December always seems to fly by, and before we know it, 2012 will be upon us. The beginning of the new year is the perfect time to set goals and create a plan for the rest of the year, especially when it comes to your financial situation. Here are two of the most common financial resolutions and ways you can start working toward these goals this holiday season and into 2012.
Save MoreWhat to do now: It can be difficult, but do everything you can to keep the holiday season affordable. Set a budget, and stick with it. Take full advantage of holiday sales, online shopping deals and coupons so you’re not dipping into your non-holiday savings to pay for everything. What to do in 2012: Start out by identifying your savings goals. For what purposes do you want to save money, and how much money do you ultimately want to save up? Many people find it helpful to start small when beginning a new savings plan and to use a consistent approach to saving. For example, contact your financial institution to set up a savings account designated for a specific purpose, such as an emergency fund. Then establish an automatic transfer that deposits a set amount of money to this emergency fund account on the same day every month or on each payday. Beginning with an automatic transfer as little as 1 percent of your paycheck or $25-$50 every month is a great initial goal. Try to approach your savings plans like you would pay your bills; treat saving money as if it’s a mandatory part of your monthly budget. If you don’t already have a long-term savings plan in place for retirement, such as a 401(k) or IRA, now’s the time to get this started. Check with your employer and financial institution to find out more about the options available to you, and consider meeting with a financial advisor for additional assistance.
Pay Off DebtWhat to do now: Paying off debt can be especially difficult this time of year, so focus primarily on staying current with all of your loan payments and minimizing any additional debt you take on. If you can afford to pay more than your minimum loan payments, start getting in the habit of doing so now. Remember, one of the best gifts you can give yourself and your family this year is to avoid excessive debt, overspending and the stress that goes along with these. What to do in 2012: Begin 2012 by setting a debt-reduction goal. Do you want to pay off a credit card balance or be completely debt-free by a certain date? Set this as your goal and get motivated by imagining the benefits of paying off this debt. Next, review all of your debt alongside your other expenses and income. Determine how much money you need to pay your bills and set aside some savings every month, and then figure out how much money you have left over to pay down your debt even faster. Create a plan that specifies exactly how much additional money you’ll put toward your loans every month, and start acting on this plan right away. While you’re reviewing your debt, double-check your interest rates and other loan fees (e.g., annual or usage fees). Loan rates are generally very low right now, so you may be able to maximize your debt reduction efforts by refinancing your debt at a lower rate or with more favorable terms. Check out loan rates and options at any financial institutions you currently use, and look at a few other credit unions or banks as well. If you’re feeling overwhelmed or aren’t sure where to start with your debt, don’t hesitate to seek professional assistance. Your financial institution may offer services to help, and there are a number of trustworthy credit counseling agencies available. Do be careful to avoid scams when it comes to debt reduction services; keep in mind the old adage that if something sounds too good to be true, it probably is.
Making Your Resolutions a RealityMaking changes and sticking to your resolutions long term can be challenging, but don’t give up! Start small with a few simple and clear financial objectives for 2012 and know that these are resolutions you can keep. Be sure to take advantage of the multitude of free and inexpensive resources available online, consider setting up an appointment with a financial advisor to review your goals, or contact your financial institution for additional advice.
April Clobes is Executive Vice President/Chief Operating Officer for MSU Federal Credit Union in East Lansing. She can be contacted by e-mail or by calling (517) 333-2254.