By Amy Mazigian, Senior Retail Manager at Gate City Bank
Ready to start fresh with a few healthy financial habits? Even if you’re not typically one to make resolutions, the new year is the perfect time to take a closer look at your finances and think about your goals for the future.
From managing debt to saving money on your mortgage, here are nine simple ways to stay on track and set your finances up for success.
Live within your means.
Simply put, don’t spend more than you earn.
Determine your monthly income and expenses to create a simple budget, so you know exactly where your money is – or should be – going every month. For many of us, it’s easy to overspend on those little day-to-day purchases without giving it much thought. (Is that Starbucks drive-thru worth it every day or only once a week? That’s up to you!)
Using a budget is a great way to focus on your priorities, reduce unnecessary spending and feel more empowered with your finances.
Practice mindful living, especially when it comes to spending.
Be intentional with your choices. Even if you’re already using a budget, it can be helpful to keep the 50-30-20 rule in mind, which means spending:
Reduce clutter by selling extra stuff that you no longer use or enjoy, which can free up more funds toward expenses, too.
Refinance your mortgage to save on interest.
If you have a home loan and haven’t refinanced within the last two years, it’s the perfect time to consider refinancing. Depending on your situation, you may be able to lower your monthly payments or pay off your loan much faster. (If you have any questions or need a hand, give us a call at 701-293-2400 or 800-423-3344. You can even start your application online with a lender near you.)
Not sure whether refinancing is right for you? Try our handy refinance calculator.
Build an emergency fund.
For peace of mind, make it a goal to save enough to cover three months of living expenses. Set up a savings account for when you need it most, and start an automatic transfer from every paycheck. Start small, and you won’t even miss it! Over time, that safety net will continue to grow with interest.
If you use a Gate City Bank debit card, you can also use our Simply Save feature to automatically round up your transactions to the next whole dollar – depositing the difference right into your savings account.
Get a home equity line of credit (HELOC).
One of the biggest lessons of the pandemic: sometimes expenses – and life changes – can come along unexpectedly. With a revolving home equity line of credit, you’re covered when you need it.
A home equity line of credit from Gate City Bank doesn't impact your mortgage rate or terms, and it comes with a lower interest rate than most credit cards. (Ask your tax consultant because sometimes the interest is even tax deductible!) If you have equity in your home, set it up now, just in case. It’s a terrific way to be prepared and have cash readily available in case of emergency.
Manage and consider consolidating your debt.
Having debt doesn’t mean you aren’t financially healthy. In fact, certain investments – like education and buying a home – are considered “good debt” since they have the potential to increase your net worth. The key is not having more debt than you can manage.
As a good rule of thumb, try to keep your total monthly debt payments under 36% of your monthly income. (This is known as your debt-to-income ratio for lenders.) If your numbers aren’t quite where you want them to be, there are several ways to reduce debt or make it more manageable, such as downsizing your vehicle, negotiating with your creditors for a lower interest rate or consolidating your debts to reduce your monthly bills. Focus on debts with the highest interest rates first, such as credit cards and loans for “toys” like boats, campers and recreational vehicles.
TIP: If you have a home loan with Gate City Bank, ask about our BetterLife™ Student Loan program, too. Since 2015, we’ve helped over 3,000 customers refinance their student loans – saving each customer an average of $9,631 in interest.
Save for retirement – the earlier, the better.
It’s never too early to set up a retirement account and plan for your financial future. Contribute as much as you can, and if you have an employer match with your 401K, max it out. Start where you feel comfortable, and consider adding another 1% to your contribution every January. You’ll barely notice when you adjust it annually, and over time, it will really add up!
If you have questions about the right strategies for retirement, college funding for your kids and more, Gate City Investment Services will be happy to help, too.
Make it a family conversation.
Talk to your partner. Even if one of you takes the lead on day-to-day money management, make sure you’re always both aware of key financial information regarding your accounts, investments and debts.
Share fundamentals and teachable moments with your kids, too. Gift cards can be an easy and practical tool to help teach them the value of money at an early age, as well as help them understand budgeting if they want to save for more expensive items down the road.
Ask for support.
Remember, we’re here to serve you when it comes to saving, refinancing or financial planning for whatever matters most to you. Let us know how we can help!