Money Management

Ramsey’s advice could help you stay on track with your goals. 

If you’re hoping to get better at managing your money, there’s a lot of different things you can do in order to accomplish this important objective.

But, there’s one surprising step that finance expert Dave Ramsey said you can’t skip if you really want to be successful at improving your financial situation.

Could this be the key to accomplishing your financial objectives?

Ramsey said if you really want to stick to your budget or to other financial goals, there’s one trick to making that happen.

“Get yourself an accountability partner,” Ramsey suggested. “Don’t skip this. Accountability and routine are key to getting new habits to stick and making goals actually come true!”

Ramsey believes you should have regular budget meetings with your accountability partner. Depending on what your financial goals are, you could also check in with your partner on other issues you are working on too.

For example, if you are primarily focused on paying off credit card debt right now, you could have monthly meetings to report on your progress and share how much extra you paid on your balance that month. Or if your goal is to boost your savings account balance, you could share your balance at a set time each month to showcase how it has grown thanks to your new contributions.

Is Ramsey right?

Ramsey’s advice makes a lot of sense. In fact, there’s tons of data showing that having someone to be accountable to can help you make all sorts of important life improvements. For example, the idea of being accountable to someone else is the foundation for programs like Weight Watchers, which aims to help you to lose weight due to regular check-ins with others.

When you know you’re going to have to check in with someone else, you’re much less likely to want to disappoint them by your lack of progress. You probably won’t want to have to report you didn’t accomplish your goal for the month and, in fact, you may even be motivated to do more than you had originally intended just so you have something extra positive to share.

The good news is, this step isn’t a difficult one to take and there’s no real downside to it, so you may as well give it a try if you’re working toward any financial goals. Ramsey says you can ask a spouse or partner to serve in this role, or ask someone else you trust (who you can also perhaps help accomplish goals of their own).

“If you’re married, you’ve got an automatic, built-in accountability partner,” Ramsey said. “If you aren’t, find someone who will both motivate and challenge you through the year.” So, figure out who your person is going to be, share your goals, and set up regular sessions to see how you’re accomplishing them. Do it today so you can get on the path toward building lasting positive habits, and you’ll likely be amazed at what a difference this simple step ends up making in your financial life.

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That’s not really a good thing, though. 

Americans certainly aren’t strangers to borrowing money. You’ll commonly see consumers whip out their credit cards and charge up a storm, figuring they’ll pay off those balances over time.

Similarly, U.S. homeowners aren’t necessarily shy about tapping the equity they have in their homes. And last year, homeowners had a lot of that equity to tap due to elevated home values. It’s not so surprising, then, to learn that balances on home equity lines of credits, or HELOCs, increased by $14 billion during the fourth quarter of 2022, according to the Federal Reserve Bank of New York.

Not only does that represent the third consecutive quarterly increase in HELOC balances, but it’s the largest increase in more than a decade. And all told, Americans owe $336 billion on their HELOCs.

It’s easy to see why a HELOC might be an easy and convenient way to borrow money when you need it. But you should also know that there’s a danger in carrying a HELOC balance, and it may come back to bite you this year in particular.

Your debt could get more expensive over time

Some types of loans come with fixed interest rates, like home equity and personal loans. But HELOCs, like credit cards, commonly come with variable interest.

What this means is that the interest rate on your HELOC could change with market conditions. And if that interest rate rises, guess what? So will your monthly payments.

Meanwhile, there’s a good chance the cost of consumer borrowing will increase on a whole in the course of 2023. The Federal Reserve is on a mission to slow the pace of inflation. To make that happen, the central bank is likely to raise interest rates multiple times in 2023 just like it did in 2022.

The Fed doesn’t set consumer borrowing rates directly. But when it raises its federal funds rate, which is what banks charge each other for short-term borrowing, the cost of consumer borrowing tends to rise, too. So what might happen this year if you owe money on a HELOC is that your interest rate on that debt goes up, leaving you with higher payments to grapple with.

Be careful when taking out a HELOC

Borrowing via a HELOC can be tempting when you have a fair amount of equity in your home to tap. But before you move forward with a HELOC, you may want to consider opting for a home equity loan instead. A home equity loan will give you the benefit of a fixed interest rate on your debt — and predictable monthly payments until it’s paid off.

Meanwhile, if you’re paying off a HELOC now, you may want to try to whittle down your balance before interest rates climb again. Granted, inflation may be making it hard to eke out extra money these days, so that may not be possible. But if you can chip away at your balance, you might really appreciate it if the rate on your HELOC starts to soar.

