Making the right money resolutions

Some 61% of Americans consider money issues their number-one cause of holiday stress, according to a survey by the American Psychological Association. If you want to get a head start on a better holiday season in 2007, start with some important New Year's resolutions to improve your financial life.

The Financial Planning Association, Denver, Colo., recommends that you resolve:

* To track your spending. This is the first critical step to getting personal finances in order.

* To write down your goals. That gives them a formality and a starting point for must-do planning.

* To consider advice on taxes and planning. It could be that your personal planning is inadequate. Start getting references on good tax professionals and consider sitting down with a certified professional to discuss your current retirement savings picture and what can be done to improve it.

* To cut credit card debt. Take inventory of your balances; figure out if you can consolidate them under your lowest-rate card, and be sure to pay off an amount that exceeds the minimum--on time, every month. Oh, and pay cash from now on.

* To consider prepaying your mortgage. Every dollar you prepay potentially will save thousands in interest over the life of the loan. If you make just one extra payment a year, a 30-year loan can be cut down to 21 years--just do not short your investment plans to do it.

* To save. You should put aside at least five to 10% of your take-home pay (if you can afford to) and place the maximum in whatever retirement savings plans you qualify for.

* To refinance. Interest rates remain relatively low and now may be a good time to consider consolidating all your debt under the lowest possible fixed rate--if you can resist taking on more debt in the future.

* To redefine the way you shop. If you are an impulse shopper, break the habit. Get a legal pad and make that your centralized shopping list--separate it for groceries, stock-up goods, essential clothing, and big expenditures you will need to make at specific times.

* To cook more. Eating out is one of the biggest drains on the American household budget. The National Restaurant Association reports that the average household spends $2,276 each year in restaurants, equal to $910 per person.

* To attack that miscellaneous column. In every budget, there are items that can be cut--or at least cut back on. Do you really need deluxe cable? How much are you paying for your Internet service? Can you wear a sweater around the house and lower the thermostat? Aim for a target of at least 10% and start setting that money aside on a regular basis.

COPYRIGHT 2007 Society for the Advancement of Education
COPYRIGHT 2008 Gale, Cengage Learning