Get-out-of-debt resolutions for ’13

By Michal Cheney, U.S. News & World Report

A new beginning for the new year
Many cringe at the thought of New Year’s resolutions. After all, only about 8% of those who make them actually achieve their goals. If our troubled economy has taught us anything, though, it’s that the less debt you have, the better off you are. And now online tools and smartphone apps are available to help you stay on track to hit your financial targets. Click ahead for a look at eight resolutions to get you out of debt in the new year.

Reduce your credit card debt
One of the best things you can do for your financial stability is to reduce your credit card debt. Your approach should be to pay off all new charges immediately while you work to pay down any existing balances. Paying down credit card debt is also one of the quickest ways to improve your credit scores. Your credit scores are determined in part by your debt utilization ratio — the amount of debt you have outstanding compared with your total available credit. By reducing your debt, you will boost your credit scores.

Track your spending
Knowing where your money is going is one of the first steps you need to take when examining your finances. You can use a website like to track your spending. Such sites can also help you set a realistic budget.

Create a budget
Some people strongly dislike the “B” word, and it’s usually because they can’t stick to a budget. That’s why it’s important to create a realistic one that’s not so strict that you’ll feel the need to go on the occasional spending spree. A good budget will help you identify where your money is being spent so you can make better spending decisions.

Make some money on the side
Whether you need extra money to pay off bills or you just want to add to your emergency fund, finding some extra income could be just the ticket. A side gig can be anything that makes you money outside your full-time job. Consider selling unwanted possessions online or picking up a seasonal part-time job. Earning more money can help you get ahead on your regular bills so you can put more toward paying off your debts.

Set up an emergency fund
An emergency fund can keep you from going into debt. When unforeseen bills pop up, you can use the money from your fund instead of racking up more debt. Determine the amount of your emergency fund based on your circumstances. Personal-finance expert Dave Ramsey recommends that everyone have at least $1,000 set aside for emergencies, while others say you need a full six months’ worth of living expenses.

Open a savings account
A savings account might not give the best return on your money, but any solid financial plan rests on a foundation of liquid assets, such as cash. Your checking account can handle your everyday expenses, but there are good reasons — among them unexpected expenses, taxes and vacations — to have extra money in a savings account. I use an online savings account to save for my tax return payment, because I can’t access the account on a whim. A great way to get started is by setting up direct deposit from your paycheck or checking account into a savings account. If it’s done automatically, chances are you’ll never miss the money.

Check your credit report
By law, U.S. consumers are entitled to three free credit reports a year — one each from TransUnion, Experian and Equifax. The free reports are available through

Avoid new debt
Taking on more debt will just be adding more fuel to the fire. If you must borrow, be sure to get the lowest rate possible. You can even try lowering some of your old rates by contacting your credit card companies. It’s worth a shot.

Reprinted from U.S. News & World Report

About melvynburrow

Attorney and CPA services.
This entry was posted in Credit, Debt Issues, Money. Bookmark the permalink.

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