New Year Resolutions

Have you given up making New Year?s resolutions because it?s just plain dumb to make promises you?re not likely to keep? Before you throw out the baby with the bath water, why not shift your thinking to resolutions that you can keep ? and save some serious cash in the process?

Review all of your insurance coverage. Raise deductibles to the highest level feasible. Drop collision coverage on cars with a market value of less than $2,500. Carry life insurance equal to five times the insured?s annual salary. A housewife should be insured based on no less than $50,000 per year.

2. Create a list with current data regarding all loans, insurance policies, important documents, savings and investments.

Inventory your safe-deposit box. Do not keep the only copy of your will or family trust in a safe-deposit box. Often such a location is sealed upon a death.

Calculate (do not just estimate) your net worth.

Change batteries in smoke detectors and make a video inventory of all personal possessions. Store this at another location.

6. Add up all the bank fees you?ve paid in the past year. Reconsider your banking relationship. Join a credit union that offers a free checking account.

Open a special savings account and make monthly deposits for your non-monthly bills (property taxes, insurance, auto maintenance and registration, etc.).

Ask your mortgage holder about canceling your private mortgage insurance. You may not even be aware that you are paying for this as part of your monthly payments. In most cases, PMI cannot be required once the borrower has accumulated 20 percent equity.

9. Cancel extended warranties on household appliances. If this makes you too nervous or insecure, self-insure by depositing the same monthly amounts that you?ve been paying for these overpriced insurance policies into your own savings account.

If you?ll be getting a big tax return for 2010, file a new W-4 form with your employer to adjust the amount withheld for taxes. Why let the government use your money all year interest-free?

Keep a spending record. By putting down in black and white exactly where your money goes, you?ll start changing your spending habits automatically.

Sign up for a payroll savings program. Often employers contribute proportionately. You hardly will miss money you don?t see.

Teach your kids how to save 10 percent.

Cut your expenses. Reducing everything a little is far less painful than trying to eliminate a category altogether.

Don?t invest in anything you don?t understand. If you own a mystery investment, either educate yourself or switch.

Write down your car?s mileage, if you didn?t do so on Jan. 1.

Work on your marriage. Divorce is very expensive.

If you are due an IRS refund, file as soon as possible. If you owe the IRS, hold off paying until the last minute.

Set up a meticulous system for keeping receipts and financial records. Could you use some guidance and help with these resolutions? Join a community of people learning to do extraordinary things on our ordinary incomes, ???

?????????????????????????????????? Debt-Proof Living?

?Making the decision to get serious about your money is commendable. However, decisions need concrete actions to give them power. Without a plan to get out of debt and manage your money effectively, next year at this time you?ll be in the same place you are today, or worse.

Decide once and for all that you will not sell your soul to the likes of MasterCard and Visa, not one more day, not one more purchase. Get righteously indignant at the very idea of transferring your future wealth to them. Repeat after me: ?I?ve had it and I?m not going to live on credit anymore!? I call this ?debt-proofing? ? living without reliance on consumer credit. It is implemented in a variety of ways. Here are two:

? A lifestyle.
A way of life in which you spend less than you earn; you give and save consistently; your financial decisions are purposeful; you strive to live below your means and free of consumer debt; you work toward your goals by following a specific plan.

? A system of personal money management.
A specific money management method that makes it possible to debt-proof your life. The five elements of debt-proof living are the 10-10-80 formula, a contingency fund, a spending plan, a Rapid Debt-Repayment Plan and a freedom account. With these elements in place, you?ll be in charge of your finances in a way you never dreamed possible.

Debt-proof living is not defined by austerity, poverty, guilt or fear. It is not about extremes, bizarre behavior, misery, hoarding or finding a way to recycle dryer lint. Debt-proof living is a lifestyle in which you spend less than you earn; you give, save and invest confidently; and you have control of your finances. It is your invitation to a rich and abundant life.
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