The New Year is traditionally a time when people look for new beginnings. For some, this means starting a gym membership, enrolling in school, or giving up an old vice. However, according to the mortgage experts at Texas Lending, the one resolution everyone should consider is revisiting their financial situation and making a plan for the coming months.
First things first – credit cards. Texas Lending representatives explain that credit card debt is the single most detrimental financial crisis for many homebuyers. A good rule of thumb is that credit cards not paid off at the end of each month are being used too much. If this is the case, it’s the perfect opportunity to see where spending habits may be altered to reflect a more realistic financial lifestyle that fits better with available income.
Another serious mistake many persons make is not having enough money set aside for emergencies. Texas Lending mortgage experts agree that six months of emergency savings is enough for most people, should they become temporarily unemployed. Self-employed individuals should strive for 12 months’ worth of living expenses.
Life insurance may be revisited in the New Year, as well. Parents and caregivers should ensure their family is protected in case they are suddenly no longer there to provide an income, according to the Texas Lending team. Family breadwinners should have enough income to support their family indefinitely. As an example, an individual with an income of $50,000 needs around $1 million of life insurance and savings to cover his or her family’s expenses.
This is also a wonderful time to look at expenses and determine which can be let go and which may be eligible for a discount. Texas Lending representatives report that cell phone, Internet, and cable service providers often offer discounts, even to existing customers, which can save hundreds of dollars every year.
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