- The Washington Times - Saturday, January 6, 2007

NEW YORK

The eggnog may be drained and the last bottle of champagne depleted, but if you’re like most Americans, a sense of wooziness may return soon as credit-card bills demand payment for your celebratory extravaganza.

What better time than January to make a few financial resolutions and get 2007 off to a smart money start. Here are seven tips to get you going:

Pay off your debt — or at least make a plan to start lowering it.

“Sixty-five percent of Americans carry balances on their credit cards. Only 35 percent of them pay their cards off in full,” says Howard Dvorkin, author of “Credit Hell: How to Dig Out of Debt.” “You may still be paying for last year’s Christmas.”

He recommends sitting down with all of your bills so you know what you owe and then figuring out a realistic plan to start paying them all off.

“You want to pay the cards with the highest rates, which typically are the department stores, which carry rates of more than 20 percent,” he says. “Put your credit card away and start using cash until your balances are gone.”

A sit-down also can help create a financial road map for the next year. This is especially important if not all family members participate equally in the family finances — for example, if one spouse handles all the bills or investing.

“Many people really neglect setting aside time to brainstorm about their finances, to talk to their spouse or family members,” says Eric Tyson, author of “Personal Finance for Dummies.” “You need to talk about what you want to do financially.”

Start saving.

Saving is a state of mind. Even if you can’t save much, just getting into the habit is important. Try brown-bagging lunch and skipping your coffee-bar latte. The $10 you spend daily — $3 for the latte, $7 for lunch — can add up to more than $2,000 a year.

Take advantage of an employer-sponsored 401(k) or other tax-advantage retirement account. A 401(k) lets you set aside money pretax for retirement. The money is taxed when it’s withdrawn, but until then, you don’t pay taxes, which equals a tax break in the short term. You even may benefit long term because many people will have a lower income and be in a lower tax bracket in retirement than now.

If your employer offers a match to 401(k) contributions, make sure you meet the requirements.

Some employers also offer other tax-advantaged benefits that let you use pretax dollars for heath care, child care and dependent expenses and even mass transit.

There also are tax-advantage savings accounts you can set up on your own, including individual retirement accounts or IRAs, education savings accounts and medical savings accounts.

Change a light bulb to a more energy-efficient model or try a high-tech thermostat. It’s expensive to heat, cool and light a home, and conservation can pay off.

“It’s easy to install a $50 computerized thermostat that will save you a lot,” Mr. Dvorkin says.

The federal government also wants you to think green. For 2006 and 2007, there are tax credits for certain types of home improvements, including insulation, windows, solar panels and more efficient boilers.

Get your affairs in order.

No one likes to think about worst-case scenarios, but you owe it to yourself and to your loved ones, especially if you have children.

“Pretty much everybody should have a will. Everyone owns something of value. People need to remember [that] in the absence of a will, the law dictates everything,” Mr. Tyson says.

People with children will likely need life insurance and to name legal guardians. You also may have other financial needs, depending upon your situation.

Don’t forget to make sure all of your documents are easily accessible and that someone knows where they are.

“There should be a one-page form that summarizes where everything is,” Mr. Tyson says.

Be a financial role model.

If you want your children, your spouse or even your parents to improve their financial habits or you need to keep yourself motivated, think about the example your spending decisions can set for others.

Children who see their parents take brown-bag lunches, live by a budget or comfortably discuss money are more likely to do the same.

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