MAINE, USA — You may want to reduce debt, raise your credit score, and increase your savings account, but those things take time. There are three steps you can start taking now to work your way to financial freedom in 2021.
1. Saving money, Open a new account
First, when it comes to your savings, financial experts say you should start putting money aside before you tackle debt.
While paying off debt and increasing your credit score is important, if the unexpected happens it's good to have savings to fall back on.
Experts recommend setting up a savings account at a different bank than your checking account and set up automatic deposits, even if it's a few dollars each paycheck.
By allocating money to be deposited into your savings automatically, you won't have to think twice before spending your check because it's already in the bank.
2. Don't miss bill deadlines
Paying off your debt is important to raise your credit score -- but it's not the only factor, paying bills on time also helps. Set up automatic payments to make sure you don't miss deadlines.
Some banks may even have cash-back incentives if you enroll in auto-pay.
You may be tempted to close unused credit cards but that can hurt your score. Keep the credit card account open, but use it sparingly.
3. Pay more now, save later
Always pay more than the minimum payment due on your credit card balance even if you can only afford a few dollars more.
The minimum payment will mean you are accruing interest every month and that total can add up over time, leaving you with an even bigger balance that will be hard to pay off.
Improving your finances won't happen overnight, but these are some actionable steps you can take today to get yourself on the right track to living debt-free.