It's that virtuous time of year for all those good intentions: Lose weight, clean out closets, learn a foreign language. For New Year's resolutions involving money, there are two biggies: paying down debt and pumping up savings.
And this month is when the holiday debt hangover kicks in. "People get shocked in January when the holiday bills start coming in. Or if they're paying online, the shock is already there," said Terri Ciochetti, a Sacramento, Calif., psychotherapist and former financial recovery counselor.
But it can be oh-so-hard to make those New Year's money resolutions stick. Ciochetti says that's partly because our resolutions are too often "desperate wishes, as opposed to thought-out plans."
But it appears we're trying. Getting through the recession has forced more Americans to sock away what money they have, boosting the nation's dismal savings rate slightly.
If you want to curb your spending and boost savings, here are some how-tos.
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GETTING STARTED: Before knowing how to cut back, you need to know where your money goes. Financial experts recommend you track your spending for at least 30 days. Write everything down -- from gum to groceries. That $5 you think you spend on lunch every day may actually be $8 or $9, even $15 if you're eating out. Three times a week, you're forking out $45 without even realizing.
TIGHTEN THE BUDGET BELT: Based on your 30-day spending, decide what's important; choose where you can economize.
"It's a cliche, but think about if you need a Starbucks coffee every day," said Elias Delgado, spokesman with nonprofit ClearPoint Credit Counseling Solutions, which has 10 offices in California, including Sacramento. "At $5 a cup, that's $25 a week, $100 a month. If you really want it, can you buy a pound and brew it at home or the office?"
Get a budget buddy, someone to keep you motivated, suggests Ciochetti. "It's easier to say, 'Let's lose 10 pounds together' than 'Let's save 10 percent of our money together.' But I've had clients who noticed a friend at work bringing lunch and joined them. Then others noticed ,and suddenly you're not alone."
Other tips: Get a smaller cable TV package. Order two takeout pizzas a month instead of four, suggests Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. Review your cell phone bill: If you're paying for unlimited texting, for instance, but rarely use it, cut back on what you're paying for that privilege.
At the grocery store, always shop from a list and never shop hungry, says Ciochetti. "Don't walk in with any cravings and don't buy anything in the checkout line. There's a reason the candy, gum, soda and $5 magazines are there." Bring your own magazine or pull out your phone and check e-mail while waiting, she said.
To free up cash, have a garage sale or sell the boat and other "toys" you've accumulated, suggests NFCC's Cunningham.
GET A CUSHION: Everyone needs a financial safety net, a savings account for that unexpected medical, dental, car or family emergency. "What usually knocks people off a financial recovery plan is an emergency that requires a credit card: new tires for the car, the water heater goes out," said Ciochetti.
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Typically, it's recommended to set aside savings of three to six months of living expenses. "But in this economy, it's more realistic to have one to two months of savings because more people are stretched," said ClearPoint's Delgado.
A reasonable amount is 10 percent of your take-home pay, he said. If you get paid $1,000 every two weeks, put away at least $100 in an account that's accessed only in an emergency. "Even if it's only $10 to $20, it's a start."
CREDIT CARD HELP: When it comes to credit cards, put them on ice. Literally, says Cunningham. "The plastic in your wallet is temptation. Remove it. Put (credit cards) in a mixing bowl with water in the freezer."
Other tips: If you have multiple cards with varying debt, pay down the card with the highest interest rate first. Pay more than the minimum payment, whenever possible.
Consider transferring balances to a card with a lower interest rate. But be aware: some card issuers are now charging higher transfer fees.
Call your card issuer to ask -- politely -- about negotiating lower rates. If turned down, ask to speak with a supervisor. Take notes of the dates and results from each conversation.
GET OUTSIDE HELP: If you need help sorting it out, consider nonprofit credit counseling agencies, which offer money counseling by phone, online or in person. It's typically free or a nominal charge.
To find the nearest agency, contact nonprofits like the National Foundation for Credit Counseling at www.debtadvice.org or 800-388-2227, or the Association of Independent Consumer Credit Counseling Agencies at www.aiccca.org or 800-450-1794.
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If you need help whittling down credit card debt, a debt management plan may be in order. That's where you sign up to have someone contact your creditors, seeking lower interest rates and a halt to late/over-limit fees.
But be wary of "get-out-of-debt-now" offers. Some unscrupulous firms charge high monthly fees with few results and have come under fire by regulators.
A nonprofit credit counseling agency, for instance, typically charges a $30 setup fee, plus a maintenance fee on your new monthly payments.
Do your homework. Look for firms that have certified credit counselors, offer consumer education workshops, and do not require minimum amounts of debt or number of credit cards. Get the agreement in writing.
"A new year equals the potential for a new financial you," said NFCC's Cunningham. "But if you bite off too much, it's highly unlikely you'll stick with it."
