The holidays have come and gone, and 2008 has turned into 2009. On the first Monday of the first full week of the new year, it’s time to get serious about those financial resolutions.
» Don’t avoid money issues. Set aside time every month to review the bills, progress toward your money goals, investment portfolio, college savings and any other money topic that is relevant.
» Create an emergy fund. Open a savings account and don’t stop contributing until you have saved enough to cover at least three months of monthly expenses. If you can save six months worth, even better.
» Pay more than the minimum on credit cards. Even a small amount more than the minimum can make a big difference in the time it takes to pay off your balance and the total cost of interest.
» Get adequate insurance protection. There is nothing like an emergency to wipe out your savings or add to your debt level. Protect yourself financially from as many emergencies as possible by ensuring adequate insurance for health, life, auto and home.
Source: Dara Duguay, director of Citi’s Office of Financial Education
After a recession-plagued year in which home values plummeted, stock losses mounted and personal debt multiplied, most people will likely resolve to try to get fiscally fit in 2009.
“Many consumers have been renting their lifestyle by living off credit, and it’s time they took ownership,” said Gail Cunningham, spokeswoman for the Silver Spring-based National Foundation for Credit Counseling. “Resuming control of their finances should be at the top of everyone’s new year’s resolutions list for 2009.”
The top three new year’s resolutions categories were expected to be health and fitness, career and personal finance, according to mygoals.com, a Web site that helps people set and reach personal and professional goals. The health and fitness and career categories saw decreases in popularity, while personal finance saw an increase this year.
“2009 is going to be all about individuals’ security,” Greg Helmstetter, chief executive officer of mygoals.com, said in a statement. “Paying down debt is always a popular resolution, and this year is no different. What is different is that very few people are thinking about investing, of any sort, compared to recent years. Nearly all of people’s financial resolutions will be about getting rid of debt.”
There’s also very little interest in buying a home in 2009, according to Helmstetter. Instead, people are looking to improve their current homes without spending much money.
“It’s as though they expect things to be tough going for a while and are digging in for what could be a long winter,” Helmstetter said.
To build a level of financial stability, the NFCC recommends the following steps:
» Know where your money goes. According to a recent NFCC Financial Literacy Survey, about 40 million adults keep little or no track of how they spend their money. Commit to writing down every cent you spend for 30 days, as it can reveal spending patterns that need adjustments.
» Build a budget. After you’ve tracked your spending, you can categorize it starting with living expenses, followed by debt repayment. At this point you might discover that you’ve got more expenses than money, but that’s OK, because you’re now in control of your finances, and you can take the necessary steps to resolve any deficit.
» Pay down debt. High-interest credit card debt coupled with high debt loads can destroy any budget. If you’ve dug a deep financial hole, stop digging. Don’t add new debt on top of old. Put a freeze on charging, with no exceptions. If the balance on any card exceeds 30 percent of the credit limit, devote all extra money to paying down that debt.
» Start saving. Have 10 percent of each paycheck automatically deposited into an interest-bearing savings account. You’ll never miss this money, and at the end of a year, you’ll have a little more than one month’s income socked away for emergencies. Contribute to your company’s retirement plan. If they match your contribution, deposit at least that amount, or you’re missing out on free money.
