We all look at the new year with hope and the motivation to improve ourselves. With this comes the promise to do a lot of things. Although a lot of us tend to forget the resolution after a few months, it still makes sense for us to start our year right by setting goals for the coming year.
When it comes to our finances, one of the things that we want to improve on is our credit health. Debt is one of the reasons why a lot of people are having a hard time financially. Credit obligations can limit your resources further and will keep you from increasing your savings or investing it to grow your money. This is why some people are trying to learn credit management. It is one way for them to take control of the debt before it ruins your finances.
We are not saying that you eliminate debt entirely. There are debts that are potentially good for consumers. For instance, student loans can help consumers get a better chance at earning a respectable amount of money. Home loans can increase the personal net worth of a household through the home’s equity. However, even the supposed “good” debts like student loans and home loans can be destructive if you cannot manage it well. This is why this particular management lesson is very important so consumers will not be scared of debt.
Survey shows that consumers want to improve their debt situation
What you have to realize is that debt is not really the problem. It is our mismanagement of debt that makes it a burden for us. But when you learn the right credit management skills that will keep you from financial ruin, then you do not have to be afraid of debt. You will know how to utilize it to improve your financial situation.
A survey done by Wells Fargo proved that a lot of consumers are bent on improving their credit management skills. The survey is entitled “How America Buys And Borrows,” and is published on WellsFargo.com.
The press release Last December 20, 2013, that was published on the site discussed the following highlights of the survey.
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Americans will be focusing on credit scores and debt.
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60% of respondents have checked their credit scores or credit report in the past year.
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40% of Americans are proud of the current situation of their credit score.
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22% of Americans are concerned about their credit ranking.
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80% of respondents that plans to purchase worth $2,000 in the next two years. 41% will use it on home-related expenses, 32% will use it for travel and 28% will use it on vehicle-related expenses.
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77% of Americans feel good about their finances.
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Baby Boomers (42%) and Gen X (35%) are more inclined to actively work on reducing their debts.
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35% of Millennials are more concerned about their savings.
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39% are paying off credit card bills on a monthly basis.
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38% are saving for major purchases instead of using their credit cards.
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32% are strictly implementing their monthly budget plan.
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43% of Americans are positive that things will be a lot better next year.
The rest of the findings indicate that most consumers are not only bent on paying off their debts, they are also intent on saving for their retirement. They are implementing the necessary credit management habits like credit monitoring and timely payments. Not only that, the Wells Fargo survey indicated that consumers are more cautious about the interest rate and the total price of their purchases.
All of these data paint a smarter consumer that is bent on taking charge of their finances. It bodes well for the individual wealth of every American family. While the resolutions are intact, it remains to be seen if they will actually be met. Unfortunately, we have the knack of making all of these promises at the beginning of the year – only to back out on our word a few months after.
4 ways you can be financially fit all the time
If you are intent on fulfilling your promise to be more responsible when it comes to credit management, there are a couple of things that you can do. First off, you may want to know how you will
The Principal Financial Group released a report that revealed the financial blunders that were commonly committed last year. Here are the highlights as published in Principal.com:
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22% did not save enough
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9% accumulated credit card debt
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8% took on more credit than necessary
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7% did not budget properly
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7% spent beyond their means
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7% drained their emergency fund
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6% did not invest
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5% invested too little
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2% invested during the wrong time
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2% took a long on their 401(k)
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2% others
Although 24% did not commit any of the blunders, it is important to note that there is another 24% who had some debt problems. These were the people who accumulated credit card debt (9%), took more credit than necessary (8%) and spent beyond their means (7%).
Not only that, this same report indicated the various reason why people were not able to stick to their budgets. In most cases, our financial resolutions are in our budget plan. If we failed to follow it, the chances of us failing our financial improvements will be more likely to happen.
Here are the reasons why budgets were not followed in 2013.
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22% dined out
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21% overspent on food and groceries
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20% spent a lot on gas
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15% overpaid on entertainment expenses
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15% splurged on clothing and shoes
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14% went to travel expenses
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13% other consumer goods
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11% unplanned home improvements
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5% on coffee
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9% other expenses
While 29% of the respondents were able to stick to their budget a bigger percentage, 71% blew their budget plans.
If you want to be able to improve your personal finances, you need to start on credit management. Here are some things you can start this year to help you with your intention to implement personal finance improvements.
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Come up with a plan to pay off your debts. This is probably one of the most important things that you should accomplish. Lowering your debt will free up your limited resources to be allocated to other important expenses like your home buying fund, emergency fund and investing options.
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Make smart spending choices. It is also important to control your spending habits. Even if you can afford to pay for something in cash, you need to think about the importance of making that purchase. If it is not necessary, just opt to put that money into your savings to prepare for an investment opportunity in the future.
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Track your progress. Monitoring the progress of your financial goals will really keep you from making a mistake. This can be tracking your debt payments or your saving fund. It will help you decide if you need to switch strategies or your current program is working well.
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Take it one step at a time. Some people fail to implement and finish their financial goals simply because they were expecting things to be immediate. Or, some of them were just too overwhelmed by what they had to accomplish. If the task is too great for you, try to divide it and focus on the smaller milestones. That should keep you from being too intimidated by the task before you.
Credit management and the implementation of the right personal finance habits should be able to help you improve your financial situation in 2014. Just be patient and monitor your progress. Keep your eye on the prize and the goals that you have set out for yourself at the beginning of the year.