This New Year, 31 percent of Americans who planned to make a New Year’s resolution said they would focus on firming up their financial footing, according to a survey by Bankrate.com – but if citizens’ track records on resolutions are any indication, many well-intentioned individuals have fallen off the bandwagon.
If you’re among that number, you’re not alone. Last year, just 57 percent of people who made a resolution kept it, according to a survey by the Marist College Institute of Public Opinion, based in Poughkeepsie, N.Y. And, as we all know, financial resolutions can be among the toughest to keep, especially for people who already face financial hardship. Here are five tips from Freedom Financial Network, LLC, a national consumer debt resolution firm, to help you get back on the fiscal bandwagon.
1. Get back on the horse
If your first part of 2005 financial responsibility hasn’t gone as well as you planned – or if a sky-high credit card bill just arrived – don’t despair. Most important is working to change long-term habits. Try building a monthly budget divided into weekly increments, and if one week doesn’t go well, make a fresh start the next week.
2. Set goals
Set out specific goals for yourself, and then plan to meet those goals. Do you want to eliminate your credit card debt, save 10 percent of your income for retirement, cut back discretionary spending by 40 percent? Without a target, you can’t know where to go, so, name your intention.
3. Make a plan
As the saying goes, a resolution without a plan is only a wish. How will you reach your goal? Eating out less or sticking with a cash budget can trim excess spending. Keeping a spending journal, writing down every penny you spend daily, will show you where the bucks go. Then you can identify which areas can be trimmed – or if you’ll need to find a second job to finance your dreams.
4. Work your way up
To eliminate credit card debt, first make sure you can make minimum payments on all your debts. (If you can’t do that, consider seeking help from a consumer debt resolution organization.) Then, pay as much as you can on the card with the highest interest rate, making minimum payments on all other obligations. After you pay off the first card, pay the same amount, plus the previous minimum payment, on the next highest-rate card, and so on, until your debt is eliminated.
5. Stay inspired
Why do you want to keep your resolution? Give yourself rewards for small milestones attained. If you’ve slashed your entertainment budget to pay off one credit card, tell yourself when it’s done, you’ll treat yourself and your spouse to a movie out. If you want to get out of debt so you can save to buy a home, cut out or sketch a picture of your dream home and post it somewhere you can see it regularly. Or, keep a copy of the image in your wallet to remind you not to spend frivolously.