Get-Out-of-Debt Resolutions for 2013

If our troubled economy has taught us anything, it’s that the less debt you have, the better.

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Many cringe at the thought of a New Year’s resolution. After all, only about 8 percent of those who make a resolution actually achieve theirs. There are even online tools and apps to help stay on track with your resolution. If our troubled economy has taught us anything, it’s that the less debt you have, the better. Here are eight resolutions to help you climb out of debt in the new year:

1. Reduce Credit Card Debt. One of the best things you can do for your financial stability is to reduce your credit card debt. Your approach should be to pay off all new charges immediately, while working to pay down your existing balances. Paying down credit card debt is also one of the quickest ways to improve your score. Part of your credit score factors in your debt utilization ratio—the amount of debt you have compared to the amount of available credit you have. By reducing your debt, you will boost your credit score.

2. Track Your Spending. Knowing where your money is going is one of the first steps you need to take when examining your finances. You can use a website like Mint.com to track your spending, which will also help you set a realistic budget.

3. Create A Budget. Some people strongly dislike the “B” word, and it’s usually because they can’t stick to a budget. That’s why it’s important to create a realistic one that’s not too strict that you’ll feel the need to go on the occasional spending spree. A budget will help you identify where your money is being spent so that you can make better spending decisions.

4. Make Money On The Side. Whether you need extra money to pay off bills or you just want to add to your emergency fund, finding a side hustle could be your ticket. A side gig can be anything that makes you money outside your full-time job. Sometimes selling your possessions online can bank you money, or you can even pick up a seasonal part-time job. Earning more money helps you put more toward paying off your debt while still keeping up with your regular bills.

5. Set-Up An Emergency Fund. Having an emergency fund will keep you from going into debt. When unforeseen costs arise, you can use money from your emergency fund instead of accumulating more debt. The amount of the emergency fund is something you should determine for yourself. Dave Ramsey suggests everyone should have at least $1,000 set aside for emergencies, while others say you need a full six months of living expenses.

6. Have A Savings Account. A savings account might not give the best return on your money, but any solid financial plan rests on a foundation of liquid assets, such as cash. Your checking account can handle your everyday expenses, but there are good reasons to have extra money in a savings account, such as for unexpected expenses, taxes, and vacations. I use an online savings account to save for my taxes, because it’s money I can’t easily access on a whim. A great way to get started is by setting up a direct deposit from your paycheck or checking account into a savings account. It’s done automatically and you won’t miss the money.

7. Check Your Credit Report. By law, U.S. consumers are entitled to one free credit report a year from AnnualCreditReport.com. The report is based on data from each of the three major credit bureaus: TransUnion, Experian, and Equifax. This is also a way to prevent errors on your report or even fraud.

8. Avoid New Debt. Taking on more debt will just be adding more fuel to the fire. If you must borrow, be sure to get the lowest rate possible. You can even try lowering some of your old rates, like with your credit card companies. Give them a call and ask them to lower your rate—it’s worth a shot.

Corrected on 12/06/2012: A previous version of this article misstated the number of times a person is entitled to a free credit report per year. By law, a person is entitled to one free credit report per year.

Michal Cheney is a frequent contributor to Go Banking Rates, Credit Card Offers IQ, and Dough Roller, where you can find the best online banks to manage your money.