For many, 2022 is a difficult year, with high inflation and a plunging stock market affecting the personal finances of many Americans. Fortunately, a new year is just around the corner and many people are weighing their options and promising to improve their financial situation by 2023.
But New Year’s resolutions are hard enough to sustain even if the world doesn’t put more challenges your way. So we’ve put together a list of three practical ways you can start getting your personal finances in order in 2023, along with some of our favorite financial tools that can help you out. throughout the process.
First, note that we said a part your debt, not all of it. Studies show that the The best way to make a New Year’s resolution stick is to set specific, achievable goals. And if you’ve spent years in debt, it can be really difficult and frustrating to try to get out of it right away.
But you can take some manageable steps to not only pay off some of your debt, but also set yourself up so that the rest of your debt will be easier to pay off later. How? By reducing the interest you are currently paying on your debt.
Based on WalletHub, the average credit card interest rate for existing accounts is 16.27% and is even higher at 21.34% for new accounts. Those unusually high interest rates make it increasingly difficult to pay what you owe, even if you’re making the minimum payments on time.
So how can you lower your interest rates to a more manageable level? Believe it or not, the best choice is a somewhat counter-intuitive one: opening a new credit card.
We know what you’re thinking, but wait! We do not recommend opening a new credit card to spend more money. You’ll want to look for a credit card that has referral balance transfer offer.
Credit card balance transfer offers 0% interest for a temporary period of time on existing debt that you transfer from other cards. The referral period can be from 12 to 21 months, depending on the card.
By transferring your debt to a new card with an initial balance transfer offer, you won’t have to pay interest on that debt for more than a year. And even if you continue to pay the same amount you’ve paid each month until now, you’ll reduce your debt, because part of your payment will no longer have to pay exorbitant interest. again.
How can you find a credit card with a balance transfer offer? Just check out CNN Underscored’s list of Best balance transfer credit card and see which card might be right for you.
The good news is that credit card issuers, after being stingy in approving people’s balance transfer credit cards during the pandemic, are now mostly back to normal, so It’s easier to get a new card now. But if you get rejected, it’s probably due to a low credit scoreapply for a personal loan is another option.
Interest rate per personal loan potentially higher than the initial balance transfer offer with a credit card, but could still be better than the interest rate you’re currently paying. Plus, you don’t have to worry about the interest rate on a personal loan changing after an introductory period, like you would with a personal loan. credit card balance transfer. It’s also easier to get approved for a personal loan, as there are options for people of all credit levels, although the worse your credit, the more interest you’ll have to pay on the loan. personal.
You can use a personal loan to pay off your existing debt, and with a personal loan, you’ll have a specific timetable for paying off your debt so it doesn’t last forever. But if you’re considering a personal loan, make sure that loan’s interest rate is lower than what you’re currently paying – otherwise it won’t make sense to switch.
There are other factors to consider if you’re applying for a personal loan, so if you’re considering this option, be sure to read our guide on how to apply for a personal loan. Why might you consider a personal loan? and how to apply for one. And for more ideas on how to make your debt more manageable in 2023, check out our four steps to get rid of your credit card debt.
If there’s one thing the past few years have taught us, it’s the importance of having some kind of savings or emergency fund.
Some say that, as a rule of thumb, you should save three or six months of living expenses. But if you don’t have any savings right now, don’t try to accumulate all six months of savings at once. Again, your goals should be achievable so that you have a chance to accomplish them and prepare for future victories.
So instead, set a goal that you will begin an emergency fund in January and add to it every month in 2023. This could be as simple as putting a jar on a kitchen counter with a slot in the lid and putting change in it every time you get home. That won’t be a ton, but it’s still better than doing nothing.
However, an even better strategy is Open a savings account and have a portion of your paycheck automatically deposited into it every payday. This is a concept called “pay yourself first”, because you are saving money for yourself every month. before you start paying your bills, instead of trying to save what’s left at the end.
You may think opening a savings account sounds like a hassle, and 20 years ago that would have meant going to the bank and 45 minutes with the banker. But in 2023, you can actually do it at home in about 10 minutes with any of the hundreds of online savings account options.
Maybe you’re worried about depositing your money in an online bank you’re not familiar with? Then you can consider an option like Capital One 360 . Performance Savings Account, which CNN Underscored recently reviewed. You can find other savings accounts that earn more interest, but if you’re looking for an established company and an extremely easy and quick way to get started, it’s an option. sure.
Now, if you’re spending every penny of your income and aren’t sure how you’re going to save it, it’s a good idea to take a moment in early 2023 to sit down and put together a spending plan.
One spending plan slightly different from budget, in that it allows you to choose what you right spend money each month and then give you the freedom to do whatever you want with the rest. (Plus, it’s more fun to think about spending money than budgeting. Everyone loves to spend money, right?)
If you don’t know how to plan your spending, we have spending plan guide that will take you step by step. And if you’re having a hard time figuring out how to cut down on what you’re spending so that there’s room to save some money, check out our ideas for how to reduce three main expenses in your household in just 30 minutes.
Credit scores can be scary and confusing, and there’s a lot of misinformation about how they’re calculated and what affects them. But one thing everyone knows for sure is that the higher your credit score, the better. In modern life, your credit score affects everything from how much you’ll pay on a car loan to whether you can get a mortgage to buy a home.
So how do you improve your score? Well, like everything else on our list, you can’t go from bad to excellent all at once. But you don’t have to have one perfect credit score to make a difference. While the higher the better, even a high score will open up new financial doors for you that a GPA cannot.
Of course, the first step to improving your credit score is know what your score is to start. CNN Underscore’s guide to how to check your credit score There are several online options, many of which are free, and some of which you may already have access to and not even know about.
And once you know your credit score, how can you tell if it’s good, bad, or somewhere in between? The answer is that it depends on the credit score you are looking at. That’s right – to make things more complicated, there are several different credit scoring models that different companies use. But don’t worry, because our guide to What is a good credit score? give it all to you.
Once you know your credit score and your location, the best way to increase your score in 2023 is to ensure that you are paying all your bills on time each month. Timely payment is one of the biggest factors used when calculating your credit score. And if debt is dragging your score down, paying off some of it using our tips at the top of this story will also help boost that score.
Finally, while you should beware of unscrupulous “bad credit repair” services, one that you can safely use is increase experience, operated by one of the three main credit bureaus. Experian Boost can track a good payment history for services that don’t normally show up on your credit report — like utility bills or streaming services like Netflix — and improve your score. by adding them to your credit profile. And best of all, it’s free.
And one more note: If you’re a tenant, consider getting payment Mastercard. You can use it to pay rent with no extra fees and earn rewards in the process. Even better, when renting at a Bilt Alliance property, you can choose to have your on-time rent payments automatically reported to the three main credit bureaus, which is a great way to build (or rebuild) your credit. Best of all, the Bilt Mastercard doesn’t charge an annual fee.
Here are some resources from CNN Underscored to help you implement New Year resolutions:
And you can find all of our daily personal finance stories at CNN’s Underlined Money Center.