Your Yearly Financial Health Check-Up

Just as you'd pay a visit to your doctor or take your care in for a tune-up, you need to make sure that your financial life is on the footing you deserve. But what exactly would a financial health check-up look like, and how can you tell if you're on the road to achieving your financial goals?

Your Debt Status

Total consumer debt was at around $4 trillion in 2018. Have you decreased your share of that burden?

If you run the numbers (see above), you'll find that the average American owes about 26% of their income to debt. That's not ideal. You can measure your own debt status against these averages, of course, but it's far better to measure your progress against yourself. Here are some key questions to ask:

• Aside from a home mortgage, do you hold more or less debt than you did at this point last year?

• Has your income changed? If so, has the debt you owe decreased as a percentage of your income from this point last year?

• Did you make any purposeful progress in paying off debt last year?

Your Credit Report

Your credit report is another important way to check on your financial health. The FTC points out where you can find free credit reports. If you've never done this before, then you'll have a reference for your financial health dating back to last year. If not, you can still use a credit score to weigh your financial health.

Experian explains that anything above an 800 credit score is "exceptional," with 740-799 representing "very good" and 670-739 landing you in "good." Anything below that will make it harder to secure favorable terms for long-term loans like mortgages, which can add to your financial strain over time.

Other Areas to Check for Financial Fitness

Your debt and credit score might be two key ways to gauge your financial health, but they won't give you a complete picture of your progress, year-over-year. Here some other things to consider as you measure your current financial fitness:

• Increase in your home's equity. If your home value improved over the previous year, it will represent an increase in your net worth. It may also give you additional flexibility for borrowing in the future, if need be.

• The state of other investments. If you have other investments - such as through a company 401(k) - then you might find that the value of these investments has gone up while you've left your contributions on automatic. An increase in net worth is always a powerful indicator of stronger financial health, even if you can't access all of this money directly.

• Simplification and consolidation. Even if you have a lot of debt, making progress on that debt sometimes starts with a simplification or consolidation plan that makes payments much more simple. At the very least, if you have debt, make sure that you create a structure that allows you to be in a better financial position next year.

Are you in good financial health? There's no time like the present to find out.

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