Are You a Financial Slacker?

Here’s how to gain control of your finances.

By Dave Dugdale from Superior, USA (Analyzing Financial Data) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

We are financial slackers. Such is the sad conclusion of a poll conducted by HSH.com, a mortgage information resource. It reveals that many of us are slackers when it comes to managing money and financial planning.

Although Americans claim to strive for financial security, many of us did nothing to improve our credit profiles in 2014. Furthermore, a lot of us admit that we have no plans to do any better in 2015.

Questions asked by HSH to about 2,000 participants included:

  • Did you save money for retirement in 2014?
  • Did you refinance a mortgage?
  • Did you prepay part of a mortgage?
  • Did you pay off credit card debt?
  • Did you take any steps to improve our credit score?

Results are concerning — to say the least. Here is what respondents said they did in 2014:

  • 15% refinanced their mortgage.
  • 27% saved money for retirement.
  • 3% prepaid their mortgage.
  • 24% paid off credit card debt.
  • 24% improved their credit score.

How about in 2015? Are people more willing to improve their financial health?

  • 9% want to refinance their mortgage.
  • 33% want to save money for retirement.
  • 12% want to prepay their mortgage.
  • 30% want to pay off credit card debt.
  • 28% want to improve their credit score.

So these slightly higher numbers are somewhat encouraging, but of course it is too early to tell if these wishes turned into reality. Either way, it’s a little bit concerning that only about one third of participants want to save money for retirement or pay off credit card debt.

What Can we do to Avoid Being Financial Slackers?

  • Refinancing a mortgage (residential or commercial) is a way to lower your interest rate. Even a decrease of 0.5 or 1 % can translate into thousands of dollars in your pocket rather than your banker’s.
  • Saving money for retirement should be a no-brainer, yet studies show that a minority of employees participates in their employer’s sponsored plan such as a 401(k).
  • Prepaying your mortgage*, as long as there is no prepayment penalty, is a way to knock off years of monthly payments. The idea is simple: the more you pay now, the less you pay later – in principal and interest. Every little bit counts, even $25, 50 or 100 each month would help.
  • Paying off credit card debt is one of the best ways to save money. If the interest rate on your credit card is 20%, this means that a $100 item will in fact cost you $120. And if you don’t repay your debt in the first year, it will cost even more because this interest rate compounds year after year
  • Improving your credit score can result in better credit card offers, but that might be a poisoned gift. A better reason is to have access to better interests on loans, such as mortgages and car loans. How can you improve your credit score?

Pay your bills on time. This alone can have a huge effect because your payment history makes up a whopping 35% of your credit score.

And we really mean paying off debt, not just moving it around to a new card with a low introductory rate. Balance transfer offers may help in the short-term, but decreasing the actual debt is ultimately what will boost your credit score significantly. That should be your ultimate goal.

Once you’ve eliminated your debt, then always pay your balance 1. in full and 2. on time. This will avoid paying late fees and getting back on the slippery interest rate slope. If at all possible, set up automated payments so you always pay on time.

In addition, avoid “maxing out” your credit cards, not only because you might get yourself in trouble, but also because it affect your credit score negatively. Under-using your credit card is a good strategy, achieved by keeping your "credit-utilization ratio" under 30%. For example, if a card has a $1,500 limit, strive to charge less than $500 each month. Requesting a raise of your credit limit can help… as long as you do not raise your spending habits!

These steps, however easy or difficult they may seem, all have very significant impacts.

Procrastination with getting your financial house in order is a lot like postponing taking care of your health. You will not see results today, tomorrow or even next week. On the opposite, it you work hard are getting on the right path, your efforts will soon pay off — literally.

Your debt will shrink, your retirement account balance will increase and your credit score will improve.

So please don’t follow the route chosen by the majority. Be an exception. Be in the minority. Pay your bills in full and on time. Take small steps to improve your personal finances. Setting realistic goals can set you on the path to financial freedom and a rewarding future.


Dr. Phil Zeltzman is a board-certified veterinary surgeon and author. His traveling practice takes him all over Eastern Pennsylvania and Western New Jersey. You can visit his website at www.DrPhilZeltzman.com, and follow him at www.facebook.com/DrZeltzman.

Zee Mahmood, a veterinary technician in Reading, PA, contributed to this article.

* Not everybody agrees that prepaying your mortgage is a good idea, but that’s a whole different story…

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