Resolve to Get in the Black in 2009

For many Americans, the only area where they may have lost weight over the holidays is their wallet. And as their credit card statements begin to arrive with the reminder -- and obligation -- of their holiday spending, consumers should resolve now to lower their debt in the New Year.

Consumers can achieve their debt reduction goals by following five steps:

1. Start with a specific goal. It's great to want to eliminate all debt and start with a clean slate, but when faced with the proverbial mountain of debt, the goal may seem daunting. So start small, and add incremental goals along the way. For example, to pay down $20,000 in credit-card debt -- and credit-card debt is what's known as "bad" debt because of the typically high interest rates and the money spent isn't being used to purchase a long-term asset like a house -- the first goal can be to eliminate 20 percent of that total by summer. Then set new goals with each milestone you reach.
2. Put the plan on paper. "Budget" is not a bad word, so embrace it. If consumers want to get their debt under control, they should establish a realistic budget, and stick to it. Put the budget on paper or online, and adhere to it with each paycheck. Committing to stick to a budget can have multiple benefits -- it can help prevent piling on more debt and can identify extra money that can be put toward debt payments.
3. Track progress. There's nothing more satisfying than not paying interest to a credit-card company. As debt decreases and less interest is charged, more money will be available each month for other expenses -- or for those unexpected emergencies that occur from time to time. Continually tracking progress over time will help keep the overall goal front and center, and allow for budget adjustments as more money is freed up over time.
4. Splurge ... in moderation. While keeping a focus on reducing debt undoubtedly will require some sacrifice, it's OK to splurge on a reward for a job well done from time to time. But keep in mind that moderation is the key. Maybe one reward is a night on the town. If so, avoid the five-star restaurant and enjoy something at a more moderate price point. In fact, "moderation" is a good way to start thinking about how to approach spending overall.
5. Save like there is a tomorrow. While many consumers are used to spending like there's no tomorrow, turn that philosophy on its head and start saving. There are a few easy ways to get started. First, spend less than is earned so there will be money left over to save. Second, with that extra money, consider increasing contributions to a 401(k) or IRA. And third, start saving more for everyday expenses and emergencies by setting up a monthly automatic transfer into a savings account.

Finally, for those who are overwhelmed by debt and don't know where to begin, consider enlisting the help of a financial planner. Be sure to look for one who is salaried and has a CFP designation to ensure the advice is coming from a credentialed professional.

Eliminating debt and keeping it in check is a great way to start the New Year. With a plan in place and a disciplined approach, anyone can start on the road to securing a better financial future.