As the year is about to come to a close, there are a few last minute money decisions you can look into to help you improve your finances. It is a good idea to try and start the coming year on the right footing and your finances should be part of that. Here are a few of those financial decisions you can make now which will benefit you down the road.
Pay a big chunk off of your debt
One of the best last minute money decisions you can ever make is paying off a significant portion of your debt obligations. You can put extra payments on all of your payments or focus on one or two you want to pay off quickly. This way, you lower down your principal amount, and if your lender will allow it, put that money towards principal payment.
If you are able to do this, you change the whole dynamics of your payment. For one, you get to save on interest down the line. This is because as your principal amount goes down, your interest payment should go down as well. When that happens and you stick to your payment and some extra principal payments, you pay off that account a lot sooner than you have planned.
Pay off one small financial obligation
One other last minute money decisions you can make before the year ends is to pay off a debt account. This, of course, depends on the balance and what you can set aside as payment. It would not be wise to pay off a big balance and start the new year with a depleted bank account. Choose a small one that you can pay off.
There are a lot of benefits to this such as crossing out one account before the year ends. It can help you put the money you would have used to pay for it into another payment. Continue on with this strategy as you pay off your accounts and you will go through all them much faster. And it all starts by paying off one small account.
Max out your 401(k) contributions
You have to understand that retirement is not a matter of hit or miss, it is something inevitable and you will reach that stage in your life. The time will come when you have to hang up your corporate clothes and enjoy old age. There are some people who are able to retire early and enjoy their life traveling or spending time doing what they love.
The difference with retired people who are able to enjoy it is that they planned for it. Retirement planning involves a lot of forward thinking and knowing what you want to do and how much you need to do them. With this in mind, one of the best last minute money decisions you can make at the end of the year is max out your 401(k) contribution.
This is a good idea especially when you work for a company who has a matching program. The money you put in is matched at a certain percentage by your company effectively increasing the money in your 401(k). If you do not have a 401(k) and have other accounts you use for retirement planning, you can put the money there which will have the same effect.
Put a significant amount towards your emergency fund
No one can predict the future. A lot of people in the investment industry are paid to do that and they sometimes get it wrong. It only makes sense that you prepare for the unexpected especially with your finances. That is why last minute money decisions should include strengthening your reserve funds. It will help you face unexpected financial challenges that may come.
Emergencies can come at any time even at the start of the year. One thing you need to remember with emergency funds is that it also helps you stay away from debt. This is because when you are in financial trouble and you have nowhere to get cash from, the first thing you do is borrow. It can be from people around you, friends, taking out a high-interest loan, or even taking out a cash advance on your card. However, if you have an emergency fund, you have some cushion away from debt.
Be wary of expensive year-end social gatherings
One of the most expensive parties are the ones for the new year and there are a few ways you can get away from expensive gatherings. This is one of those last minute money decisions which will help you keep your finances in tact for the new year. This is because most gatherings for the New Year are glamorous and lavish.
One thing you can do is look for free events near your area organized by groups or even your city. It can be a simple countdown, fireworks, or even some dancing. You just have to buy inexpensive food and you’re set. If you have the whole family with you, a movie marathon at home with popcorns and drinks can be a good idea. You get to be under a comfortable blanket away from the chilling cold.
Secure and go through a copy of your credit report
Throughout the course of the year, you have made a lot of financial decisions, made a lot of payments, and even paid off and closed some accounts. It is a good idea to get a copy of your credit report and go through it thoroughly. The Federal Trade Commission shares that you can request for a free credit report from nationwide credit reporting companies once every twelve months.
Go through each item and flag entries you do not recognize. These can be indicators that someone else is using your credit line to make a purchase. Check for errors as well in your report. These can be the likes of paid off debt accounts still reflected as unpaid and others. Once you fix these mistakes in your credit report, you could see improvement in your credit score giving you better financial opportunities for the coming new year.
Set up an automated payment system for next year
Another one of the last minute money decisions you can make to improve your finances for the coming year is to use technology to your advantage. There are ways to help you manage payments better apart from getting an online copy of your bill online. You can also make online payments and a regular one every month.
Of course, this will work for accounts with a specific payment amount every month. All you have to worry about is making sure you have the funds in your checking account to meet those payments. You no longer have to mail checks or even go out of the house to pay. The good thing about online payment is that most of them are posted pretty quickly. You get to see and monitor your payments much faster.
Change your passwords
It is also a good idea to change your passwords at the end of the year. This can password in your email accounts and even social media accounts. You also need to change your passwords in financial accounts you have online. It can be from online banking, apps which are connected to your bank accounts and others. This way, you get to stay ahead of would-be thieves trying to steal your identity.
There are a number of last minute money decisions you can make before the year ends which puts your finances in better shape for the coming new year. You just have to look into them and identify the ones that will work for you.