As the new year approaches the NFCC offers these financial resolution tips for 2012:
- Have adequate savings.Â You might ask yourself howÂ you paid forÂ your last emergency. If it was with a credit card, that’s a red flag. A person who cannot afford an emergency is not likely to be able to afford the interest, late charges, and over limit fees that could be associated with adding to their debt load.Â
- Track your spending. The only way you can know where your hard-earned money is going is to write down every cent you spend. Do this for at least 30 days. Believe it or not, many people make incomes adequate to support their expenses, but end up short each month simply because they don’t keep track of their spending.
- Create a budget. Budget is not a four-letter word. If it helps, call it a spending plan. The point is to be in charge of your money, not the other way around. After you’ve tracked your spending, you’ll be able to assign dollar amounts to each spending category. This results in using your money to your best advantage.
- Get your credit report. Review it for accuracy and address any errors. Why? Your credit score is based on the contents of your credit report. Further, frequently reviewing your credit report is a good way to protect yourself against identity theft, as you’ll be able to spot any suspicious activity. Now that consumers are allowed one free credit report from each of the three bureaus every 12 months, there’s no excuse for not obtaining it. Realize, however, that there is only one legitimate site which is www.annualcreditreport.com.
- Improve your credit score. Credit is becoming increasingly harder to obtain, but having a solid credit score will help you not only get the credit you need, but at a reasonable rate. The two most important things you can do to improve your score are to pay your bills on time, and not utilize more than 30 percent of your available credit. To help you never pay late, create a cash-flow calendar listing all paydays and which bills are due to be paid from those funds.
- Pay down debt. Find the money to dedicate to debt reduction by learning to live below your means. If you’ve created a lifestyle that is not realistic for your income, it’s going to involve some serious adjustments. Additionally, you may need to take on a second job and dedicate that paycheck to debt reduction. As burdensome as that may sound, becoming debt free has tremendous perks: it frees you from worry, allows you to build your savings account, begin investing, and meet your financial goals.
- Set goals. When people are in financial distress they have trouble planning beyond the next day. However, setting both short- and long-term goals can define where you want to be and help you get there. Your goals need to be low enough that you can attain them, but high enough that they make you stretch. Sometimes we’re so busy making a living that we don’t take time to make a life. Know where you want to go and take the necessary steps to get there.
- Plan for retirement. This is another often neglected area when money is tight. However, we all hope that tomorrow comes so we’d better start planning for it today. Time is money’s best friend, thus small contributions over time to your retirement plan or IRA can yield significant benefits. Nobody has ever regretted beginning retirement planning early, but many wish they’d started sooner.
- Involve your family. Make all financial decisions family decisions, and your likelihood of success will increase dramatically. Talk about everything from the bills to the budget. The home is a great place to teach your children about financial issues, including the inevitable problems. Remembering when Mom and Dad worked through the hard times will be a nice cushion when it’s the kid’s turn.
- Reach out for help. Take action at the first sign of financial distress. Delaying only makes it harder to find a solution. There are many reputable credit counseling agencies with trained and certified counselors waiting to help you. Even better, sit down with a counselor and get your financial ducks in row before trouble strikes.
Perhaps the best tip of all is to remember the adage that contentment is not the fulfillment of what you want, but the realization of how much you already have. A new attitude toward money will go a long way toward reaching many of our financial goals.
If you’d like help with your New Year’s resolutions consider a consultation with an NFCC-certified counselor. Call 800.388.2227, or go online to www.DebtAdvice.org to find the agency closest to you. For help in Spanish, call 800.682.9832.
Gail Cunningham is Vice President of Membership & Public Relations with the NFCC.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.