Financial New Years Resolutions for 2011

It's that time of year again: Time to declare your New Year's resolutions that you'll break by January 10th.  Unless you make a resolution to keep your resolutions, or a resolution to keep your resolution to keep your resolution.  Anyway, money--along with health--is one of the top ten resolutions of this year or any year.  Money is especially of issue this time of year, as many people spend more than they can afford on gifts during the holiday season. 

So here's looking to a financially sound 2011 and how to make it happen.

1. Save Money - To start, it may take a little money to make money. Though you can say to yourself, "I'm going to live on a budget this year," that's easier said than done.  There may be ways for you to cut corners on your expenses than you're even aware, so hiring a financial planner can be helpful.  Think of a financial planner sort of like you would a shrink. Be totally honest about your financial situation and bad habits and he or she will help you craft a way out. 
   
   Of course, the way to really save money is to not hire one at all.  In this case, use one of these financial planning calculators.  In fact, use one of these even if you do plan to hire a financial planner, as it can cut down on the number of hours you'll need from them.  Generally, it's recommended that you have six months savings.  If you're also working on a debt management plan, this means factoring in both what you'll save and what you'll put towards debt.  Which leads to resolution number two...


2. Get out of debt - Pay off your highest interest debt first.  Usually this is credit card debt, so if it would help to transfer the balance to a 0% APR card for a one-year period, then pay it off in that time frame.  What you need to do is factor in savings vs. how much you can afford to pay above the minimum to get out of debt faster.  That's a tough balance, especially if you're staring down a mortgage, student loan, car loan, credit cards, or all of the above.  One thing is for certain, paying the minimum is not a valid get of debt plan. 


3. Start an IRA - Or improve the one you already have.  There's no time like the present to start investing in your retirement--in fact, the earlier the better.  Of course, the amount you can afford to invest for retirement depends on how well off you are in terms of resolutions one and two.  Also, debt isn't the only thing you can consolidate--it's possible to consolidate retirement accounts as well, especially a 401(k) from a former employer.  Just letting that account sit there might actually be costing you money in maintenance fees.


4. Start investing - This is a tough one in this climate, as the market is volatile.  If you're looking to invest in 2011, your best bet is those investments that may take a while to grow--i.e.; don't be expecting a windfall in 2011, as these aren't exactly boom times. Of course there are always exceptions, but the investigating strategy these days should be for the long term, not short term gain.  So: patience.


5. Sell things - Yes this isn't so much fun, but it can help significantly with resolution numbers one and two.  Personally, I used to be a collector of books and CDs.  With the digital revolution (and an iPad) I see much less value in accruing hundreds of things that are a pain to move anyway.  So, hello Amazon! Depending on what you've got, you can make hundreds of dollars this way.  If necessary, think larger and sell your car to downgrade.  Hopefully you're not in a position where you're selling things just to make minimum payments.


6. Clean up your credit history - No doubt, doing all of the above will help out your credit history, as your credit history will go up if your debt is less than 40% of your limit.  There may be things in your credit history, however, that are inaccurately affecting your score such as some debt infraction by someone with your name.  This has been known to happen.  So get your three free credit reports from AnnualCreditReport.com (that's not the place that will charge you monthly after you order up a report.)  Scour these and remember that there can be an issue on one from one credit bureau that might not be on another. 

OK, that's a good start.  Sure it's not as clean as a top ten list, but these six are a good start.  One of the reasons people fail with their financial resolutions is that the task just looks too daunting.  Financial organization takes determination and patience.  It's likely that you won't fix everything by 2012, but starting now will make your future financial mountain that much easier to climb.

How about our readers - any other financial resolutions out there, or tips for succeeding in the new year?