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Making financial resolutions in difficult times

By Jason Alderman

Many folks are happy to see 2008 fade into the distance. Between the rollercoaster stock market, tightening credit availability and falling home values, most of us have taken a financial beating.

With a new year upon us and plenty of opportunities to learn from past mistakes, here are a few financial resolutions that make sense for these troubled times:

Trim expenses. Many people have gotten out of the habit of watching their spending. A few relatively painless ways to save hundreds – or thousands – of dollars a year include:

  • Regularly balance your checking account to avoid bounced check and overdraft charges. And try not to use ATMs outside your bank's network.
  • If your employer offers them, use flexible spending accounts to pay for health and dependent care expenses with pretax dollars. If you're in the 25 percent federal tax bracket, that means expenses you'd have paid for anyway will cost 25 percent less.
  • Reduce energy bills by turning down the thermostat, weatherproofing your home, turning off "energy vampire" appliances when not in use and buying energy-efficient appliances.
  • Cut back on restaurant meals and to-go coffee and brown bag your lunch to work.
  • Raise insurance deductibles; and while you're at it, shop around for better rates.

Track your credit. A bad credit rating can disqualify you for a mortgage, car loan and credit cards, or raise your existing interest rates; plus it may prevent you from renting an apartment or getting a job. Order one free credit report per year from each of the three major credit bureaus at

Review your credit reports for errors or fraudulent activity and report any you find to the bureaus immediately. For tips on ways to improve your credit score and to get a free estimate of your score, visit What's My Score at

Use credit cards wisely. Some banks and retailers have begun tightening eligibility requirements and lowering credit limits for their credit cards, so it's important to use your existing accounts wisely. A few tips:

  • Always pay at least the minimum amount due and never miss payments or due dates. Any of those actions could generate fees or raise interest rates.
  • Don't overburden any particular card or use more than 30 percent of its available credit – that can ding your credit score.
  • If you've got outstanding balances on multiple cards, try to pay off the ones with higher interest rates first – that can save you hundreds of dollars over the long term.

Stick to your budget. Spending more than you bring in is a recipe for disaster. Plus, you should have several months' living expenses set aside in case you should lose your job, have a medical emergency or experience other unplanned events. Visa Inc.'s free personal financial management site, Practical Money Skills for Life, features an easy-to-use, downloadable tool called My Budget Planner that can help you track income and expenses and make spending adjustments where necessary (

Prepare for the worst. If something terrible happened to you, would your family be protected financially? Make sure you have a valid will, durable power of attorney, health care proxy and a living will, along with adequate disability and life insurance.

No one can accurately predict when our economy will turn around. So take a few steps now to protect your family's financial security in the meantime.

Jason Alderman directs Visa's financial education programs. Sign up for his free monthly e-Newsletter at

This article is intended to provide general information and should not be considered tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how tax laws apply to your situation and about your individual financial situation.

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