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How to Clean Up Your Personal Finances Into a New Year

By: Paul Medea

 

Blond woman in casual attire at home writing out a personal check

2020 has been a bit of a rough year for us all, as our health, finances, and mental fitness have all been tested this year. But as we close out 2020 and move into the New Year, it’s worth taking a look at our spending habits, savings processes, and overall expenses in order to clear up any nagging issues that are bringing a downer into your financial health.

Rebalance your stock market portfolio.

Every investor needs to rebalance their commodity portfolio from time to time. Many investors choose to reevaluate their holdings in the stock market and real estate space on a quarterly basis, but faster movement during times of uncertainty (like the present) is often the smartest play.

Seeking mutual funds and blue chip dividend stocks that show long term growth is a great strategy to underpin a riskier approach with other commodities, both within and without the stock market. A smart mix of asset classes is the best way to chase a diversification that can weather any storm the future may hold for financial security.

Adding new asset classes like real estate or gold is another great way to improve upon your overall financial health as we enter into a new year. Building a list of alternative investments that provides short term cash flow is a great way counteract the stagnant interest rates that investors are seeing in the bond or CD market, and other slow moving commodities elsewhere.

Real estate should be high on your list of new investment opportunities in this coming year. Real estate holdings provide incredible movement opportunities to build upon existing capital in rapid speed, and you have a variety of ways to engage with this marketplace.

On the early side, investors without the funding to buy up properties themselves, can take advantage of REITs (Real Estate Investment Trusts) in order to see dividend and growth margins that rival the true market, without the startup capital required to engage firsthand. For others, buying properties to flip or rent to tenants is a great way to achieve high quality cash flow that can either supplement your income right away, or even pay off the mortgage on the new property in its entirety.

Real estate investors often seek out spaces that provide a rent payment which lands 10% or more above the monthly mortgage responsibility. This means that you can pay off the loan while pocketing a small payout each month that can go back into your investment funds, or go toward paying down the current mortgage early.

Tackle debts this year, too.

On the subject of mortgage payments; while interest rates are falling it makes sense to consider a refinance home loan in order to reduce your monthly burden overall. Lenders are always willing to come to the table in order to renegotiate better terms for a loan, albeit with a new origination fee, of course. The option to slash your current interest rate may be something that significantly reduces your financial burden over the next decade or longer, by simply inquiring today about renegotiation options.

Homeowners with great credit scores have the most wiggle room here, so paying down other debts before approaching a private equity firm or your bank is the best course of action. Alternatively, you may benefit from a consolidation loan that brings various credit card accounts under one single loan, creating a solitary monthly payment that helps improve your cash flow and credit score, all at the same time.

Cleaning up your finances involves two sides of the coin, reducing and consolidating any debts that you carry, and improving the mixture of investments in the stock market and commodity holdings that you possess. Ring in the New Year with a newly stable portfolio, a lucrative investment strategy and managed hassle-free debts.

Published: November 4, 2020
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