Advice on New Year's Financial Resolutions

Free guide supports consumers' budget goals in 2007

SAN MATEO, Calif., Jan. 3, 2007 - At the New Year, most Americans make at least one resolution to improve their lives - with 10 the average number of resolutions, according to a recent study.1 Yet 25 percent abandon their goals within the first 15 weeks January 1. Brad Stroh, co-CEO of, offers individuals hope -- and a few how-to's -- to increase the likelihood that this year, financial resolutions will stick. "The key to success in any endeavor is setting attainable goals," Stroh said. "Many of us make broad resolutions, such as 'I'll be more financially responsible.' But I encourage our clients and all consumers to set specific goals that are meaningful to them. They’ll then find it easier to achieve their resolutions." Stroh's tips come from his organization's free consumer guide, "Debt Freedom: You Can Be Debt-Free, Starting Today." The guide is available electronically in PDF format by sending an e-mail message to or by visiting

  1. Know Your Goals: Families and individuals should meet to establish goals that are meaningful to them. "You don’t want to go through life as a rudderless ship, so make sure your financial strategy is taking you somewhere you want to end up," Stroh said. "Whether you want to take a trip to Europe this summer, buy a home in three years, plan for impending retirement or simply go for a walk every week, the important thing is that you plan to meet these goals."
  2. Create a Budget: A monthly budget allows families to make sure they live within their means. Then, they can direct funds toward the goals they set in Step 1. "Managing cash flow is the foundation of a solid financial game plan," said Stroh. "Based on the personal goals you wrote down, your strategy should help you become free of liabilities, accumulate assets and use your positive cash flow and assets to build a positive net worth." Begin by detailing ongoing monthly expenses (fixed expenses like rent or mortgage payments). Add variable expenses that are "must-buys" (food, gas, medicine), and then determine categories for savings and spending cash (for unexpected expenses and entertainment). Subtract expenses from monthly net income (the amount left after taxes and other paycheck deductions such as health insurance and 401(k) contributions) to find cash flow. Guidelines, such as those at, provide rules of thumb to help establish the percentage of income to spend and save. "If your bottom-line cash flow is negative or does not help you achieve your short- and long-term financial goals, do a ‘gut check’ and find a way to either increase your income or reduce your expenses," Stroh suggested. (Note: Getting rid of credit card debt is frequently the best way to free up your free cash flow.)
  3. Stop Using Plastic: The first step to eliminating debt is to stop adding to your debt, Stroh pointed out. The cash flow that is going into creditors’ pockets, he said, should be going into your own savings account. "Cut up your credit cards, freeze them in a bowl of water, give them to your mother for safekeeping, or whatever it takes to stop adding to your debt. Pay more than the minimum each month -- and pay as much as you can. Then, no matter how little you make, you will eventually get rid of your debt."
  4. Guard Your Credit: Once a year, consumers can go to and pull a free "tri-merge" (all three major reporting bureaus) credit report. It's wise to check your report each year to watch for suspicious activity that could be a sign of identity theft. Guard against identity theft by shredding all documents that contain personal information, closing unneeded credit accounts, and never giving personal information to those who solicit it by phone or e-mail. "If you find errors or misrepresentations in your credit report, send a letter directly to each agency requesting the item be corrected or removed," Stroh advised. "If you see fraudulent action, put a 'fraud alert' on your account with each agency, and immediately write to your creditors to inform them that you did not conduct the transaction in question."
  5. Get Catastrophic Insurance Coverage: Insurance protects consumers from financial losses that would permanently derail their financial strategy. "Once a year, reassess and make sure that you are protected from loss of income to your family (life insurance), medical trauma (health insurance) and damage to your most important asset (homeowners or renters insurance)," Stroh said. "Generally, high-deductible policies with low rates protect from catastrophic events while keeping the monthly cost low."

By setting realistic goals and consistently working toward them, you can avoid being among the 25 percent of people who abandon their goals within the first 15 weeks. "Achieving financial health is work, make no mistake," Stroh said. "But the work is worth it for the peace it brings." Based in San Mateo, Calif., is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and save money by choosing the best-value products and services. Since 2002, and its partner company, Freedom Financial Network, have served more than 10,000 customers nationwide while managing more than $350 million in consumer debt. The company’s co-founders and CEOs, Andrew Housser and Brad Stroh, were named Northern California finalists in Ernst & Young’s 2006 Entrepreneur of the Year Awards.