Every January, it's the same drill. This is the year you will cut your debt, save money and spend more wisely.
And you, like millions of others, will fail again for no good reason.
Want to break the cycle of broken New Year's resolutions? The professionals say you've got to get automated, get educated, and get over the fear of making changes.
But first things first.
Get rid of those hazy promises to yourself about your fiscal behavior. Sit down and make a list about exactly what you want to achieve, advises Scott Halliwell, a USAA financial planner. Designate actionable items for each month, starting with spending January to get your budget and savings plan on track.
There's a difference, for example, between "I want to increase my savings," and "I want to have $1,000 more in the bank by April 1."
How do you get from here to there? Here's how you start:
_ Automate as much as possible
One key way to stay on track is to make things as easy as possible. "If you don't automate it, oftentimes things won't get done," Halliwell said. "Life will get in the way."
Setting up automatic savings is easy on most bank websites. Doing so makes you much more likely to keep that resolution to save more. Add auto bill pay, and you will take a big step toward avoiding late charges that run up costs unnecessarily. Making payments on time is also the single most important thing you can do to maintain a healthy credit score.
Automation doesn't mean you can avoid periodically checking on your progress, however. At least once a month, designate a day to go over your performance during the prior few weeks, and make any adjustments that are necessary.
_ Check your credit reports
Everyone is entitled to one free credit report per year from each of the three major agencies, TransUnion, Equifax and Experian.
The data in these reports is what's used to determine your credit score, which in turn is what banks and credit card companies use to decide if they'll lend to you and at what interest rate. You'll get a good picture of what problems exist that can drive down your credit score, like late payments or a forgotten bill that went to collections. And you may find mistakes that could be hurting your score as well.
A low credit score can cost you big. The difference between a 4 percent interest rate and a 5 percent rate on a 30-year, $200,000 mortgage, for instance, is nearly $42,000 over the life of the loan.
By spacing the free reports out to one every four months, you can also monitor your records for unexpected activity that may indicate you're a victim of identity theft. To learn more and start the process of obtaining your free reports, visit http://www.annualcreditreport.com.
To take things a step further, you can visit http://www.myfico.com, which is offering a free credit score to those who sign up for a 10-day free trial of its credit monitoring service. After the 10 days, the service is $14.95 per month.
_ Take advantage of all your job benefits.
You may be up to speed on how much your co-payments cost, but are you aware of all the benefits offered through your health insurance? Log in to your insurance company website to find out if you're eligible for reimbursement or discounts on health club memberships or programs to help you with weight loss or quitting smoking. You may even be able to check a few other resolutions off your list at the same time you save a few dollars.
Likewise, many companies and unions offer extra benefits that are often overlooked, from discounts on cell phone plans and computer purchases, to reduced price travel and entertainment, pet insurance, college test preparation programs and even legal advice. Ask your human resources department or visit UnionPlus.org to learn how you can shave dollars off spending you'll likely be doing anyway.
_ Rebalance your investments
Rebalancing involves adjusting the mix of stocks, bonds and other assets you hold to keep them appropriate for your stage of life and the amount of risk you're willing to take. In general, most advisors say the older you are, the less risk you want to take, which means a higher portion of bonds than stocks.
The first step of the process is setting the targets for what sort of mix you should have. "For all of us, those targets change as time goes by," said Christine Benz, director of personal finance at Morningstar Inc. "What's right for you when you're 25 is not necessarily right for you when you're 40."
Even if all you have is a 401(k) plan through work, it's important to make sure the funds you picked when you first enrolled are the best choices for you now. If you own additional mutual funds or have an IRA, those items should be considered as well, to create as complete a picture as possible.
The market volatility of the past few years adds to the importance of taking a periodic look at your holdings, but may make it more difficult to decide the best steps to take. Rebalancing often seems counterintuitive, Benz noted, because it can involve selling holdings that are doing well and shifting that money to investments that have underperformed recently.
So especially if you haven't made any adjustments in the last few years, it may be worth spending a few dollars to enlist the help of a financial advisor. An advisor can be an even bigger help if the thought of dealing with investments battered by the economy leaves you full of fear.
"The hardest part for rebalancing for most people comes down to the practical application for doing it," said USAA's Halliwell. "One of the things that getting outside help can do for you is help remove some of the emotion."