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The Post-Holiday Budget Workout

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Five financial resolutions (and how to make them work for you)

The New Year is traditionally the time of new beginnings, when we hope to overcome bad old habits and adopt new ones that will improve our well-being. Here are five New Year’s resolutions you might consider – with tips on how to make them part of your life in.

1. “I vow to pay down debt.”
To make a significant dent in what you owe, first list all your loans, credit lines, and credit cards. Write down the current balance and interest rate for each. Draw a target on the one you want to pay off first (probably the one with the highest interest rate) and focus on wiping out that debt, while making minimum payments on the rest. Then turn your sights on the next-costliest debt, and follow the same strategy.

2. “I vow to create a saving plan and stick to it.”
Hmm… what to do with that year-end raise? Ordinarily, it makes more sense to pay off a 12% Annual Percentage Rate (APR) credit card than to stash that cash in a savings account yielding less than 1%. The exception: your retirement fund. Financial planners say you should save at least 10% to 15% of your paycheck to draw on in later years. If you don’t have a retirement cushion, make this a priority.

3. “I vow to stop running up overdraft fees.”
If you have trouble keeping track of your account balance ask us about applying for an overdraft line of credit that advances money to your checking account to prevent an overdraft. Or you might consider linking a savings account to your checking account, and authorizing us to automatically transfer funds to nip overdrafts in the bud. There may be a modest charge for using either of these services depending on your membership level, but it could be much less than an overdraft fee. (That may free up money to help you accomplish the first two resolutions.)

4. “I vow to teach my kids to manage money well.”
Most schools don’t teach basic real life financial skills – so it’s up to parents, grandparents, aunts, and uncles to help tomorrow’s consumers learn such basics as saving, using a checking account, and the wise use of credit. For age-appropriate ideas, buy or borrow Raising Money Smart Kids: What They Need to Know About Money and How to Tell Them, by Janet Bodnar, also the editor of Kiplinger’s magazine.

5. “I vow to do fun things more often that don’t cost much.”
When people are surveyed to find out what gives them most pleasure, free or low-cost activities usually head the list. You might go sledding, skating, or hiking with the kids; invite your best friend over for a movie and popcorn; or devote a full day to paint, write, or whatever makes you happy. As George Lorimer, editor of The Saturday Evening Post, once said: “It is good to have money and the things that money can buy, but it’s good too, to check up once in a while and make sure you haven’t lost the things money can’t buy.”