Take a self-assessment of you and your lifestyle
Improving your credit score is one way to help your chances of getting a good loan at a decent rate. But the truth is that, for many Americans, a pattern of spending and debt has impacted their lives and created much stress and strain in their homes.
As part of the process, it might be appropriate for you to take a self-assessment about you and your purchasing and savings patterns. Some things to ask yourself include:
- Would you consider yourself a spender or a saver?
Saving is better than spending in almost all cases. You should strive to save at least 10% of your monthly paycheck.
- Do you eat out a lot or tend to eat more at home?
Eating out is one of the easiest things to eliminate from a household budget and could save you considerable money each month.
- Do you have a lot of credit-card debt and do you make the minimum payment each month?
Credit-card debt is typically the most expensive debt you can have. Making minimum payments over a period of years can cost you thousands and even tens of thousands of dollars in interest depending on your balances.
- How much do you make and is your percentage of debt-to-gross income greater than 33%?
Many experts recommend that your debt-to-income percentage not exceed 33%. And there are other experts who would say no more than 20%. Still others would say have no debt at all… but for most people that is an impractical strategy.
- Do you shop for entertainment?
Shopping for entertainment is far more common than you may think. If you have this habit, break it as soon as you can. Maybe take up needlepoint instead!
- Do you live paycheck to paycheck? Or do you have a reasonable savings account in case of emergency?
Having savings not only keeps you from having a huge problem in the case of an emergency, it also gives you greater peace of mind.
- Do you invest for your retirement or have you very little left from your paycheck at the end of the month?
Planning for the future is very important. Many people wait far too long to start saving for their retirement. Many experts say that you should reserve 10% of your monthly paycheck and put it into a retirement program.
- Does your employer have a matching program for your retirement? If so, do you take advantage of it?
One of the best deals around is a matching employer contribution retirement program. If your employer offers this you should seriously consider taking part in the program.
- Do you buy things and then regret purchasing them later?
Buyers remorse is common among people who shop for entertainment or to make themselves feel better. If you do this, you should work on changing your habits and get away from shopping for recreation.
- Do you clip coupons and look for sales or just buy whatever you want or need whenever you want/need it?
Coupon clipping and diligently shopping at legitimate sales can save hundreds and even thousands every year. If you aren’t a smart shopper yet, you can start learning how to be one from many good shopper websites.
These are just a few of many questions that can help you to think about yourself and your lifestyle with regard to money. Making just a few lifestyle changes can make a huge difference in your credit and your future.