Get started on finances in the new year
If you are planning to purchase a home in the next year, it is important to assess your financial picture and make improvements, if necessary.
Having a high debt-to-income ratio or a low credit score can impact whether you are approved for a home loan or not; however, potential home buyers can start by taking basic steps to improve their situations. Total American household debt is only rising, so if you are in debt, you’re not alone.
For consumers hoping to make a major purchase, such as a home or other item, but need to improve their finances first, the Better Business Bureau of Greater Houston and South Texas offers the following tips:
• Take a closer look at your credit cards. Credit cards are known for their high interest rates, and this can waste a lot of money over time. See if you can use a balance transfer offer to switch to a card with a lower rate.
Do your research on BBBHouston.org first. Make sure to read the terms and contract very carefully as there may be big penalties if you miss a payment.
If you have multiple cards, decide which debtpaying strategy is best for you.
Some experts recommend paying off cards with the highest interest rates first, but others recommend paying off cards with the smallest balances first.
Determine what works best for you. Additionally, try sending in payments throughout the month. Put the $5 you would have spent on a morning coffee toward your debt instead.
• Don’t waste money on unethical businesses or scams. When making a purchase or choosing a business, always check with BBB. Making careful decisions now can save you time, money, and headaches later.
Research all companies with the BBB, and check BBB Scam Tracker regularly at BBBHouston.org/ScamTracker to see what scams are happening in your area.
• Take advantage of free tools. There are many online tools that can help you manage and reduce your debt. A great place to start is the BBB Financial Building Blocks website at www.BBB.org/financialbuilding-blocks, which helps consumers evaluate their finances, learn how to stay debt free, and protect themselves from scams and illegal collection calls.
• Write out the year 2020. Avoid abbreviating the year 2020. Writing “/20” without the first two digits may leave consumers vulnerable to scammers.
Fraudsters can capitalize on the use of abbreviated dates in the new decade, altering document dates to their benefit by adding just two digits.
For instance, the date “1/10/20” could be changed to “1/10/2019,” making consumers vulnerable to an array of fraud. Checks, bank drafts, pay orders, bills, legal documents and more are susceptible to alteration.
• Start budgeting. Creating a written budget and tracking your spending is one of the best ways to save money and stop spending more than you earn. First, figure out how much debt you have; you need an accurate picture before you can figure out your budget.
Note the difference between fixed expenses, needs, and wants. If you have debt, include repayment goals in your budget.
If you can, try to factor in retirement and emergency savings as well. Save money by giving up your morning coffee and cooking at home instead of getting takeout. Factor in any alternate income that you can think of, like selling unused items or part-time work in the gig economy.
The Better Business Bureau is an unbiased nonprofit organization that sets and upholds high standards for fair and honest business behavior. Visit www.bbbhouston.org or call 713-868-9500. Leah Napoliello is senior director of Investigative Services with the BBB of Greater Houston and South Texas. Send questions to Leah Napoliello, Better Business Bureau, 1333 West Loop South, Suite 1200, Houston, TX 77027, or e-mail lnapoliello@bbbhou.org. Include your mailing address and phone number.