When you think of spring, what comes to your mind? Perhaps you think of sunny weather, March Madness, or gardens filled with beautiful plants and flowers. However, for many people, the first thing that pops into their head is spring cleaning: sweeping the floors, decluttering the closets, and finally dealing with that one junk drawer you throw all of your odds and ends into.
But did you know that you can also take the same approach to your finances? Using a personal loan, you can get a clean financial slate and start fresh for spring. Specifically, personal loans can help you clear out debt, freshen up your savings, improve your credit score, and fix your bad spending habits.
Clear Out Some Debt
Think of your finances like a garden. If you don’t take time to clean out your flower beds of weeds and debris, your flowers won’t bloom. Similarly, if you let things like debt hold your financial situation back, you won’t be able to prosper fully! However, when there’s a lot of weeding to do, it can be hard to decide what to tackle first.
That’s why using a personal loan to consolidate your debt is the best solution to help your financial garden bounce back. Here’s how debt consolidation with a personal loan works: you take multiple debts (typically higher-interest ones such as credit cards) and use one personal loan to pay all of them off. By doing this, you end up with one affordable monthly payment that you then repay over a set term. Rather than stressing about what debts to tackle first, personal loans allow you to roll up your sleeves and get to work reinvigorating your financial garden right away.
Freshen Up Your Savings
Let’s face it: when you’re trying to pay down multiple debts, it’s easy to let your savings accounts go stale. 70% of Americans have less than $1,000 in savings, and 45% have nothing put away at all (Statista). When you pay off your debt using a personal loan and condense your multiple payments into one payment with a lower interest rate, not only do you save money, but it also becomes possible to put money into savings again.
To get into the habit of putting money towards savings, try automating the process! First, decide how much you want to save each month. Then, set up a direct transfer to your savings account. This way, you can build up a nest egg without even having to think about it. If you don’t know exactly how much you can spare to save, try using an app like Digit. Digit analyzes your spending habits and then automatically moves small amounts of money over from your checking to your savings. It may be a dollar here or five dollars there, but the money begins to add up!
Watch Your Credit Score Grow
Whether you’re working on paying off high-interest credit card balances or multiple unexpected bills, continuing to make monthly payments without seeing a change in your credit score can leave you feeling like you do after the long winter months: over the cold and ready for spring!
Using a personal loan to consolidate debt can help boost your credit score in two significant ways. First, it leads to a lower credit utilization ratio. Your credit utilization ratio, which measures how much of your available credit you’re using, may fall when you consolidate debt because you’re decreasing the amount of debt you have. This, in turn, increases your available credit. Second, having a single monthly payment means you’re more likely to make payments on time. Because payment history is by far the most significant factor in determining your credit score, a personal loan can help you establish a solid repayment history and increase your credit score.
Sweep Out Bad Spending Habits
So you’ve tackled your debt by using a personal loan…now what? While it can be tempting to fall back on old habits once you’ve got a clean slate, the spring is the best time to get rid of the things that no longer serve you, including your poor spending habits! Use your fresh start as an opportunity to analyze your spending and pinpoint what practices need to be swept outside and out of your life. For example, let’s say that you look at your financial statements and notice that you tend to shop online after getting home from work. Instead of browsing Amazon after dinner, why not watch a YouTube video about a hobby you’re interested in, such as knitting or coding? You’ll still get the satisfaction that comes with receiving something, but it will instead be something you made for yourself!
If you’re ready to start fresh for spring with a personal loan, why not apply to check offers with Credit Direct! Our application takes minutes to complete with no effect to credit score.