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There is no doubt that 2009 was a rough year for many Americans. Consumers saw record high unemployment, credit card lines cut and an increasing number of debt repayment delinquencies. One positive statistic was that in 2009, consumers saved more than ever — reaching a personal savings rate high of 6.4 percent in May. This is the highest figure since 1993, according to the Department of Commerce’s Bureau of Economic Analysis.

“Consumers have been able to save because they have been practicing frugality,” says Jenny Realo, executive vice president of CareOne Services, one of the largest debt relief service providers. “However, being frugal isn’t enough to get financially on track in the New Year. Consumers need to also pay down debt sooner and begin building an emergency savings cushion.”
To get started, CareOne Money Mom Lori O’Donnell advises consumers to have a plan in place to monitor spending and tackle some of the biggest expenses, including major bills, coming up in the New Year.

Make your finances a priority this year. You might have spent the last year buying as you needed something, but make it a goal this year to keep your spending in check. Make it a habit to write down purchases as you make them.

Set your short- and long-term financial goals. It’s always important to know what you have, but having specific goals can serve as motivation to spend less and save more. For example, start saving and budgeting now for your family’s summer vacation.

After you’ve set your goals, CareOne financial coach Suzanne Cramer says it’s time to take action. Start with evaluating your spending over the last three months.

Evaluate how you’re currently spending. Group your spending habits by categories that represent your needs and wants. For example, separate out how much you’ve spent on your mortgage or rent, food, transportation, entertainment, and so forth. Add up costs under each category and you’ll get an idea of how you’re spending and where you can probably cut back.

Create a budget. Now that you know your spending habits, identify where you can cut back so you are only spending on what you need. Create a budget that works for your income that allows you to pay down debt and still save money.

CareOne financial counselor Rob Taylor says your current bills are a good place to start when looking to cut unnecessary spending.

Read the fine print of your credit card bill. With just a few weeks before the Credit Card Accountability, Responsibility and Disclosure (CARD) Act goes into effect, credit card issuers are issuing new terms and policies — not to mention new interest rates. Make sure you keep and read all those little pieces of paper that come with your next credit card statement. Otherwise, it could cost you.

SOURCE CareOne Services, Inc.