symbols.”

Finally, try using apps to help you manage your finances. You’ll find apps to check balances, budget, set savings goals and make real-time payments, he says.

6. Ask for a lower interest rate.

Bruce McClary

Bruce McClary

If you’re chipping away at debt, a high interest rate may be setting you back. See if you can get a lower rate to ease the debt repayment process, says Bruce McClary, spokesman for the National Foundation for Credit Counseling.

“Credit cards are among the costliest forms of debt, so look for lower interest rates, either by negotiating with your current credit card issuer or shopping around for more competitive balance transfer offers,” McClary says.

This move could save you hundreds of dollars.

“You will want to know your credit score beforehand to know your chances of qualifying for the best offers,” McClary says. Look at your other debts as well, not just credit cards.

7. Commit to paying more than the minimum payment.

If you’re making only the minimum payment on your credit card statement, you could be in for a long journey to being debt-free. Speed up the process as much as you can, says Alice Rodriguez, head of community and business development at Chase.

Pay more than the minimum – maybe even double the amount owed – every month, she says. “The faster you can pay down that debt, the faster you can allocate that money to your savings.”

8. Familiarize yourself with the retentions department.

Joe 
Ridout

Joe Ridout

If you have cable, internet, phone or other services, now is the time to call your providers for a deal, says Joe Ridout, manager of consumer services at Consumer Action, a nonprofit advocacy group dedicated to consumer affairs.

“Your first year may be at a promotional rate, while the second year is more expensive without any discounts,” he says. “But if you’re a loyal customer and you’re out of a contract, you can call and say you’ve received a flyer in the mail from a competitor or you’ve flagged a better deal – you could end up with a price match or a substantial discount.”

This applies to insurance rates, too. Annual surveys list average insurance payments and the disparity could be as much as 300 percent for the same coverage, Ridout says.

“You need to be aware to see if you can get competitors to undercut prices,” he says.

9. Use up, or sell, what you have.

After the holidays, you’ll want to curb splurging in the new year and maybe even bring in extra income, says Chris Henningsen, vice president of consumer awareness at InCharge Debt Solutions.

It’s an opportune time to use old gift cards, movie tickets and credit card points on groceries, gas, shopping, entertainment and travel.

If you have electronics, clothes or other goods that are worth reselling, “consider a garage sale, or offering items on a second-hand sales site,” Henningsen says. Pay off debts or pad savings with the proceeds.

10. Find a financial mentor.

Brad Klontz

Brad Klontz

Whether you want to make more money, advance in your career or accomplish a new professional goal, you likely need to shift some of your beliefs and behaviors, says Brad Klontz, a certified financial planner, founder of the Financial Psychology Institute and associate professor at Creighton University.

“Expand your financial comfort zone by identifying someone who has either achieved what you want to achieve or is significantly closer to doing so than you are, offer to take them out to lunch and ask them about how they were able to achieve these accomplishments, and what advice they might give to someone who wanted to do the same,” Klontz says.

“Pay close attention to beliefs and behaviors that differ from yours and examine how adopting them yourself might help you better achieve your goals,” he says.

Bonus: Protect your identity.

2017 was an illustrious year of data breaches and security threats. Sign up for identity theft alerts to safeguard your personal information in case your credit cards, driver’s license or health card numbers are stolen or compromised.

“Alerts will warn you if your information appears on dark websites while resolution services aid in alerting credit bureaus and filing police reports,” Colvin says. “Many services are available to cardholders, free of charge, from card issuers or networks.”

See related: 9 ways to organize your finances in the new yearHot, new rewards cards to debut in 2018


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Updated: 08-18-2018