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Credit counselors say resolutions not right for everyone

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WASHINGTON (12/28/12)--There is a right way and a wrong way to do most things, the National Foundation for Credit Counseling (NFCC) reminded recently, while adding that the adage applies to making New Year's resolutions about debt.

Gail Cunningham, spokesperson for the NFCC, offered tips on how to determine when a resolution is appropriate and when it is not.  Even the most noble intentions, she warned, can backfire.

The NFCC suggests considering the following before making these 2013 commitments:

  • Pay off debt:   If increasing payments to creditors means compromising the timely payment of priority obligations, it's not the proper use of money.  Keep the home life stable by ensuring that the rent or mortgage is current, utilities are on, food is in the pantry, gas is in the car and medicine is purchased.  The goal is to have all debt obligations met in a timely manner, but when money is tight, paying in the proper order is essential to prevent a bad financial situation from becoming worse.
  • Begin exercising: Signing a long-term contract at a gym or exercise club could result in wasted money if resolve wanes and the membership is not used.  Also, costly home-exercise equipment might end up in the next garage sale. To test exercise staying power, first look for free or lower-cost options such as running, exercise tapes, taking the stairs instead of the elevator, parking far from the door, or joining the dog for a brisk walk. 
  • Save money:  A financial cushion can provide a safety net in times of emergencies, but paying double-digit interest on credit card balances is definitely the elephant in the room when it comes to saving.  To find money to begin or increase savings without taking away from debt repayment, each time an item is purchased on sale, put the amount saved into a designated savings account.  After all, savings from a sale isn't really savings at all unless it's tangible.
  • Start investing: Everyone needs to plan for their retirement, but an amateur playing a professional's game can be dangerous.  An effective way to build retirement security is to invest through monthly contributions to an employer's retirement plan.  On top of the tax advantages, these plans often include professional guidance which can be safer than independently investing.
  • Increase skills: It is no secret that student loan debt has a stronghold on many young adults who assumed that a good education would equal a good job, one that would provide enough income to repay the loan.  As an alternative to taking out a student loan, first explore which grants might be available, as a grant does not have to be repaid.  Also, consider skill centers which offer job retraining and teach computer courses, as many of these centers offer their services free of charge to consumers.  Obtaining additional CEUs (continuing education unites)  is another cost-effective way to improve skills and impress an employer.
The NFCC was founded in 1951. Use the resource link below to access its website.