6 Personal Finance Questions to Ask Yourself Today

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Personal Finance Questions to Ask Yourself

Personal Finance Questions to Ask Yourself

During the past few years of recession, job losses, stock market downturns and trouble in the housing market, millions of Americans have started to take a more active role in understanding and managing their personal finances.

If you would like to save more money, spend more wisely and put your life on a more stable and profitable path, there are a few key questions that you should ask yourself today:

1. What’s your credit score?

Having a good credit score is the difference between getting approved for a loan (or credit card, or mortgage refinance) and being rejected. Having a good credit score makes it easier to buy a car, buy a house or refinance a mortgage, rent an apartment or even get a job (some employers will not hire people who have problems on their credit report).

[Check Your Credit: Don’t Guess. Know.® Get your free credit report and score. No credit card required.

Even if your credit is fine and you’re not planning on borrowing money anytime soon, it’s still a good idea to know your credit score and check your credit report at least every six months, just to make sure there are no errors, inaccuracies or suspicious activities on your record. Many victims of identity theft first find out about it because of odd information on their credit reports – it’s important to stay vigilant.

2. How much interest are you paying on your mortgage?

If you have good credit, have owned your home for several years and are paying a significantly higher interest rate than is currently available, it might be time to refinance. Depending on your situation, you could save hundreds of dollars a month and thousands of dollars over the course of the years you live in your home by refinancing to a lower interest rate.

3. How much credit card debt do you have?

Many people are not proud of their credit card debt, but it does no good to ignore the problem. Find out how much total debt you’re looking at, and then make a plan to pay it off. Some financial advisers recommend that you pay off the highest-interest accounts first, since that will save you the most money on interest payments in the long run.

But other advisers, like best-selling author and radio host Dave Ramsey, recommend paying off the smallest debt first (while paying only the minimums on your other debts), and then go in order of the next smallest debt, until you’re debt-free. This way might cost you more money in interest, but it helps you stay motivated and gives you a growing feeling of accomplishment; instead of staring at a $10,000 balance that never seems to go away, you can get the burst of energy that comes from crossing off a few $500 balances and working your way up. Paying off the smallest debts first can give you a powerful feeling of momentum in tackling your credit card debts.

4. How much interest are you earning on your savings?

Interest rates for savings accounts are incredibly low right now, but you don’t have to settle for the lowest interest rates that local banks are offering. If you have $10,000 in emergency savings, and you move it to a high-interest online savings account that earns an extra 1 percent in annual interest, that would mean an additional $100 in your savings account over the course of a year.

5. How much are you spending (and saving) each month?

Are you living within your means? Do your paychecks cover your expenses? Are you saving for the future, barely scraping by, or slowly sinking into further debt? Take advantage of free budget planners to see where your money goes – and help you take control of every dollar you spend.

6. Do you have a savings plan?

No matter how much money you make, even if you have credit card debt, everyone needs to have an emergency savings fund. Set up an automatic savings plan to have money automatically deposited into your savings account on every payday. Even if you can only save $50 a month, that will add up to $600 a year. You probably won’t miss $50 a month – but by the end of a year, you’ll be glad to have this extra chunk of money. By making your savings plan automatic, you don’t have to think about it or take any extra steps to save the money. If you “pay yourself first,” saving money each month will become a healthy and profitable habit that will strengthen your financial position over time.

[Check Your Credit: Don’t Guess. Know.® Get your free credit report and score. No credit card required.

For more ideas on how to gain better control over your money and financial life, check out Quizzle.com.

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