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CardHub.com’s New Year’s Resolutions For Your Money in 2013

With 13 days remaining before the calendar turns to 2013, CardHub.com today announced 5 New Year’s Resolutions for Your Money in order to help everyone make the upcoming year as financially rewarding as possible. These resolutions come on the heels of Card Hub’s Credit Predictions for 2013, and they will together ensure that you and your wallet are ready for all that the New Year throws at you.


Commentary on the resolutions from Card Hub CEO Odysseas Papadimitriou – a personal finance expert who previously served as a senior director in Capital One’s credit card division – is below, and detailed rationales as well as Card Hub’s recommendation for accomplishing each resolution can be found at: http://www.cardhub.com/edu/financial-new-years-resolutions-2013/

1. Get Out of Debt

Odysseas Papadimitriou (OP): “While the continued economic recovery is helping us incur credit card debt at a slower rate, we’re still adding to our tab and are expected to end the year having incurred $36.3 billion in new credit card debt. If we want to avoid catastrophe down the road, we need to pull ourselves out of the hole now as well as take measures to ensure that we won’t fall into the same trap in the future. What we recommend is a three-step plan. First, everyone needs to make a budget that will enable them to spend within their means. For almost all of us, that will entail rethinking necessities and luxuries. Second, people should adopt the so-called Island Approach to credit card use, which holds that you should use different cards for different types of transactions. That will help you get the best rates and rewards, lower your interest burden, and garner an improved perspective on your spending. A credit card calculator will help you identify the best credit cards for your needs. Finally, people should employ the snowball method for debt payments. In other words, attribute the majority of your allotted monthly debt payment to the balance with the highest rate and systematically pay down what you owe, while gaining more and more money for each obligation as you go.”

2. Build Excellent Credit

(OP): “Anyone who followed the credit card market in 2012 is aware of the spoils of excellent credit. Such lofty credit standing can score you hundreds of dollars in rewards bonuses or a 0% introductory interest rate for as long as a year and a half. Your credit standing obviously impacts your loan rates, job prospects, insurance premiums, and leasing opportunities as well. Interestingly, while most people think excellent credit is limited to the select few, roughly half of all consumers have it. The other half can indeed reach that point with a bit of discipline. We generally recommend using the least expensive card possible – often a secured credit card – and making on-time payments every single month. This will ensure that positive information flows into your credit reports on a monthly basis and that you will see some noticeable credit score gains in a little over a year. Increasing your available credit by adding to your secured card deposit, opening another trade line, and/or paying down amounts owed will help expedite the process as well.”

3. Improve Your Child’s Financial Literacy

(OP): “We essentially have a financial illiteracy epidemic on our hands right now. The events of the past few years show how little most of us know about responsible money management and it seems like our children know even less. I mean, more than 70% of parents say their kids don’t know the basics of personal finance. Some changes to the education system are obviously needed, but education always starts at home, and parents need to give their kids practical experience managing their own money when they reach high school. We recommend giving your child an allowance on a prepaid card and requiring that they pay for some of their own discretionary expenses. Prepaid cards are great financial literacy teaching tools because they can’t be overdrawn and they won’t lead to credit score damage or debt. Once your child masters the prepaid card, you can progress to cash, a checking account, and ultimately a student credit card. Such a program will give your child experience budgeting and making transactions with the major financial products used during financial independence.”

4. Start an Emergency Fund

(OP): “If there’s one lesson we learned from the Great Recession it’s that an emergency fund is extremely important. After all, people charged-off on more than $233 billion in credit card debt since the beginning of 2009, and that staggering number would be a lot lower if more of us had emergency funds. That’s why when people ask me, ‘which should I do first: pay off my debt or build my emergency fund,’ I always say that establishing an emergency fund should actually be the higher priority. Say you pay off what you owe and immediately lose your job. If you don’t have an emergency fund, you’ll just fall right back into debt, incur significant credit score damage, and have creditors ranging from your doctor to the cable guy showing up at your door. With that being said, the goal should be to have a nest egg equal to roughly a year’s salary so you can stay afloat while handling any financial emergency that may pop up.”

5. Improve Your Health

(OP): “There’s actually a strong correlation between your personal health and that of your wallet. Studies show that being overweight or smoking translates to thousands of dollars in additional medical costs over the course of your lifetime, and that’s not even to mention lost productivity due to a lack of energy, the added insurance burden, or money wasted on quick-fix health improvement schemes. Mental health is just as important because being happy and in a sound state of mind has positive ramifications throughout your life, particularly in terms of being more efficient at the workplace. We’re obviously not experts in physical or mental health, but we can point out their importance and recommend addressing them in the coming year.”

More of Card Hub’s seasonal tips, studies, and reports:
• 2012’s Best Credit Cards for Holiday Shopping
• Harmful Retailer Financing Offers
• Q3 2012 Credit Card Debt Study
• 8 Things to Know About Gift Cards in 2012
• Predictions for Your Money in 2013

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