For 2017, less may be more

Tuesday, January 3, 2017

If you're like most of us, you've gained a few pounds over the holiday season, and taking them off may be a high priority.

When it comes to our bank account, however, excess probably isn't the problem.

Like many things in life, less is more where finances are involved.

That's especially true once the Christmas bills start coming in. The average U.S. household has $5,700 in credit card debt and 38 percent carry some type of balance.

The sooner you pay that off, the better. For instance, paying off a $5,000 balance at 20 percent over three years will cost $1,100 more than paying it off in one year.

There's a simple fact, and finding out about it early can make a big difference over the long run.

Live below your means.

That means setting up a budget and sticking to it, but if the word "budget" is enough to give you indigestion, call it a "spending plan" instead.

Take some time, sit down with your computer, bills and bank statements and find out where your money is going. If you do most of your bill paying on line, many credit cards and banks have built-in spending tracking, which can streamline the process.

Once you've categorized most of your spending, look for ways to cut corners with a minimal impact on your lifestyle -- do you really need that much data on your wireless plan? Can you find cheaper sources of entertainment, food or other products? Apps and websites can make couponing easier.

Consider going to a cash system with envelopes for each category; once the envelope is empty, you're done spending for the month.

Once your spending is in control, put extra money away for retirement, you'll be ahead of the average American.

About 69 percent of Americans have less than $1,000 in a savings account and about a third have $0 for retirement. If you've been lucky enough to get a raise this year, or a year-end bonus, put the extra directly into your savings or retirement account.

Like diet and exercise, financial discipline is a form of short-term pain that pays off in the long run.

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