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How to Improve Your Credit By Rearranging Your Budget

A set-it-and-forget attitude is an efficient way of thinking when it comes to some things like your coffee maker, automatic payments and your alarm clock. But with budgeting, it’s not always the case.

Even if you’ve mastered the art of personal finance, revisiting your budget at least twice a year will ensure you’re saving as much as possible, becoming debt-free and staying financially secure. Best of all: Rearranging your budget can actually boost your credit.

Make Higher Payments Toward Your Debt

Reworking your budget allows you to figure out where you may be overspending, and then reallocate that money toward your debt.

For example, are you overspending on dining out? Are you using that gym membership that’s costing you a fortune? Weigh your necessities versus the luxuries that could be hurting your credit.

Plus, if you’ve accrued large amounts of debt over time or you’ve come close to maxing out your credit cards, you may have a high credit utilization ratio, which is the percentage of your credit limit you actually use. For example, if your credit limit is $5,000 across all cards, and you have $3,500 in outstanding credit card debt, your utilization ratio is 70 percent.

A general rule to live by is to keep your utilization ratio around 30 percent or less. By re-evaluating your budget, you can put more money toward your debt, lowering your outstanding balance and utilization ratio – as long as you stop using the cards completely.

Stay Updated with the Latest Tools

When you sit down to examine your budget, research new tools that have been designed to help you streamline the way you manage your finances

Here are a few that can help save you money, and make bill and account management easier.

  • Expensify: A mega timesaving app that is a must-have for business travelers. The tagline is “Expense Reports That Don’t Suck,” which is something I think most people who work in a corporate environment can relate to. When you’re traveling, all you have to do is take a picture of the receipt you want to save and then upload it to Expensify. The app will be able to automatically identify the merchant’s information, date and amount of the purchase.

Be More Financially Aware

Even the savviest budgeters should re-examine their budget at least twice a year to ensure that nothing has changed, like a job, promotion or layoff, that could affect their spending. Plus, sitting down to adjust your budget is also a good time to rethink your retirement savings strategy to ensure you’re contributing enough to your 401(k) and other retirement savings funds.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].

Adjusting Your Personal Budget

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