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Use goals to focus spending

Do you remember the New Year's resolutions you made last year, or the year before? If you're like most Americans, many of them were probably related to how you were going to manage your money better.

Despite lofty goals, most of these resolutions likely fell by the wayside and many of us are still struggling to get by, especially during tough financial times.

"If the recession has taught us anything, it's that there's no time to lose in making changes toward financial health. But the trick is to actually follow through and make the hard choices," says Michael McAuliffe, president of Family Credit Management Services, a nonprofit consumer credit counseling service providing solutions for those seeking financial assistance.

"You must get to know yourself, your personal weaknesses, and then make the changes needed to protect yourself from, well, you," McAuliffe says.

Here are five easy ways to help you gain control of your finances in the New Year:

Set goals. Where do you want to be financially in one, three or five years? Do you want your credit cards paid off? A fat savings account? Or, how about a vacation paid for with cash, not credit cards? You probably can have any of these things, but you must make them a priority.

, Look at the big picture. A $5 latte may not seem like much, but it adds up to more than $1,800 a year or more than $9,000 in five years. So ask yourself if that $5 latte is steering you away from your goals. How many other unnecessary expenses are keeping you from reaching your financial destination?

Spend rationally. As long as you aren't spending more than you make, you can spend your money on whatever you'd like. The key is to not make impulse or emotional purchases. Put a picture of your goal in your wallet so you are reminded of it each time you are tempted to spend. Another trick is to keep your credit cards in sleeves that remind you to "Stop, Think, Save" before using them. You can get such sleeves for free from the nonprofit site www. stopthinksave.org.

Evaluate debt. It's hard to move forward financially when you are still paying off Christmas presents from three years ago. Create a plan to get out of debt as soon as possible. This may include reviewing your interest rates, increasing payments or consulting an objective credit counselor. Debt-free living can be a reality, but it takes hard work.

Save. Don't allow a medical emergency, broken furnace or car repair to create a financial disaster. Create an emergency fund and add to it each pay period. Direct deposit is also a great way to save. Ask your employer to automatically deposit a small portion of your pay into a savings account so you aren't tempted to spend it.

For more tips to save money, visit www.stopthinksave.org.

Use goals to focus spending 12/30/10 [Last modified: Thursday, December 30, 2010 3:31am]

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