So you have good credit and now want to know what is the next step to KEEP your credit good and how to utlize your credit in the future so you can continue to get LOANS and GOOD Credit Cards – As well as buy a home or other real estate investments in the future. Follow these steps of expert advice.
1. Automate your finances
They insist that it has a psychological effect, since when payments and transfers are set automatically, your planning works much better.
In fact, if you set out to save a monthly amount and do not leave it automated in your account, it is very likely that you will forget it or that you will leave it for later, since you will likely find more urgent needs.
“Just as everyone knows that the key to having a good physical condition is a proper diet and exercise, everyone also knows that the key to improving personal finances is to spend less and save more,”.
2. Spend less than you earn
“The best financial advice I can give is to spend less than you earn,” Kevin Hegarty, founder of the New York-based company Hegarty Advisors, tells BBC Mundo, who has long experience advising companies and government agencies. such as the US Department of Defense.
Although there are many applications to do this monitoring, the expert points out that some of them may have security problems related to other websites.
That is why he recommends a traditional-style method: writing the disbursements daily in a notebook.
“Some studies have shown the benefits of listing expenses,”
3. Use the “avalanche method” or the “snowball method” to pay off debts
Among the most popular strategies to pay debts – especially with credit cards – are the “avalanche method” or the “snowball” method, Greg Mahnken, an analyst of the credit industry at the consulting firm, tells BBC Mundo. Credit Card Insider, based in New York.
The avalanche method is to pay off the debt with the highest interest rate first (as long as you have already made the minimum payments for the rest).
“After paying that debt in full, you move to the second highest interest debt,”
Thus, you avoid charges that finally eat up your money and do not let you pay off the debt.
The snowball method works in reverse.
After having secured the minimum payment of all your debts (as in the previous case), you dedicate your financial efforts to pay the smallest debt first.
After paying off the entirety of the smallest debt, you then direct your income to pay off the second smallest debt.
“This method does not allow you to save money in the long term, because it does not eliminate your most expensive debt first, the one with the highest interest,” he says.
4. Invest the unproductive money
If you are not in financial trouble and have already paid your debts, it is advisable to have a “savings cushion” —that is equivalent to your three or six months income— in a savings account that provides a return of at least 1.5 % -2% interest.
“This is to help you have a soft landing in the event of a financial emergency,”
When you have this fund insured to cover contingencies, then you are prepared to invest the “bad money,” he explains.
That money is the one that remains stagnant in your savings account and earns a minimum level of interest.
To invest in the stock market, Behr proposes to do so in some broad stock index; that is, it includes several companies.