New Year New Resolution

Every year, many people make resolutions they want to follow throughout the year. For 2018, I know you can guess which three resolutions were the most popular.  According to Statista, 37% of people ranked eating healthier, getting more exercise and saving more money as the most common resolutions. Meanwhile, 32% of respondents stated they will not make any new year’s resolution (Statista). The biggest problem with a resolution is how difficult it is to stick to it! Here are a few ways you can keep your finances in line and a note on how to accomplish them.  

Pay Down Credit Card Debt

If you went a little overboard with holiday shopping or had a major expense such as replacing your furnace this winter, your credit card may be close to its limit.  Regardless, paying down or eliminating credit card debt can be intimidating and frustrating. Especially if it is a large amount. According to Nerdwallet, the average household carries a credit card balance close to $15,654. Medical expenses were a key contributor to that number.  So where does a person even start to pay off their debt?

Budget and Prioritize. Calculating your income versus expenses would be the initial step.  You then can determine how much you can pay toward your credit card debt every month. Once you establish your budget, start using the excess cash to pay your credit cards. Start with the cards that charge the highest interest rate. If this is not enough, try cutting out an expense from your lifestyle or raising your income to help.

Balance Transfer/0%. Another option available might be a balance transfer to a credit card that has 0% interest.  You may have to pay a one-time balance transfer fee, normally around 3%, but it may be worth it to eliminate the interest charges.  It would allow 100% of your payment to go toward principal. We recently discovered a credit card that had 0% for 21 months. Ask us if this is something you could use.

Home Equity Loan/ Line. Another option is a home equity loan or line of credit. Although this requires another loan, it can be a great solution. A homeowner can utilize the equity in their home to pay off credit card debt or any other debt. Most banks offer this product. The biggest benefit is how low the interest rate can be. For example, the interest may be around 3%-6% on an equity loan/line.  This is far better than the normal interest on a credit card which may be upwards up 25%.

Increase your Retirement Savings

Are you worried about how much money you have been putting away in your retirement account? The number of Americans who will not have enough money to retire on continues to grow. The time to act is now. Quit ignoring this problem and do something about it.

Start by accessing the resources available to you. For example, are you participating in your companies 401(k) plan? This is a huge benefit if your employer offers one. Especially since some employers will match all or a portion of your contributions. If they do match, always contribute the amount which allows you to receive the full match from your employer. This is, free money. Remember, these funds go in on a pre-tax basis, which lowers your taxable income. Plus, the account will also grow tax-deferred.

If you are already contributing, then consider bumping up your contribution amount. Say you are contributing 4%, can you increase your contribution 1%, 2% or even double it? Some experts believe 10-15% of your income should be the amount we need to save for retirement.

We believe your goals and lifestyle also play a key role in your contribution amount. Quality of retirement is not only dependent on contributions, but also the performance of your account. Talk to us if you believe this is something you need reviewed.

Lastly, if you do not have access to a company 401(k), consider an IRA or Individual Retirement Account. These accounts have the same tax advantages and are a great way to save for retirement.   

How to Stick to your Resolution

Did you know only 8% of people who make a resolution stick with it? Here is one piece of advice to improve your chance of staying true to your resolution.  We have implemented this technique ourselves.

Visualization. Whether you are trying to accomplish a new year’s resolution or personal goal, you need to write it down. Otherwise, it is just a dream. I had a professor tell me to write my goals on a small piece of paper and put it in my wallet. This way it would always be with me. By writing it down, you create a visual reminder of your goal. It becomes more concrete and genuine.  For example, if your resolution is to reduce debt, write a number down along with a date and put it somewhere you can see it every day. It is a way to hold yourself accountable. It will reinforce the actions you need to take to be successful.   

Please feel free to reach out if you are needing any financial advice regarding your resolution for 2018.

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio.  Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Griffin Financial Advisors, LLC. The opinions expressed are those of Griffin Financial Advisors, LLC and are subject to change at any time due to the changes in market or economic conditions.