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(1)  Lose fifteen pounds

(2)  Drink less coffee

(3)  Spend more time with the kids

(4)  Finally buy a new car

Sound familiar? Yeah, those were our new year’s resolutions too.

Much has been said in the news lately about the average age of cars owned in the United States reaching an all-time high of almost eleven years old. While cars may be more durable and resilient that ever before, many of us want, or desperately need, a new car. Unfortunately, our credit score or errors on credit reports may be keeping us from realizing this dream.

Cleaning up those credit reports to help people achieve their resolutions of owning shiny new cars (or other dreams) makes the first quarter of each new year a blissfully busy time at Ovation.

It usually takes 6 to 8 months of dedicated work to navigate the cumbersome but time-tested dispute process with the three major credit bureaus and clear blemishes and mistakes from the credit reports of our clients. So if we start working on that new year’s resolution now, many clients will smell that new car smell by September – still plenty of time to fulfill that resolution (we don’t make any promises about the 15 pounds).

Coupling credit repair with a healthy tax return will make payments on that new ride more manageable. The tax return will provide the big down payment that will help to lower the principal payments or allow us to reach a little higher up in the automotive echelon. However, whether the down payment is $1,000 or $15,000, the cash down does nothing for the interest rate. It is our credit report and credit score that drives the interest rate, and it significantly affects the monthly payment, especially over a longer-term loan. Better credit means lower interest, leaving more money in your wallet each month for gas to feel the torque of that new engine.

Perhaps it isn’t a car that gets your engine going? Perhaps you are perfectly happy with the dependable subcompact in the driveway. The first quarter of the year is still a great time to get our finances in order, check the three major credit reports for errors, pay things off, and dream of our financial goals for the coming year. This can only help you realize your dreams, whatever they are – practical and pragmatic or romantic and whimsical.

Once the credit reports are tidy, remember to park the new car (or the old clunker) in the garage, slam a cup a green tea, and go on a long walk with the kids.

If you didn’t know any better, you might suspect that credit cards were the insidious invention of a Las Vegas casino conglomerate. Certainly, the odds of “winning” in the game of credit spending are in favor of the “house.”  Getting ahead of credit card debt demands that you get ahead of interest payments in your effort to pay down the principal amount – the amount you actually charged.  While it may seem that every dime in your spending budget is accounted for, preventing you from making larger credit card payments, you can find ways to cut back personal spending. You can indeed spend less day-to-day, ultimately saving you more money in the long run by paying down your monthly credit card debt sooner rather than later.

One of the best ways to curtail your discretionary spending is to examine how often you eat outside the home. Your job may demand a daily quick trip through the doughnut shop or coffee shop drive-through, you may make enough money to afford lunch out each day with your co-workers, and your family schedule may be hectic enough to make pizza delivery or fast food a blessing. These combined expenses, however, dramatically impact your household budget. Some research suggests that half of our food budget is allocated to eating outside the home. You can save money by avoiding the daily latte, the lunch with co-workers, and the fast food hamburgers. Pack lunches and plan meals ahead of time to better manage your time, expenses, and your diet.

As you examine your dining habits, also take a look at your entertainment expenses. Do you need 200 or more stations, or are you paying $50 per month for the privilege of watching your two favorite channels? Consider online websites that often offer free streaming movies and television programming. Alternatively, you can pay a monthly fee that is a fraction of what you might pay your local cable or satellite provider for streaming services like Hulu and Netflix. As well, the expense of renting a movie and making popcorn at home is far less costly than taking the family to a movie theater. Your family evening is also more intimate when sharing a movie at home, and you can avoid twenty minutes of advertising and movie previews.

Other methods of reducing spending include walking or riding a bike instead of driving your vehicle, monitoring your utility use (electricity, water, and heating are often wasted, yet controllable expenses), and cutting back on impulse buying that is often triggered by sales found in department stores (get what you went to the store for, and get out!).  All of these items by themselves might seem trivial, as may the relative cost of a cup of coffee, one food item, or a quick drive to the store. These items calculated collectively, however, represent a significant portion of your budget that would best serve you by being assigned to your monthly credit card payment.

Christmas season revelers were singing, “Bring in the noise, bring in the funk.” Funk is right! But the aftermath – high interest rates on credit cards – bring a different kind of funk to the months of January and throughout the year. Spending on Black Friday may have sounded like a good idea at the time, but overspending is never more prevalent than at Christmas. The months following yuletide bliss can be ferocious, especially for those drowning in high interest credit card debt. It’s so easy to justify that extra credit card debt at Christmas, but recovering from the spending can take you right into the next Christmas season. It’s possible that high interest rates on credit cards may have more to do with winter depression than lack of sunshine.

While retailers coast into the new year on your Christmas purchases, you’re stuck in a midwinter depression, paying interest on the purchases you made the day after Thanksgiving. You know the problem, but here is something perhaps you do not know: Your case is not hopeless. Getting out of the winter credit card funk will take a little work, but we can help you create a plan to pay down debt quickly.

Our suggestion? Start with the card that has the highest interest rate and pay it off first. This sounds radical since some financial advisers may encourage just the opposite: paying lower balances first. However, a financial payoff plan that targets high interest rates first is a good idea. Why? Let’s say you pay off the card of lesser interest first. While you are doing so, the higher interest is piling up fast. You will pay more in the long run on a higher interest loan that is left idling on minimum payments than you would on a lower balance card. Paying off the higher interest loan will result in less total interest piled on to your debt. When the high interest loan is eliminated, you can then concentrate greatly on the lesser loan, even adding the difference paid from the higher interest loan, which is now happily paid off.

Paying off high interest credit cards can help positively affect your credit rating, especially if you get the balances on the cards under 50%. Outstanding debt accounts for 30% of your credit score, so paying off those high interest cards can make a difference.

Ovation specializes in diffusing the funk on high interest loans. Our payment tools will take the guesswork on how to get started.