New Year’s Resolutions: Save money, pay off debt in new year

John Vaughan (Financial Advisor) @ Lucid Living

We are well into 2012, so we thought it appropriate to remind you about your New Year’s Resolutions – particularly if it involved paying off your debts.

Santa brought lots of gifts this year. Unfortunately, he also brought lots of credit card debt. But you can still get out of debt and save money in 2012. Adv Randolph Samuel, CEO of the Credit Foundation of South Africa, offers these tips:

  1. Assess your income, expenses and debt: Samuel recommends getting a copy of your credit report to determine all of the debt you owe.
  1. Then create a budget, making sure to make room for savings. “Having a savings component actually allows for a family to rest easy while attacking debt,” he said.
  1. Determine how much to pay each month: If you just make the minimum payments on a loan or credit card each month, you might not be making much of an impact on your overall debt because of interest payments.
  1. Determine how much of your monthly payment is going toward the interest and how much goes toward the principal debt, Samuel said. Pay a little more each month to pay off your debt faster.
  1. Put something toward savings every month: Treat savings as an expense in your monthly budget and stick with it, Samuel said. “One of the things that makes savings work is that it’s consistent, not how much you save,” he said.
  1. Save
  2. with goals in mind: Saving for a vacation? Start looking at specific destinations and travel costs. “Have a real good vision of it,” Samuel said. You’ll be more committed to saving and feel like you got something out of the experience at the end of the year.

  1. Budget for impulse buying: You don’t have to give up meals at your favorite restaurant or your coffee habit — just budget for it, Samuel said. Make a list of things you tend to buy on an impulse and see if you can find room for these purchases in your budget.