You've Made The New Year's Resolution To Eliminate Debt And Get Hold of Your Finances… So Now What?

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Whether you suffered from a holiday financial hangover, or saw increasing financial demands in your life in 2006, you have likely resolved to never touch a credit card again and eliminate all of your debt in 2007.

Whether you suffered from a holiday financial hangover, or saw increasing financial demands in your life in 2006, you have likely resolved to never touch a credit card again and eliminate all of your debt in 2007. Or if you haven't made the strong resolution yet, maybe you're thinking about at least paying down your debt over the next 12 months. So, what are the first steps to making this financially empowering resolution stick?

"A person should first quantify how much they owe and interest rates for each debt they have, then set realistic and achievable goals," says Diane Gray, Director of Education at Novadebt (, a non-profit, social service agency that specializes in financial education and credit counseling. "It is never too late to take charge of your finances, and careful planning up front can help focus your resources, and your mind, to creating a resolution plan you can live with throughout the year."

With the following tips from Novadebt, consumers can begin the road to financial freedom in 2007:

•Quantify: Total Debt/Total Income - Vagueness will only make your situation feel worse, particularly if you feel you owe "a lot of money" when you don't make "a lot of money." When you know the exact amount of debt you owe and monthly resources you have at your disposal, it will be easier to make realistic goals and steps to reducing that debt.

•Understand Your Expenditures - Review your expenses versus income over a span of two to three months to understand how and where your money is being spent. This will give you a clear picture of all financial expenditures - bills, necessities and miscellaneous spending.

•Create a Budget and Stick To It - Categorize all of your monthly expenses, including both necessary and personal spending, and avoid leaving open-ended categories such as "miscellaneous". Make sure to include a plan for saving within your budget. A well-structured budget still allows you to make the occasional larger expenditures as well, so long as you are able to identify areas where you can make sacrifices in exchange.

•Make clear financial goals - Whether planning to put extra funds to a credit card payment or savings, make sure you develop clear financial goals you wish to accomplish. These goals should be manageable, attainable, relevant and time-bound.

•Prioritize Your Payments - If you have debts that are small and closer to being paid off, you may wish to tackle these first. Understand the terms and conditions of all your outstanding debts, and look into transferring balances to lower interest rate accounts.

•Don't Forget to Save - Do not forgo building a strong savings "safety net" while you continue to pay down your debts. Using all available resources to pay down debts will leave none available in the event of an emergency situation, such as a broken-down car or medical bill, resulting in the urge to rely on credit cards again. Building a strong safety net helps prepare for emergency situations and will ultimately help break the reliance on credit cards cycle.

Should all else fail, and consumers see that they continue to have financial difficulty with debts, Gray recommends seeking professional help. She notes that there are many nonprofit organizations, including Novadebt, that provide financial budgeting and credit consolidation help to thousands of consumers every year.

Following these first steps, everyone can resolve to take charge of their financial spending and regain financial footing in 2007 and years to come.    

Since its inception in 1991, Novadebt helped over 250,000 people to regain their

financial footing and repay approximately $340 million to their creditors. Novadebt

maintains an average active caseload of approximately 15,000 consumers at any given time. A non-profit, social service agency licensed and bonded by the New Jersey Department of Banking, Novadebt is a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) and the Better Business Bureau. The United States Government recognizes Novadebt as a charitable organization under 501© (3) of the IRS Code. All of the agency's counselors are certified by the Institute of Personal Finance.

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Monica Talmud
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