Holidays Timely for Personal Financial Checkup, Financial Portal Bills.com Suggests

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Consumers can give themselves the gift of financial health with four steps.

According to a recent survey, fewer than 20 percent of Americans can state their credit score within an appropriate range -- and almost half of respondents never check their credit score -- which indicates the time is right for a credit checkup, according to Andrew Housser, co-founder and co-CEO of online financial portal Bills.com.

"Around the holidays, we tend to think of spending, not saving. But the holidays are a great time to take a look at your personal fiscal status," Housser said. He pointed out that for those in danger of holiday overspending, a December review might help rein in expenses. Additionally, a review now will prepare consumers for next year's tax season, and allow them to make any necessary changes to savings plans and payroll deductions for 2007.

Individuals have most of the information they need to understand their financial picture, and other information is readily available, Housser explained. "Best of all, conducting an annual financial examination is even easier than scheduling an annual physical exam -- and less painful."

Here are Housser's steps to checking one's own financial picture:

1. Free credit score gives a baseline. An individual's credit score determines the type and amount of credit for which he or she is eligible, as well as the interest rate. While the survey showed many Americans are ignorant of their creditworthiness, about one-third are on the right track -- checking their credit score annually. Request a free credit report once every 12 months by visiting http://www.annualcreditreport.com or calling 1-877-322-8228.

2. Net worth provides the big picture. "Net worth" is the value of assets minus the value of debts. Add cash on hand, savings and checking accounts, retirement accounts and the value of property such as a home and automobiles. Then add up debt on credit cards, mortgages, auto loans, student loans and other debt. "Subtract what you owe from what you own. The result is your net worth," said Housser, who pointed out that for those with a lot of debt, the net worth might be negative.

3. Take a savings temperature. In 2005, Americans had a negative savings rate -- spending more than they earned -- for the first time since the Great Depression. Calculate a savings rate by adding up all savings -- including retirement contributions and employer matching, health savings account contributions and even spare change on its way to the bank. To find savings as a percentage of disposable income, take the net (after-tax or take-home) income and subtract mandatory expenses (rent, utilities, basic food expenses). The remainder is the disposable income. Then, divide monthly savings by monthly disposable income to find the savings percentage. "Aim for at least 10 percent going into a savings vehicle," Housser advised.

4. Check credit card payoff timelines. Payments on credit card debt are like a gift to the bank -- especially in the case of minimum payments. Gather credit card statements and use an online calculator (search "credit card payoff calculator") to determine the estimated payoff date for each card. "Then plan to pay them off using a tried-and-true method," Housser said. "First, stop charging. Second, pay as much as you can each month on the highest-interest debt, while making minimum payments on other cards. Third, when you've paid off the highest-interest card, add that payment amount to your minimum payment on the second-highest-rate card until that debt is repaid. Continue until your debts are gone. Then, you can start saving -- paying yourself! -- what you've been giving to the bank."

"Sometimes it can be frightening or depressing to take a clear-eyed look at your financial situation," Housser acknowledged. "But an educated person is a person who can take action. Whatever your financial dreams, the first step to achieve them is understanding where you stand. By checking your financial position each year, you can decide your next move -- and that's a very healthy plan."

Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and save money by choosing the best-value products and services. Since 2002, Bills.com and its partner company, Freedom Financial Network, have served more than 10,000 customers nationwide while managing more than $350 million in consumer debt. The company's co-founders and CEOs, Andrew Housser and Brad Stroh, have been named Northern California finalists in Ernst & Young's 2006 Entrepreneur of the Year Awards.

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Aimee Bennett
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