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Image source: Getty Images
What happenedThe number of new bankruptcy filings was 18% higher in February compared to the year before. There were almost 31,900 new filings last month across U.S. major filing categories, up from around 27,000 in February 2022, according to the American Bankruptcy Institute (ABI) and Epiq Bankruptcy.So whatBankruptcy figures are one of several indicators that help us understand the state of Americans’ finances. The jump in the number of new filings is one of several signs that people’s bank accounts are starting to feel the strain. Another is data from the Federal Reserve Bank of New York that shows an uptick in delinquencies as well as record high consumer debt in Q4 last year.”The growing number of households and businesses filing for bankruptcy reflects the mounting economic challenges they now face,” said ABI Executive Director Amy Quackenboss. Not only have pandemic relief efforts largely expired, Quackenboss said the combination of inflation and increasing borrowing costs have hit both individuals and businesses.Now whatFiling for bankruptcy is a serious step, and not one to take lightly. It’s important to fully understand how bankruptcy works, especially as it won’t necessarily wipe out all your debts. The two main types of consumer bankruptcy are Chapter 7 and Chapter 13. Each works slightly differently, but both can be costly — according to debt.org it can cost between $1,500 and $3,000 to file.In addition to the cost, bankruptcy can do serious damage to your credit score and will make it difficult for you to borrow in the future. Chapter 7 bankruptcy will stay on your credit report for 10 years, while Chapter 13 will remain on file for seven years.If you’re having trouble keeping on top of your bills, there are a number of moves you can make before you declare bankruptcy. You might, for example, contact your creditors to see if you can negotiate a payment plan. Another route might be to consolidate your debt into a single loan.If you do decide to file for bankruptcy, here are some steps you’ll need to take:Complete a credit counseling course: In order to file for bankruptcy, you have to attend credit counseling with an approved agency. The counselor will look at your situation and help you explore options. There’s usually a fee involved.Consult a bankruptcy attorney: Even if you plan to file for bankruptcy without a lawyer, at the very least it’s worth getting a free first consultation. You might also see if you can get help with the legal fees rather than going it alone as it isn’t a straightforward process.Collect the paperwork: In addition to the forms you need to fill out, you’ll need to pull together a bunch of documents. These include tax returns, bank statements, information about your debts, and details of your assets.If your debt has become overwhelming, bankruptcy could be a way to wipe the slate clean and start again. However, be aware that it’s also a costly and time consuming process that can have longer term consequences.Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. 

What happened

The number of new bankruptcy filings was 18% higher in February compared to the year before. There were almost 31,900 new filings last month across U.S. major filing categories, up from around 27,000 in February 2022, according to the American Bankruptcy Institute (ABI) and Epiq Bankruptcy.

So what

Bankruptcy figures are one of several indicators that help us understand the state of Americans’ finances. The jump in the number of new filings is one of several signs that people’s bank accounts are starting to feel the strain. Another is data from the Federal Reserve Bank of New York that shows an uptick in delinquencies as well as record high consumer debt in Q4 last year.

“The growing number of households and businesses filing for bankruptcy reflects the mounting economic challenges they now face,” said ABI Executive Director Amy Quackenboss. Not only have pandemic relief efforts largely expired, Quackenboss said the combination of inflation and increasing borrowing costs have hit both individuals and businesses.

Now what

Filing for bankruptcy is a serious step, and not one to take lightly. It’s important to fully understand how bankruptcy works, especially as it won’t necessarily wipe out all your debts. The two main types of consumer bankruptcy are Chapter 7 and Chapter 13. Each works slightly differently, but both can be costly — according to debt.org it can cost between $1,500 and $3,000 to file.

In addition to the cost, bankruptcy can do serious damage to your credit score and will make it difficult for you to borrow in the future. Chapter 7 bankruptcy will stay on your credit report for 10 years, while Chapter 13 will remain on file for seven years.

If you’re having trouble keeping on top of your bills, there are a number of moves you can make before you declare bankruptcy. You might, for example, contact your creditors to see if you can negotiate a payment plan. Another route might be to consolidate your debt into a single loan.

If you do decide to file for bankruptcy, here are some steps you’ll need to take:

Complete a credit counseling course: In order to file for bankruptcy, you have to attend credit counseling with an approved agency. The counselor will look at your situation and help you explore options. There’s usually a fee involved.Consult a bankruptcy attorney: Even if you plan to file for bankruptcy without a lawyer, at the very least it’s worth getting a free first consultation. You might also see if you can get help with the legal fees rather than going it alone as it isn’t a straightforward process.Collect the paperwork: In addition to the forms you need to fill out, you’ll need to pull together a bunch of documents. These include tax returns, bank statements, information about your debts, and details of your assets.

If your debt has become overwhelming, bankruptcy could be a way to wipe the slate clean and start again. However, be aware that it’s also a costly and time consuming process that can have longer term consequences.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More