What’s the average balance on those cards? For example, if you have five cards with a credit limit of $2,000 and each has a balance of $1,000, your total debt is $5,000. You have used 50% of your available credit, which affects your FICO score. You need to put away those cards, stop using them, and pay them off.
“Don’t close the account after paying off the balance, because that will increase your debt-to-available-credit ratio, which will lower your credit score,” cautions Young. Once you pay off all your cards, consider using one account. “Keep the credit card that offers the most benefits like cash-back rewards, merchant discounts, and airline mileage points,” suggests Young. Nix department store cards since they charge the highest interest rates, canceling out any 15% to 20% discount you get for using them, she points out.
To help you manage your debt, check your credit score, view alerts, and handle other tasks, use tools such as Equifax’s mobile app for the iPhone, iPad, or Android phone. For other management tools, see “4 Apps to Boost Your Score” in Money, this issue.
Is your cash organized by denomination?
Open your wallet and look at how your cash is organized. Is it ordered by denomination with bills facing the same way? Cash that’s arranged and in order is characteristic of a person whose financial life is organized, Young says. Not to mention that it’s easier to get hold of and to add when making purchases.
“Cash in disarray reflects a disorganized financial life. Focusing through clutter and chaos is difficult.” Organize your cash, financial files, documents, and accounts. “It is hard to have abundance when your money isn’t in order and financial papers are all over the place,” says Young. Disorder increases the odds that you’ll get overcharged or miss payment due dates. Some women are even afraid to look at their statements, allowing them to sit around unopened for months, notes Young. You’re not making the right financial decisions if you don’t review your financial statements each month.
Young explains that organizing—your cash and your financial papers—has to do with money awareness. “When I was at Fidelity, I managed nearly $1 billion in assets for clients who averaged $2 million each. The one thing my millionaires had in common is they were very money aware. If they got charged $10, right or wrong, they would question it. They were very focused—though not obsessive—on how much money they had at all times.” Every day, the woman behaving wealthy is aware of how much money she has in her purse, checking account, and savings.
(Continued on next page)