Is 2016 going to be the year you finally get your finances in order?

If you have already embarked on a credit repair plan, I’m betting that it is. That’s because once you’ve gone through credit repair, you definitely don’t want to make any of those same money mistakes again or you will find yourself back in the same bad credit sinking boat.

Instead, you most likely have changed several of your financial habits to keep your credit in good standing and to watch your credit score increase at the same time.

But, if you’re wondering where to start to get your finances in order, I’ll give you just four basic steps. Because once you’re committed, it really is that simple.

  1. Check your credit score and order your credit reports. A recent The Chase Slate Credit Survey of 1,000 adults found those who have checked their credit scores before think 719 is a good score, while those who haven’t checked their scores, think 668 is a good credit score. So, the more you know about your credit score and what is reported on your credit reports the higher your score is likely to be — and the more power you have in reaching a higher credit score. Knowledge is also power in solving your financial problems and worries. You can clearly see problems such as repeated late payments or maxed out credit cards or collections accounts on your credit reports. You may even find errors on the report you can dispute. From there you can decide which are your specific financial problems and formulate your specific plan of attack to solve them.
  2. Set aside time to plan every week: I remember reading a survey that found that most Americans spent more time choosing a restaurant or buying a flat screen TV than planning an IRA investment. That’s just crazy. If you are stressed out by bad credit or financial worries, then it makes sense to spend some time really thinking about your problems and planning some solutions. Just get down to business. One really great book I’ve used to do this for my own life is family finance expert Ellie Kay’s book The 60 Minute Money Workout. In it, she outlines a plan for thinking about and improving every area of your finances just once per week for 60 minutes.
  3. Use the calendar (or an app): If making payments on time has been a problem for you causing a low credit score that’s holding you back, then a step in the right direction is to plan all your payments. Same goes for paying down debt and tracking balances getting smaller. Get out a large desk calendar (from the dollar store) and your bill pile and mark when each bill is due, how much you will pay and from what account it is paid. This way there is no excuse for paying late. And, you can easily see the upcoming week’s payments due. This way, you’ll be more aware of your goal for paying on time or paying off debt, making it easier to say no to those shoes you want or that dinner out. As a second layer of protection, enlist the help of text alerts or reminder apps, too.
  4. Hold yourself accountable: A great book about keeping resolutions is called Changeology: 5 Steps to Realizing Your goals and Resolutions By John C. Norcross, Ph.D. Now, I trust this author because he is the world’s foremost expert on the science of resolutions, having researched and studied them for over 30 years. So, one of the steps in his book that really spoke to me was making yourself accountable. That means working with your spouse or partner or telling someone else your plan and making your commitment to the plan out loud. Have a family meeting to let everyone know and agree on the goals so that when kids start whining about wanting McDonald’s again, you can remind them you are all saving for a vacation or new car or being approved for a mortgage for a new house. This way everyone is on board. In fact, Norcross goes as far as saying to recruit a “change team” comprised of supporting, encouraging people in your life (real or cyber) who you can check in with, who will remind you of your goals, help you avoid pitfalls and help you up if you slip.

If you use all 4 steps to formulate your financial plan for 2016, you will most likely succeed.

Posted in Finance