By now approximately 25 percent of the people who made New Year’s resolutions for the coming year have already abandoned them, according to a Norcross study, but I’m still sticking to mine.
It’s been a big year for me financially. I began my first full-time job after earning my bachelor’s degree, began repaying my student loans and took out an auto loan on my first car. I also began contributing to a 401(k) retirement savings account and learned how to balance a steady income with the more costly bills, rent and living expenses that come along with post-college life.
I went through some financial rough patches, but I’ve learned a lot and am glad I took the steps I did.
So, in the spirit of moving forward and continuing to grow financially, I’ve come up with three credit-based financial goals I want to accomplish by the end of 2015. They aren’t huge, but knowing what I do about myself and my finances, I think these are all resolutions I can easily stick to.
Here’s my plan for the New Year:
1. Put my tax refund toward debt repayment.
As much as I would love to blow my tax refund on a fun trip, new shoes and a Whole Foods shopping spree, I’ve decided to use it to pay down as much of my debt as I possibly can.
Between my student loans, auto loan and little leftover credit card debt from this year’s holiday shopping and travel season, I have about $32,000 of debt to tackle. Ouch.
Granted, I have repayment plans for both the auto and student loans that give me good rates, and I will have them both paid off in less than 10 years, but the sooner I can get rid of it all, the better.
I’m especially determined to pay down my roughly $600 of credit card debt before the Federal Reserve starts raising interest rates — which will in turn raise my own variable card APRs — later this year.
I’m sure I’ll have moments of doubt regarding this decision as I finish my taxes and see the refund numbers, but I know paying off my debt will feel much better than those organic, all-natural groceries would taste.
2. Request a credit card interest rate decrease for the first time.
With the exception of my general purpose credit card from my bank, the other cards I have in my wallet were opened fairly early in my credit journey when just about all I had in my credit profile was a couple of student loans. As a result, these cards carry fairly high interest rates, between 17 and 19 percent.
I work hard to keep my balances low or nonexistent on those cards because of those rates, but it would be great if I didn’t still hold rates that describe my creditworthiness from a year-and-a-half ago. I have a more diverse credit portfolio and better credit score now. so I should qualify for lower rates and maybe even a credit limit increase or two.
However, I’m not good at being assertive with customer service representatives over the phone. I’m usually way too polite to nagging telemarketers and even when I experienced an auto-pay error with my car’s lien holder, I struggled to convey my feelings over the phone. I’d much rather have such conversations in person.
I’m nervous about this task and so any tips or tricks you may have about requesting an interest rate reduction would be greatly appreciated.
3. Open one more credit card to close another.
One of the aforementioned high-rate credit cards I have is a store card that can only be used at the store that used to sell my favorite jeans.
It was my first credit card. At the time, it was a great way to make occasional small purchases to begin building a credit profile. Now it’s a nearly useless card good only at a store I rarely visit anymore. I’d much rather have a card with good cash back rewards or good balance transfer rates, two things my current wallet of cards is really lacking.
To fix this, after about six more months of paying down as much overall debt as I possibly can, I’m going to start looking for a more suitable general purpose credit card to replace my outdated, high-APR store card.
I’m going to make sure to open the new card account before closing the other in order to avoid the potential credit score ding that could happen from momentarily reducing my available credit limit-to-debt ratio after closing the store card.
If I can stick to accomplishing these three goals in 2015, I think I’ll be in pretty good financial shape.