10 Tax-Time Tips for Your Peace of Mind

If you view New Year's Day as the right moment to kick a bad habit, consider Tax Day the right opportunity to start a good one. Giving up on those chocolate doughnuts might have been a losing battle after January 1, but April 15 is the perfect time for a financial spring cleaning.

"A lot of people are going to be getting tax refunds that they can use to take a big step forward," says Ken Clark, a certified financial planner and the author of The Complete Idiot's Guide to Getting Out of Debt. If you've got a refund coming this year -- or even if you don't -- we offer 10 ways to raise your credit score, rein in your spending, and boost your savings account.

1. Check your credit report for errors. A mistake on your credit report may unfairly lower your credit rating. The result? Higher interest rates, for one thing, as well as increased difficulty in renting or buying a home, leasing a car, or even getting a job. (Some employers review candidates' scores as a window onto their sense of responsibility.) Review your credit report carefully and report any errors to a credit bureau (Experian, Equifax, and TransUnion), which must investigate any disputed item and remove anything it can't verify. And if you disagree with the investigation's results, ask for a statement of dispute to be included in your file.

2. Don't max out your credit cards. "Credit utilization" -- the percentage of your available credit that you're actually using -- accounts for 30 percent of your credit score, Clark says. Lenders like to see that you have lots of available credit, but if you're using a huge percentage of what's available, you'll hurt your credit score. "That trips people up a lot," Clark says. Aim for a goal of no more than 35 percent credit utilization: if you have a $10,000 credit limit, don't carry a balance greater than $3,500. And if you have more than one card, use them all, so one card won't get maxed out.

3. Pay your bills on time. It sounds like a no-brainer, but even a couple of occasional late payments can damage your credit score. If you're forgetful, you might set up payments to come automatically from your checking or savings account, or otherwise make a note to pay online, if you're worried about postal delays.

4. Keep your oldest credit cards. The longer you hold on to a credit card, the more history you can show. Keep your longtime accounts in good standing. If you're going to cancel cards, start with those you've opened most recently, Clark says.

5. Need it? Save for it. Create a household budget, and prepare for the unexpected. Build in reserves for car repairs, emergency root canals, and seasonal expenses like birthday gifts and holiday celebrations, so you don't wind up charging those expenses and then overextending yourself on credit. "Don't wait until you pay your debt off before you start saving," says Sandra Shore, senior counselor at Novadebt, a nonprofit credit-counseling agency in New Jersey. "You need to have an emergency fund. There's always going to be a rainy day, and you need to have an umbrella."

6. Pay yourself first. Consider yourself a “creditor,” and get into a routine of writing a check to yourself first -- figuratively or literally -- when paying bills, Shore says. Even $20 per paycheck will get you into a good habit. If you wait until the end of the month to see what's left over for savings, you'll usually find the coffers empty.

7. Set achievable goals. "Everyone should have financial goals, and every goal should have a specific date," Shore says. Don't just tell yourself you want to pay off your credit-card debt, or save for a house: Open-ended targets usually fail, so set a timeline. Calculate how much you can afford to allocate each month toward your objective, and that will determine how long it'll take to achieve your goal.

8. Pay half as much, twice as often. To pay your mortgage or car off faster -- and save thousands in interest -- pay in biweekly installments, rather than monthly ones. That adds up to an extra payment a year, says Shore. "The timing fits better, too, because most people get paid every two weeks. Once you make the arrangement, you don't even have to think about it. And you'll get out of debt years sooner."

9. Keep your budgeting simple. Intricate spreadsheets and complicated budget-management software don't necessarily add up to greater savings. If you make a system too complex, it becomes unworkable, Clark says. "We delude ourselves into thinking we're making progress on our finances by spending a lot time on elaborate systems, when in reality, we just need a simple system that helps us control our variable spending." Basic ledgers or easy-to-complete templates can be just as effective in keeping you on track.

10. Give yourself an allowance. If you examine your entire paycheck, that lump sum gives you a false sense of how much money is available, Clark says. A better idea: Set up a separate spending account with a predetermined amount each month exclusively for hard-to-track expenses: lunches out, boys' night out, toys for the kids. If you put, say, $300 into the account at the beginning of each month and whittle away at that, you'll have a barometer of how the money is flowing out for miscellaneous expenses. "Then the only number you have to keep track of is zero," Clark says. And when you hit zero -- sorry, no more lattes.