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Tax season is a great time to check credit, finances

Dawn Papandrea

Every year at tax time, I’m forced to sift through my shoebox full of receipts, print out spreadsheets and take inventory of my financial accounts. I might be a personal finance writer, but my record keeping admittedly needs some work.

Like years past, this year I once again swore that I was going to put a better system in place so that I’m more on top of my finances year-round. Yet my recently-emptied shoebox is still next to my shredder (which is filled to the top with items to be shredded).

So here’s what I’m going to do:

With tax day approaching, I’m giving myself a deadline for a financial reset. By April 15, I must choose a better way to save receipts (maybe I’ll get one of those scanners so I can ditch the shoebox and go digital). I will also set up a spreadsheet for different categories of expenses so that I’m not tallying up everything next March. And, I will be more diligent about keeping my business and personal expenses separate – perhaps I’ll even apply for a business credit card.

For me, staying organized is my Achilles’ heel, but your “tax day reset” can be customized to your individual goals. Will you join me in committing to making some financial improvements this year?

Here are some ideas:

Maximize your credit

  • Evaluate your cards to see if you are getting benefits from them. If not, consider shopping around for something more appropriate for your spending style. As our recent poll found, cardholders love rewards, but many don’t shop around.
  • If you like the cards you have and your accounts are in good standing, dedicate some time to calling up and asking about perks (i.e., extended warranty, travel insurance, etc.) you might be leaving on the table.
  • While you’re at it, ask for credit line increases, which will improve your credit utilization (a major factor in your credit score calculations). For example, if you owe $3,000 and your available credit is increased from $10,000 to $15,000, your credit utilization will go from 33 percent to 20 percent. As our latest poll shows, you can get better credit card terms just by asking.

Do a credit checkup

  • Get on a quarterly credit report schedule. Everyone is entitled to one free credit report from each of the three credit bureaus once per year via annualcreditreport.com. It’s a great idea to space out your requests so that you can monitor your credit year-round. Mark down April 15 as a deadline to get your first credit report.
  • You should also tack a credit score request on your to-do list. You can usually request your score for about $10-$15 through any of the credit bureaus (Experian, Equifax and TransUnion). However, you might have free access to your credit score through one of your credit card companies or banking institutions, and you can get your VantageScore for free at creditcards.com. No matter how you get your credit score, it’s important to know where you stand so you can make credit improvements.

Evaluate your budget 

Revisit your budget at least once a year to figure out what’s working and what’s not. Tax time is a good time to revisit your budget, since you’re already assessing your finances. If you’re expecting a tax refund, that can help you jump-start your new goals. Some starting points:

  • Cut back on recurring charges to spend less. For instance, are you really using the premium versions of two different music streaming services? Saving $10 here, $40 there adds up. Here are six free tools to stop recurring card charges.
  • Use your refund wisely. Whether it’s tackling high-interest credit card debt, paying off an upcoming trip in advance, or replenishing your dwindling emergency fund, make your tax windfall work for you. Before paying off card debt with your refund, here are five questions to ask. Question No. 1: Do you have an emergency fund?
  • Shop around for better services. If you’ve been with the same insurance company, cable provider, cellphone carrier or credit card company for years, there may be better deals available. With my cable company, when I call to let them know I’m looking at other service providers I’m usually able to get a few bucks knocked off the bill, or at least a free movie channel.

Once you decide what your goals are for tax year 2017, give yourself deadlines for each action step, and schedule time on your calendar to get those next steps done. By this time next year, hopefully, we’ll all be in a better place financially (less debt and more savings, for example) with a new list of budget goals.

What will be on your tax day reset to-do list? Let us know, and keep us posted on your progress.

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