7 Tips to Get Smart About Credit

  • October 15, 2020
  • By: Greenpath Financial Wellness

It’s National Get Smart About Credit Day – a great opportunity to assess your financial situation and make a plan to move forward.

If you are dealing with credit and debt, you aren’t alone.

The average American household has an average balance of about $6,600 in credit card debt, and that’s not taking into account home, auto, and student loans. Paying off your debt is successful with a little planning. In fact, a plan can go a long way toward achieving your financial goals.

Even in a time of financial uncertainty, there are ways to address and manage credit so it works for you.

7 Tips to Get Smart About Debt

In honor of Get Smart About Credit Day, see these seven suggestions to consider so you can save more, plan for the future, and live life financially well.

1. Get an idea of what you are currently spending.

To know where you’re going, you have to know where you’re coming from. Are you spending more than you make? Do you have excess money each month that you could be putting toward your debts? Use GreenPath’s budgeting worksheet to get an idea of how much money you have coming in vs. going out each month.

2. Take a look at your spending habits.

Once you have a full financial picture of your monthly surplus (or deficit), figure out what your spending habits are and how you might change them to get out of debt. Maybe you’re spending too much on subscription services – or realize you’re spending more than you allotted for groceries each month.

This online course on Redesigning Your Financial Habits is a great place to start. In about half an hour, you will learn some of the science behind habits, identify your spending habits, and make a plan to retool them to work for you.

3. Prioritize expenses and identify areas where you may be able to save.

Once you have an idea of where you are spending and why, see if there are areas where you can cut back. If you need some extra help deciding where to make cuts, this Aligning Priorities workbook offers information to prioritize your expenses.

Hold yourself accountable, and check back in on your spending habits.

Great, you’ve made a plan! But are you sticking with it?

4. Check the plan.

Plan your paychecks and check back to see how your actual spending compares with your plan. Use the Highlighter Test to see if your spending habits are in line with your goal, or if you might need to change things up a bit. Make adjustments as you need to.

5. Automate everything.

Set up direct deposits and automated payments so that you don’t miss due dates and get hit with a late fee. Use alerts and overdraft protection to help you avoid mistakes.

6. Choose a debt payoff strategy that works for your situation.

Many people consider paying the minimum on all debts and focus extra payments on one debt at a time. When you pay one account off, they redirect the monthly payment to the next one in line, adding it to the minimum they were paying already. This way, each time you pay off one debt, your payment on the next one gets bigger. This could be a good approach for you to consider.

7. Look into a debt management plan.

Depending on your situation, there may be options for you to get out of debt more quickly. If you have high-interest credit cards or other unsecured debts, a debt management plan could be just what you need to get out of debt for good.

A debt management plan works with your creditors to bring your accounts current, lower interest rates, and eliminate fees. This means that more of your payment goes toward reducing your account balances. It can help you pay off debts faster and save money on interest.  An added benefit is that once the debt management plan is established, diminishing collection calls and creditor balances help reduce worry and stress about your debt situation.

GreenPath is Here for You

At GreenPath Financial Wellness, we are working to make it easier for everyone to achieve financial health. We can help you gain a better understanding of your spending habits, and we can help you create a plan to pay off your credit card debt. Our financial coaches are kind and caring. We can help you understand your finances and make a plan to meet your goals. It’s free, confidential and no pressure!

Call today for a free financial counseling session.