Spring and summer are known as beach season, travel season, and the time of year when people tend to have a little more free time on their hands. Especially as it relates to millennials, who are well known to have a bit of the wanderlust bug, this time of year can also be an expensive time of year.
As a millennial CPA myself, I know I am looking forward to stretching my legs and getting some fresh air as the weather finally decides to cooperate, but cannot entirely put the financial ramifications of travel out of my mind. It is tempting, and certainly can be rationalized, to simply not worry about credit, credit score, or personal finances when you are planning your vacation, trip, or weekend getaway.
That said, just like you would try to exercise and eat better before hitting the beaches, or going on a nice vacation, this time of year is the perfect time to review, clean up, and improve your credit before travel season. It might be cool, rainy, and dreary outside right now, but before you know it, travel season and travel expenses will be here.
Obviously, this list is not the be-all and end-all of credit cleaning tips, but I think it might be able to give you a plan to get started.
1. Get your credit score
There is a lot of confusion out there about credit reports, and whether requesting one dings your credit score. The real deal is that you are legally entitled to a free credit report from each of the 3 major credit bureaus -- knowing where you stand is the first step toward improving where you end up.
2. Protect yourself
Especially if you are traveling overseas, or will even just be hitting the road for an extended period of time, making sure that your identifying information, passwords, and other access information is accurate is a common sense tip. Make sure that the "you" the credit card agencies see is actually you!
3. Pay down debt
Paying down debt is never a bad idea, especially when it comes to getting your credit into tip-top shape. In addition to cleaning up your credit cards, and lowering your debt, it also improves your credit utilization ratio, which sounds technical but is just a ratio of how much credit you have used divided by how much total credit you have access to. Lenders look at this when they are calculating how risky (think higher interest) you are.
Fees, fees, and fees are an enormous potential waste of your hard-earned money, and this makes sense if you think about like this. With all of the credit card options available out there that do not charge you fees, the rewards and benefits associated with a card that does charge a fee have to make up for the expense. It might make sense for you, but be sure to do your homework.
5. Set a budget
Traveling can be an exhilarating experience, but it is important to remember that the financial hangover from a trip can last even longer than the worst sunburn. Setting a budget for your trip and time away, and sticking to it, can put your mind at ease, and keep your financial plans on track while you are vacationing.
Summertime is known as travel season, beach season, and the time of year when you are more free to be yourself. This does not mean, however, that you have to go overbudget, ding your credit, or give yourself a financial hangover. Cleaning your credit, reviewing where you stand right now in terms of your credit, and establishing a financial plan for your trips is good finance, and just common sense.