JENNIFER FIERRO • PICAYUNE STAFF
LLANO — The start of a new year means making an improvements to-do list. Usually among those items is better personal financial management.
Most advisors encourage putting 10 percent of the gross of each paycheck into a savings account and not having more than one car payment, if possible.
And yet, one of the biggest challenges for many families is credit card debt, according to Certified Public Accountant Lance Center.
“One of the biggest things with us is paying more than the minimum on credit cards each month,” he said. “Otherwise, (credit card balances) never go away.”
To encourage people to pay more than the minimum balance, Center tells them to multiply the minimum amount they pay by the number of payments it takes to pay off the credit card.
“That’ll motivate you to pay more than the minimum,” he said.
Center knows circumstances happen that are beyond one’s control. But when people are in a better financial situation, he suggests using the extra money to pay off a credit card.
“And cut down the number of cards you have,” the CPA said. “We need to go back to how our grandparents thought: When times are tough … make lifestyle changes. Sleeping at night is sometimes better than a lifestyle.”
Another common sentence Center hears is people make financial decisions based on tax consequences as opposed to financial consequences.
“(Families) may not pay off mortgage because it’s tax-deductible,” he said. “Or you go buy a piece of equipment you don’t need.”
Instead, paying off long-term debt or not purchasing something that’s not needed gives a different kind of financial freedom. While it might mean not having a tax write-off, Center, who also does software consulting, said the extra money can go to something else.
“Buy something because you need to,” he said.