One of the most common New Year’s Resolutions is to get on track financially for 2019. As holiday bills start coming in and everyone gets back to their everyday schedule, many start to refocus for the coming year. One of the best ways to get on track and get your finances in order for 2019 is to have a plan. Set aside some time to write down your goals and how you’re going to achieve them. By following these four simple steps, 2019 will end on a much better financial note than 2018.
Get Your Finances in Order in 2019
1: Review Your Current Financial Situation
Before you lay out a map to go anywhere, you have to know where you are right now. First, use a spreadsheet or even a good old-fashioned piece of paper and list out all your current debts, along with the interest rate associated with each debt. Add up your current mortgage, auto loan, credit cards, student loans and other loans. Look closely at what you’ve paid each month over the past six months. This will help you know exactly where you are today as you work to get your finances in order in 2019.
2: Look At Your Current Budget
Where is your money going each month? Better yet, where is your money going each day? Most people have a pretty good idea what their mortgage payment and auto loan is each month, but many don’t keep track of the little things. What about groceries? Gas to get to work? Movies? Eating out? Take a close look at where your money goes each month.
While going to the movies sets a couple back anywhere from $30 to $40, it’s how many times they go to the movies each month that starts to take a toll. Here’s a tip; carry a small notepad and each and every time you spend money, write down how much you spent, for what and when. You might be surprised how those little expenditures add up.
3: Cutting Back
Now take a closer look at your expenses and determine what you can cut back on or quit spending entirely. Everything you can cut back can be money you can help get your finances in order in 2019. Take those new monthly savings and place them in a new savings account. If you already have a savings account, that’s fine, but it’s better to set up a new one that has funds solely from the accounts you’ve paid down and off. This will help you keep your financial goals in sight.
4. Consider a Debt Consolidation Mortgage
A debt consolidation mortgage can be a second mortgage or a cash-out refinance for a brand new first mortgage. As the name implies, a debt consolidation mortgage combines all outstanding consumer debt into one new loan. The key here is the interest rate on the consolidation mortgage is lower than the rates for other consumers debt such as credit cards and automobile loans. For this to be effective long-term though, you’ll have to either cancel the other credit card accounts or make sure you can pay off the card each month. This is often one of the more difficult habits to break out of.
The cash out refinance option might be your better solution. Let’s say mortgage rates have moved lower or you’re thinking of switching to a shorter loan term to save on interest payments. If it makes sense to refinance, take a closer look at a cash-out refinance. A cash out refinance will pay off the old mortgage, replace it with a new one and pay off the outstanding credit card balances and installment loans.
Let’s say that your debt consolidation mortgage reduced your monthly payments by $400. This is the extra amount you can put away in your nest egg. By saving this $400 each month, and gaining just 5% annually in interest or other gains, in just 15 years you’ll have amassed over $108,000 for retirement! In 25 years your nest egg will have grown to over $240,000!!
Getting your finances in order in 2019 and following these tips will help you get to where you ultimately want to be at the end of this year. The process is simple. But before you get too far into the process, let’s talk first to see how much you can save in interest each month with a new debt consolidation mortgage.