5 steps to well-rounded financial health
Bills.com suggests 5 steps to well-rounded financial health
SAN MATEO, Calif., Aug. 6, 2008 - Money, debt, mortgages and credit scores have dominated the headlines for months -- but Bills.com President Ethan Ewing reminds consumers that there's more to life than a credit score, and suggests five areas of personal finance for individuals to hone for true financial health.
"These days, it's easy to imagine that our financial lives are all about credit scores," Ewing said. "But when making any financial plans, you'll do well to remember that your money is in the service of your life."
Consider these five categories, Ewing said, to create a well-rounded financial plan.
- Credit: No doubt about it, credit scores are extremely important. Good credit can help buy a home, get a car, land a great job or rent that perfect apartment. Poor credit can mean your dreams must be put on hold. Fortunately, good credit is within reach. Pay all bills on time; charge only the minimum to credit cards, and pay the balance off each month. Do not risk a home mortgage by skipping payments or paying late. For many people, finding a good system to keep track of bills -- such as setting up online bill payment -- can help ensure all payments are made on time, which will boost a credit score almost effortlessly.
- Debt: "There can be no financial freedom while you are in debt," Ewing cautioned. "Still, not all debt is created equal. Debt that you incur for expenses such as buying a house, getting an education or even obtaining reliable transportation is not all bad." Most Americans, however, have a serious problem with consumer debt. Americans carry median credit card debt of $6,600 1-- meaning they owe amounts equivalent to 14 percent of the U.S. median household income of $48,200 2. Total U.S. consumer debt (excluding mortgage debt) is $2,558 trillion dollars 3. Striving to eliminate consumer and credit card debt will make a tremendous difference in personal finances as well as personal outlook.
- Budgeting: What are your spending, budgeting and saving habits? Do you live within your means? Do you even know where your money goes? In March 2008 (the most recent data available), the personal saving rate in the United States was 0.2 percent of income 4. In actuality, that figure easily could be negative if saving was financed by borrowing. And only a minority of Americans keep track of how much they spend and where they spend it 5. For help in developing a simple budget, download the free Bills.com Personal Finance Budget Guide.
- Wealth: In the past, many people could be guaranteed a pension from an employer. Today, most retirees must rely upon their own savings. Add the uncertainty in today's economy, and having a nest egg is more important than ever. Most experts recommend an emergency fund that will cover about six months of living expenses. Saving that much can be intimidating. "Arrange for small amounts -- or as much as you can afford -- to be automatically deducted from your checking account each time you get paid," Ewing suggested. "You'll find the savings add up quickly." In addition, take advantage of any retirement plan your employer offers. Contribute the maximum to benefit from tax savings now and retirement savings tomorrow.
- Life Plan: What are your overall life and financial goals? Where are you in your financial life cycle? Money means nothing if it isn't helping you get where you want to go. Every year or so, evaluate your plans for the future. Be sure your actions are in line with your stage of life, and make sure your financial plans will help you reach your goals.
To help Americans understand their answers to these important questions, this year Bills.com launched a free online quiz called Bills IQ. Upon completing the test, consumers receive a grade and a percentage score - their Bills IQ. Consumers can see their answers and receive specific tips tailored for their financial issues, and can compare their scores to those of other test-takers. To take the test, go to www.bills.com/IQ.
About Bills.com Based in San Mateo, Calif., (www.bills.com) is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 40,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at www.bills.com/news_releases.
In 2008, Entrepreneur Magazine ranked Bills.com as the No. 3 fastest-growing U.S. company on its Hot 100 list. Bills.com also was named a finalist as "most innovative company" in the American Business Awards in 2008. Company co-founders and co-CEOs Andrew Housser and Brad Stroh were named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008, and are recipients of the Northern California Ernst & Young 2008 Entrepreneur of the Year Award.
1. CardTrak.com, June 2007. 2. U.S. Census, August 2007 (http://www.census.gov/Press-Release/www/releases/archives/income_wealth/010583.html) 3. Federal Reserve, May 2008. 4. Bureau of Economic Analysis, May 2008 (http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm) 5. Princeton Survey Research Associates, April 2007 (http://www.nfcc.org/NFCC_SummaryReport_ToplineFinal.pdf)