New Year, New You: Building a better financial future

New Year New You: Better financial future
Eliminating credit card debt

INDIANAPOLIS (WTHR) — It's now 2019, so it's time to get your life in order, right!? As part of our Sunrise "New Year, New You" series, we’re building you a better financial future.

Perhaps a big stress for you or your family is money. Brent Perry, the founder of Piedmont Financial Advisors, gave me general tips you can consider in order to prosper financially this year, but keep in mind finances are personal and each situation is different.

  • STEP 1: Sit down. Whether it's as a family or just yourself, take time to building a spending plan for 2019. "I would say at least once a month," said Perry. He like to call it a "spending plan" as opposed to a budget, because it's all about how you're spending your money. He recommends looking at your last three bank statements and seeing where most of your money is going. If there's anything you can cut back on or cut out, do it. Build a savings plan and try to attain monthly goals.
  • STEP 2: Be specific. Saying you want to save more and saving random amounts of money when you feel like it isn't enough. Set an achievable goal for savings. Put a dollar amount to it and let technology help you. "If you need to save $50 a week, set up an automatic transfer from your checking account to your savings account, so it happens without you even knowing it," Perry suggested. Perry said automation is a game-changer because if you never see the money in your checking account because your bank has already put it into savings, you can't spend it.
  • STEP 3: Know the difference between between good debt and bad debt. Carrying debt from a mortgage or auto loan isn't so bad. But stay away from credit card debt, especially on cards with high interest rates. "Those are very bad debts," Perry said. Avoid making only minimum payments and keeping a constant balance on your cards — all you're doing is paying the card companies in interest.
  • STEP 4: Eliminate credit card debt. When you're checking your credit card statement, don't just look at the interest rate — look at the total dollar amount in interest. If it's looking especially daunting, make a call to try to negotiate your interest rate. "Google scripts for negotiating down credit cards," Perry said. "There are several financial websites that have written how to do that."
  • STEP 5: Don't use your savings to pay off credit cards. It may be tempting, but fight the urge. Unless you're committed to building your savings back up soon, this strategy could leave you in a bad spot. Perry said it's a good idea to always have a safety savings account for unexpected expenses. That safety net could pay for a small car repair, replace broken home appliances or pay off a small medical bill. If you don't have that fund built up, you'll be forced to again rely on your credit card, which isn't a great strategy.
  • STEP 6: Cash is king. Pay in cash whenever possible. "The credit card and the plastic detaches you from your money too much," Perry said. Once credit cards accounts are paid off, close them. But if you feel like that could have a negative effect, keep the account open and leave it dormant. Cut up the card if you must.
  • STEP 7: You can only cut out and save so much. Building a better financial future has to be about building up your finances as well. Ask your employer for a raise by making a case with the positive things brought to the company. Research average pay for employees with similar jobs at other companies. Your other option is to take on a part-time job if time allows. Companies like Uber and Lyft offer flexible hours, and you can work at your own pace, bringing in extra cash.