Free money moves
Steps to improve your financial well-being
Lots of people have more time than money nowadays. If you’re one them, here are some smart financial moves that make good use of your time and won’t cost a dime.
Assess spending This is the obligatory recommendation to develop a household budget. But creating a budget should be about liberation, not deprivation — about finding money to spend on things you care about and ruthlessly cutting things you don’t.
Recurring expenses are the black hole of regretful spending. Examine your credit and debit card statements to identify necessary and unnecessary spending. See if you can get lower rates on recurring expenses, such as auto insurance.
Manage debt Develop a plan for paying down debt. Two popular strategies: Pay extra toward debt with the highest interest rate (debt avalanche) or pay extra toward the smallest debts to wipe them out quickly and get a sense of accomplishment (debt snowball). Also: refinance your mortgage; refinance your student loan; transfer debt to a lower rate.
Monitor credit Your creditworthiness matters to your financial life, far beyond qualifying for a new loan. People with better credit live easier and less expensively. At a minimum, learn the main factors that affect your credit: payment history, credit utilization, credit history length and credit mix. Check your credit reports at AnnualCreditReport.com; check your credit scores (numbers that summarize your credit reports, available many places online); initiate a credit freeze if you’re worried about credit identity theft.
Reconsider housing and
cars Where you live and what you drive steer your money life more than most money decisions. Think critically about how your mortgage or rent, along with the cost of your vehicles, fit your financial life.
If your mortgage or rent is more than 28% of your gross monthly income, it’s time to ask hard questions about where you choose to live. If you’re looking at a new car, consider buying used instead.
Automate everything After you make a good money decision, put it on autopilot. That way, you won’t forget to stash away money or pay bills. And ultimately, you’ll have more time and money.