If you’re starting 2025 with a holiday spending hangover and some fresh credit card debt, it might be time to focus on improving your finances.
If your New Year’s resolution is to get your finances in better shape, it’s going to take a little sweat.
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Mark Hamrick, a senior economic analyst at Bankrate, compares it to working out physically in the gym.
“You’re working out for your finances, so they are in better shape for the activities that you’ll be prioritizing and targeting in the future,” Hamrick said.
Much like staring down the treadmill, overcoming financial hurdles may seem daunting.
Hamrick emphasizes the importance of figuring out where you are and creating a roadmap to get where you want to go.
“Have a budget to know how much money we have to work with. If we need to reduce our expenditures and perhaps get rid of some things that we’re paying for that we don’t need, we need to do that,” he said.
The best way to get started is by attacking your debt, typically in one of two ways.
“Some people like to attack the highest cost debt, let’s say if we have an annual percentage rate of 25%, attack that first, to pay that down and off. Others might say, oh well, I’ve got just a couple hundred dollars on this credit card. Let’s pay that off right away,” Hamrick said.
Next, pull back spending by cutting out expenditures you may deem unnecessary, like auto-pay subscription services and meal deliveries. Then, focus on saving.
“Have a separate account for your savings and then automate the deposits that are going in there with direct deposit, have it come straight out of your paycheck,” Hamrick said.
Finally, don’t forget about retirement. Putting away a little now can leave you in great financial shape in the future.