Get Finances Straight In Time For New Year

Get Finances Straight In Time For New Year

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A new year, and time to start with a clean slate.

"New year's a great time to start things new. And the reality is most people don't have a plan or a budget," says John Thompson with Thompson Wealth Management and Life Planning, Inc.

The first thing you should do is keep track of all your debt and create a plan of attack.

"Doing that requires a budget, you know, looking at what you've got coming in, what you've got to spend," says Scott Hehman with Consumer Credit Counseling Service of Mobile.

Sometimes that will require making some cuts.

"Anytime I'm going through someone's budget, there's some wiggle room in there. But if you don't identify where that money's going, it's kind of hard to find extra cash to pay on that debt," says Thompson.

And with interest rates on certain cards reaching into the double digits, it's best if you make a larger payment than just the minimum amount.

"Based on their perceived level of risk, that may be 15-20-30%. And sometimes when people have that amount of debt, paying that minimum, they may never get out of that."

"The more extra that you can apply to the card, the more will go to the principle and the faster you'll get the account paid off," adds Hehman.

What's really important is just getting started. A plan, no matter how small, is still a plan.

"No budget is perfect, but at least starting that process," says Thompson.

You can also look into combining all those balances onto one card. Shop around for a card with a low interest rate and transfer your balances there. This makes the debt easier to tackle since you don't have to divide your payments among several credit cards—and it will be cheaper since you only have that one interest rate.

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