Analysis

4 Ways to Spring Clean Your Finances

The last of winter’s chill is fading away. In the spirit of spring cleaning, why not extend that fresh start to your finances?

Veetahl Eilat-Raichel, financial entrepreneur and Sorbet CEO, formerly CMO at a major credit card firm, suggests it’s the perfect time to detox your credit “wardrobe” and plant seeds for a flourishing financial future. Let’s dive into some of Eilat-Raichel’s top tips for making your personal finances bloom this season.

1. Reset your budget

First, give your budget a thorough dusting. This isn’t just about shaving a few dollars off your grocery bill; it’s a holistic reevaluation of your financial flow. Are you subscribing to services you barely use? Now’s the time to cut them loose.

Take a magnifying glass to your debt-to-income ratio, too. If your debts are nibbling off more than their fair share of your income, it’s time for some strategic planning to get back on track. Think of it as decluttering your financial closet.

2. Assess your credit

In today’s economic context, assessing your credit is crucial, especially with U.S. credit card debt reaching all-time highs. Eilat-Raichel’s advice highlights the importance of regular credit checks as preventive measures for your financial health. These checks serve as a diagnostic tool, helping you monitor credit utilization and detect early signs of debt.

This proactive step is essential for preventing minor issues from spiraling into significant problems, ensuring that you’re aware of your financial standing and actively safeguarding it against potential instability. After learning your credit status, it’s vital to take concrete steps toward improving or maintaining your financial health. This includes:

  • Devising a targeted repayment strategy for high-interest debts and adjusting your budget to curb future borrowing.
  • For those with better credit, options like asking for a credit limit increase from your card issuers can be explored to improve credit scores, albeit cautiously.

These efforts, alongside consistent monitoring of your credit score and reports, not only translate insights from your credit assessment into effective action but also promote a proactive stance in managing and enhancing your financial well-being.

3. Accessing “hidden” money with PTO

Here’s a surprising stat: Only 45% of earned PTO days are used by employees. That’s thousands of dollars in untapped resources sitting idle. Think of it as the loose change in your couch cushions but on a grander scale. Eilat-Raichel suggests cashing in on this “hidden” money for debt payments or saving for a sunny summer getaway.

How do you do this? Any employee who works for a company with a rollover PTO plan can apply to use Sorbet directly without having to go through their employer. The employee can essentially borrow against the cash value of their own unused PTO. Then they pay Sorbet back, either when they leave the company and get their PTO payout, or after two years, whichever comes first. It’s a way to reward yourself for your financial diligence.

4. Avoid lifestyle creep

Ah, lifestyle creep — the sneaky financial phenomenon that can erode your savings as fast as spring showers wash away pollen. With online shopping just a tap away, resisting temptation has never been more challenging. Eilat-Raichel offers some savvy hacks to keep those old spending habits at bay:

  • Remove ApplePay from your phone to add a barrier to mindless spending.
  • Ditch credit card auto-pay options on your browsers; making payments manually can be a deterrent against unnecessary purchases.
  • Hit unsubscribe on those promotional emails.

Spring cleaning your finances isn’t about making monumental changes overnight. It’s about taking stock, pruning the excess, and setting the stage for growth. By resetting your budget, assessing your credit, accessing hidden funds through PTO, and avoiding lifestyle creep, you’re not just cleaning up; you’re setting a foundation for financial health that can last all year round. So, as the days get longer and the air warmer, take a moment to consider how you can refresh your financial habits. After all, a little spring cleaning can lead to many fresh starts.

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