Financial Refresh: How to Reorganize Your Finances A N D R EA M AS S O P - RA M OS MCN NOMINATING COMMITTEE
When was the last time you reviewed your overall household finances? How about those credit cards and the interest rates? Are they working for you? Let’s take a deep dive into how to refresh or reorganize your finances: 1 You should be aware of your credit score (FICO Score). Aim for a score of 750 or above, which is considered a healthy score. Check it at least once a year with each of the credit bureaus – Equifax, Experian and TransUnion. You can get a free copy from each on Annualcreditreport. com. During Covid lockdown, I had the opportunity and time to buckle down and review my finances. My credit score was about 670 and I knew the target number to aim for was 750 and higher. I used the method of paying off the lowest balance credit card first. I ended up paying off four credit cards and paying down two significantly to below the 30% threshold in an eight month time frame. My credit score shot up to 741, a 71 point increase with 23% credit card usage. y As a new business owner, your FICO score is initially used as your credit worthiness, until you are able to establish business credit worthiness with your EIN number, instead of your personal social security number. 2 Monitor how you use your credit cards by being aware of your credit utilization rate or ratio, which is the amount of revolving credit you are using divided by the total amount of your available credit. It’s always best to pay the balance off in full if you can to reduce those finance charges from accruing. Otherwise, aim to keep your balance at less than 30% usage if you must maintain a balance on your credit card at all.
6 | nedpg.org
y After I paid off my 4 credit cards, ranging from monthly payments of $40 - $168, I was able to save approximately $290 each month. I now use that savings to pay towards additional principal payments on other debt, continuing this process until all of the credit cards and debt is paid off. This process has saved me well over $1000 so far. 3 Paying off credit cards with balances. If you have several credit cards with balances, don’t panic. Be intentional with your goals to pay them off. There are a few ways you can do this: y You can begin with the card with the lowest balance first, by paying a much larger monthly payment than the required minimum payment and continue paying more each month until it is paid in full. While you are concentrating on this one card to pay off first, you continue to pay the minimum balance on all your other credit cards, until you have paid off the debt of the first card. Once that card is paid off (what a great feeling; you should celebrate!), the monthly payment you were paying on that card is now added to the next card you want to pay off in addition to its minimum payment amount. y Another method of paying off your credit cards is by paying off the highest interest credit card
first; this way you are paying less money overall. Have you ever paid an extra $50 or $100 on a credit card, only to see the balance decreased by only a few dollars? How disheartening is that? That is due to the hefty interest rate and charges applicable to that card. 4C all to lower interest rate. Yes, this is an option, not only during the pandemic, but any time. Call the creditor and ask to lower your interest rate; it can be that easy. It’s worth a try; the creditors want their money and they want to keep a customer. Andrea Ramos, MCN, founder and CEO of Healthy FRIENDZ Nutrition LLC. Through interactive programs, she helps families with health concerns improve the quality of life with fresh foods, customized to ethnicity and cultural heritage. Andrea is passionate about anything pertaining to children and gets practice with her five grandchildren, anywhere from planting an organic garden from seeds, to cooking together and competing in all sorts of playful competitions, like doing pushups, bike riding and jumping rope. She is definitely a child at heart.
