You're doomed if you think those grandiose "I'll never waste money or buy anything on impulse again" resolutions are going to stick. They'll be gone before the leftover spinach dip if you don't whittle them down to size.
Try taking baby steps instead. If you want to change big behaviors, you have to break them down into smaller, more measurable ones. That's how you'll fix your finances in 2008.
Here are some starter moves. You can do many of them in just a few minutes. Added up, they'll have you sitting pretty when you pop the cork on next year's bottle of bubbly.
* Set your priorities. Have a family meeting and discuss, in general terms, what you want your money to do in 2008 and beyond. Paying down the credit cards a priority? Gathering a down payment? Know what you're aiming for. Having a specific goal in mind will help you make everyday decisions.
* Learn to use financial management software. You can buy a program like Quicken or Microsoft Money, or use one of the newer online budgeting tools, like mvelopes.com, geezeo.com, wesabe.com or mint.com. Try a few, and see which one you like the best. Give yourself time to learn it. The better you get at recording your financial life, the better you'll be about managing it. Really.
* Prioritize your debts. This is a one-hour exercise. Make a list of everything you owe, the interest rates you're paying and any other factors, such as tax deductibility. Put them in the order you want to pay them off, with high credit card debt at the top of the list and low-interest mortgage debt at the bottom. All year long, pay extra -- as much as you can afford -- to whittle down the debt at the top of the list.
* Learn at least one thing about investing, whether you know nothing or a lot. If you're socially inclined, form an educational investing club with friends. (You can learn how at better-investing.org). If you're more of a do-it-yourselfer, just start reading. A couple of good places to begin are moneychimp.com and fool.com/school.
* Update your homeowner's insurance. If you haven't done this recently, call the company or agent that handles your homeowner's insurance. There's a good chance that it's insufficient. Find out how much coverage you need now to replace your home in the event of a fire, flood or another catastrophe.
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Put at least one savings/investing account on auto-pilot. A host of mutual funds will let you start an account with as little as $100, as long as you authorize the fund company to pull a monthly deposit out of your checking account. You can search for them at mfea.com. Do it. You'll not miss the money and it will build up without you having to make any more decisions. In some future year, when you're facing a college tuition bill or a wedding, or a leaking roof, you'll be glad you did.
* Get a better credit card. Do not, however, cancel the ones you have: the longer you hold accounts open, the better your credit score will be. Search sites like creditcards.com and indexcreditcards.com to see if there's a lower-rate or better rewards card out there than the one you're using.
* Give up one thing. The afternoon latte? The movies you buy instead of rent? The theater subscription, or the kitchen gadgets you can't resist buying every time you go shopping?
This is purely personal. But look at your spending behavior and choose one particular weakness. Write it down and decide where you're going to put the money instead. Don't attempt to live the life of a monk, but forego one personal luxury every day or week, and send the money to your rainy day fund.
Watch your balances grow, and you'll discover this secret: Saving is just as addictive as spending.
Copyright 2008 Reuters.
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