Happy New Year – It?s Time for a Financial Luggage Check!

By Kevin M

Okay, the holidays are over?and the free spending with it! It?s time to clean up the mess before it becomes an even bigger one!

Despite everyone?s best intentions, overspending at the holidays is pretty standard. It isn?t until January when the bills come in that the extent of the damage is fully realized. There?s always an extra gift or two (or three or more) that we forget about, a holiday dinner out with friends or co-workers, some extra heavy travel expenses not budgeted for?it all adds up, but heck, we?re human. But not to worry, we have an entire year to get things back in order before?the next holiday crush.

And maybe we can even make some permanent changes for the better along the way.

Try a few of these in the next few months and see if they help?

1. Start a Christmas Club account in preparation for next year. It sounds a bit old-fashioned, but right now, while the concern over last Christmas?s extravagances are still fresh on your mind (and on your credit card statement!) set up and prepare to fund an account for next year. You?ve probably thought about this every now and again, but now is the best time to make next Christmas a financially less taxing event than this year.

2. Start saving a little bit of money in regular increments. If you can save just $20 per week, that will add up to over $1000 in one year. Sometimes a small step like that is all it takes to convert a spendthrift into a saver.

3. Get a part time job?at least for a little while. A year is like a hike up a mountain?it starts out quiet in the winter time, picks up speed in the spring and summer, really kicks in with school and sports in the fall, then hits it?s crescendo in November and December with the holidays. Well, now is the quiet time of the year when not much is going on; if you need some extra money, this is the best time of the year to go for it.

Get a part time job to save up some extra cash for debt payment or savings?you can quit in time for the warmer weather. Unless you?re deep into skiing, this time of the year is pretty boring, and nothing will prime the financial pump of your life more than a few extra bucks.

4. Payoff any bills built up over the holiday season. If you have a few bills hanging over from the holidays, now is the best time to pay them off. Debt is a funny thing?pay it off quickly and it?s no big deal, but let it hang around and it becomes more or less permanent. Take it out now.

5. Pick one small debt and pay it off. If you?re in the debtor class with so many millions of others, you probably have grandiose dreams of paying off all of your debts this year. Forget about it! Unless you?re prepared to live in a tent in the woods, bicycle to work and eat rice and beans three times a day, every day, it?s probably a pipe dream. Pick one debt?your smallest is best?and pay it off as quickly as you can. Once you get that little bugger off your books, you can hit the next smallest. Presto! Debt Snowball in progress.

6. Ditch one or two regular expenses. Do you really need all the services you pay for? Are there some magazine or internet subscriptions you really don?t need that you can cancel? Can you go without cable TV for at least a while? Do you have a membership at a health club you hardly go to? Cutting just one or two expenses can make a real difference in your budget over time.

7. Review your insurance coverage. If one of your plans for the new year is to build up your savings balance, you may be able to use it cover an increase in the deductibles on both your health and auto insurance plans. If you plan on increasing your savings account by $1000, you may be able to safely raise your health plan deductible by that much. You?ll have the money to cover the higher deductible, but you?ll come out ahead because your premiums will drop, sometimes substantially. And if you have no claims during the year, you?ll be even better off still.

8. Cut back on the amount of food you buy. This isn?t as ridiculous as it sounds on the surface. In fact, it nicely compliments another popular New Year?s resolution: losing weight! The best way to do this is to eat less; start by buying less, then take it from there. That?s taking out two birds with one stone.

9. Resolve to eat more meals at home. Much like cutting back on buying food to save money and loose weight, eating more meals at home works in two positive directions. Restaurant meals are fattening, even the alleged low calorie versions?the fewer of them you consume the easier it is to lose weight. And even though eating home more may increase your grocery budget, that increase will be more than offset by the money saved by not eating out.

10. Find a cost free (or at least low cost) past-time. Boredom is one of the most destructive elements affecting finances. When we?re bored we tend to spend money to fill the void. ?Entertainment? is the generic word given to the practice, and it can get pretty expensive especially if you?re bored a lot. Take up reading, low impact exercise, gathering with friends over ONE cup of non-designer coffee, or any activity that fills your time, feeds your mind and doesn?t cost a lot of money. Or take on the above mentioned part-time job idea?anything that either doesn?t cost you money or has the potential to put some in your pocket is worthy of consideration.

You were looking for new years resolutions, weren?t you? Now you have ten to get you started.

What are some financial resolutions you?re making or can suggest to others?

( Photo by Dru Bloomfield )

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