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Six Solid Ways to Prep Your Finances for the New Year

Consider making some changes to improve your bottom line before 2021.
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As we approach the end of 2020, now is the perfect time to examine your financial situation, plan your goals, and consider making some changes to improve your bottom line.

1. Find the best credit card for your lifestyle

There are dozens of great credit cards available. But choosing one single card that best matches your needs can help you save throughout the entire year. 

Most credit card providers offer various categories including: reward points, cashback, low rate, and travel rewards. Though, don’t be fooled by those cards that charge an annual fee. Paying a yearly fee is similar to belonging to an exclusive club – the perks are not worth the additional expense. Instead, find a fee-free card that offers similar benefits. Look for a card that offers rewards on everyday purchases like gas, groceries, or restaurants. 

Choosing the right card for you could help you achieve your financial goals. 

2. Audit your monthly bills 

The most recent data shows U.S. consumer debt is nearly $14 trillion. Chances are you carry some debt, whether it’s a mortgage, auto or student loan, or a credit card. Take a look at how much your debt is costing you each month. 

Interest rates are low right now, and refinancing your loans could save you hundreds of dollars each month. Or, consider a balance transfer to reduce your overall credit card debt. Transferring a balance is a smart choice, but it may cost you a small fee up to 1.5% of the balance.

3. Create a realistic budget

The pandemic has caused massive amounts of stress and anxiety. Nearly 8 million workers lost their jobs, and half of those people are still unemployed. Even if they didn’t lose a job, many workers have had to reduce their hours or take a pay cut. To cope, American’s have changed their spending habits to focus on the necessities. 

Consider a no-spend weekend or a full seven days of not spending. Resisting the urge to spend can be a fun challenge to determine what you do and don’t need to purchase with your hard-earned income.

4. Consider a second stream of income 

Get paid while you sleep. Relying on a good old fashion 9-5 job could be risky during the coronavirus age. 

Chances are you have a hobby that you could turn into cold hard cash. Consider selling hand-crafted goods on Etsy, drive for Uber or Lyft, clean houses, rent out a room in your home on Airbnb, or be a virtual tutor.

5. Switch your cell phone plan

Whether you’re an iPhone or an Android user, you could probably save some money by negotiating with your carrier. 

Get realistic about what you need from your cell phone carrier. Are you spending most of your time at home, where there’s Wi-Fi? If so, you may not need an unlimited data plan. On the other hand, if you’re regularly going over your data limits and paying for additional usage, an unlimited plan might be a better solution. 

Is there a budget cell phone carrier that offers more affordable plans? Or could you join a family plan? Figure out the most cost-conscious option for you.

6. Give back before it’s too late

Donating to your favorite charity can reduce your taxable income. However, you must contribute your donation on or before December 31, 2020. And, keep in mind electronic transfers can take up to 14-business days. So, consider making your donation in cash. Then deduct the charitable contribution from your income when you are preparing your taxes in the spring. Giving back has never felt so good.

Improving your finances will give you confidence as you head into the new year. Please do it for your future self.