How did you do in completing last week’s action items? I hope you are progressing. As you know, in last week’s post, I introduced the first two steps of becoming financially fit. In this post, I will discuss Step 3 which is fundamental to financial success.
Step 3: Examine your credit history and insurance coverage.
Maintaining a good credit history is one of the most important steps you can take. One of the main ways to accomplish this is to take steps to reduce credit card and other high interest debt.
Questions you need to answer:
- Do you have credit in your own name? You should have at least one credit card solely in your name.
- Are you using credit wisely? Do you pay off your balances monthly or carry them from month to month? It is a good practice to pay off your credit card balances each month if possible. If you can’t pay off your balance, this is a good time to put a strategy in place to pay down your debt. Just adding an additional $100 to your minimum payment can make a big difference in decreasing the amount of interest and number of years to payoff. Here is a debt calculator to help you estimate how long it will take to pay off your credit card debt.
- Is your credit report accurate? You don’t want to wait until you apply for credit to find out your credit report is inaccurate. A good practice is to request a copy of your credit report at least annually. You are entitled to one free credit report per year. Go to: http://www.annualcreditreport.com.
Call to action: Within 24 hours-order a copy of your credit report and review for accuracy.
Protecting your assets in case of an unexpected illness or other event is important. You need to make sure that you have adequate insurance in place. This includes:
- Life
- Health
- Car, home, personal articles
- Liability
- Disability
- Long-term care
Your evaluation should include the cost and terms of your current coverage with a qualified professional. Also, consider current deductibles and take into consideration any discount eligibility. In addition, if you are employed, don’t forget to review your group policies.
Call to Action: Within a week- gather your policies and statements.
What’s next?
Next week, I will discuss steps 4 and 5: Set clear financial goals and organize your record-keeping.
