4 Tips for Improving Your Finances in 2012

NEW YORK (MainStreet) -- Even if they don’t make formal New Year’s resolutions, most people start the year hoping to be at least a little better organized. So here, then, is a quick checklist for keeping the financial aspects of your vow.

Pay down debt. The key to ridding yourself of credit card debt that piled up during the holidays is to set a realistic schedule rather than vaguely resolving to use spare cash for debt reduction “whenever you can.” The latter approach usually fails because, well, there’s always a reason to start next month rather than this one.

Start with the debts that charge the highest interest rates, and don’t to put new charges on those cards until the old ones are paid off. The BankingMyWay Credit Card Minimum Payment Calculator can help you devise the best strategy.

In a perfect world, credit card charges would be paid off during the grace period, to avoid any interest charges, but as a practical matter, it’s generally not too costly to pay interest for two or three months if you can’t pay it all off at once. But it is terribly expensive to incur late-payment charges, which can hurt your credit rating.

Many people transfer debts to new cards with zero-interest introductory periods. While the arithmetic can look attractive, searching for and applying for too many new cards can damage your credit rating. You’ll look better by keeping just two or three cards for the long term and maintaining a history of on-time payments.