(ARA) – Haircuts come and go out of style, color preferences change seasonally, jean cuts expand and contract with reliable frequency – a style makeover is as easy as following the trends shown on TV and in magazines. While good credit and low debt are always in style, many people believe that a financial makeover is simply too difficult to attempt. But making your financial self look great and up-to-date is easier than you’d think. And now’s the perfect time for a makeover that will have your financial profile looking good, inside and out.
* Get yourself organized. This is a little like stepping on the scale before starting a diet – it might not be fun, but you need to do it. Collect all of your credit card and other debt information that you have. Access your credit report, which you can get for free annually from credit reporting agencies like Equifax, to ensure everything is accurate. Tally up your debts, record your interest rates and carefully review your credit report to get a clear picture of where you’re starting.
* Stop digging yourself further into a hole of debt. One of the biggest steps you can take toward making over your financial profile is to stop the bad habits that got you into debt – and first among those is over spending. If you have debt, don’t add to it by making credit card purchases you can’t repay. If you stop digging further into debt, the only way to go is up – and out of debt.
* Pay off what you can, as fast as you can. Simply put, you need to make all the minimum monthly payments on your debts – but to give your finances a whole new look, you need to go beyond that. Financial expert David Bach, who frequently appears on The Today Show’s “Money 911” segments and is the author of Debt Free for Life: The Finish Rich Plan for Financial Freedom, advocates a systematic approach to paying off debts. Taking into account how much you owe, what your interest rates are and what the minimum monthly payments are, you can find out which debts to pay off in the order that will help you get out of debt faster. To make that process easier, Bach points out that Equifax’s Debt Wise tool is an automated way to prioritize how you can pay off your debts. The system also can help you with organization – since it pulls from your Equifax credit report all of your outstanding balances and interest rates automatically populate. Debt Wise will then put your payments in priority order, and automatically update you on your progress toward paying off your debt.
* Negotiate your rates. If you had the opportunity to make it easier to pay off your credit card bills, would you take it? Most people don’t, even though they have the chance. Simply call up your credit card companies and ask to negotiate a better interest rate. If you’ve been making your payments regularly, you’ve got a good bargaining chip and can show them that you’re trustworthy enough to have a lower rate.
* Don’t be afraid to ask for help. If you feel like you need someone with a bit more expertise than you have, there are options. Contact a non-profit credit counseling center, where you can get questions answered without adding to your financial worries. Look for a member of one of the two major trade associations – the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies – in your local area.
* Make a firm commitment to living a debt-free life. Envision the positive outcomes of paying off your debt to help keep you on track. Bach recommends recording your goal to help keep yourself accountable. He’s partnered with Equifax on the Debt Free Challenge (www.debtfreechallenge.com) – a website where you can join others pledging to get out of debt. Making over your financial profile shouldn’t be a short-term aim – the real goal is to be debt-free for life. Not only will it free you from the stresses of debt, but it will also open doors to new opportunities, and keep your finances looking good for years to come.
