Five steps to incorporate as you make your financial plan for 2023.
- Understand your loan agreements.
Your mortgage may have features you can take advantage of, such as making pre-payments to help you save on interest. Most allow for changes to payment frequency to help you save interest as well. While you’re at it, why not review your car and student loan to see what they allow to help you get a jump on interest costs?
- Tracking expenses and paying on time.
Mobile applications and other online tools can simplify monitoring and controlling expenses. Watching what you spend can help you form a budget to keep you in line with your goals. Paying all your bills on the first of each month can help ensure you pay on time or ahead of time to help maintain a healthy credit score. Keeping balances at less than 35% of the limit at all times will help keep scores high as well.
- Paying off debt vs investing.
In most cases paying off high-interest debt, such as credit cards is priority #1. Next, weighing out whether you’re better off investing or paying off your mortgage debt can be a question of rates, returns, and your time horizon. A good financial planner can help you unravel this, but If your returns are higher than your mortgage rate and you’re able to invest for longer than the time you have left on your mortgage, you may consider putting more of your resources toward investing. Everyone’s situation is different, and everyone’s comfort level with debt also differs. A conversation with a good financial planner is recommended.
- Saving and investing.
Though expenses have been increasing, staying in the habit of saving even a small but regular amount will continue to yield dividends for you over time. Adjusting the amount you can afford as you go makes sense, but continuing to put whatever you can aside can each month is advisable.
- Tax Planning
Working with an experienced accountant can help you save on taxes and receive all benefits for which you’re eligible as well. Ensure you’re writing off mortgage interest and expenses where possible, and if you’re self-employed or considering it, you’ll be wanting to ensure your plans are optimized for the greatest tax savings possible as well.
As the saying goes, what’s measured gets done. Keep an eye on your finances and you’ll be sure to reach your goals this year! If you need an introduction to a good financial planner or accountant, and if you have mortgage questions at any time, please let me know, I’m here to help.
Adapted from DLC Marketing