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Resolution 1: Get Out Of Debt

The New Year is a time of renewal and refocusing – that's why so many people set New Year's Resolutions as a way to make a positive change in their life during the year ahead. If you're struggling with debt and credit problems, the New Year could be an ideal opportunity to seize control of your personal finances, improve your credit score, and get out of debt for good.

Would you like to use the New Year as inspiration to get out of debt? Here are a few ways that you can enjoy a financially healthy New Year:

Track Your Spending

Do you know where your money is going? According to a recent Gallup poll, only 32% of Americans sets a regular monthly household budget to track spending and saving. If you haven't already, use a tool like Mint.com to track your spending (Mint can sync up with your bank account and credit card accounts to keep track of every dollar you spend throughout the year) or just write down everything you spend for a month. Find out where your money goes. You might identify some opportunities to change your spending habits. For example, are you spending too much money on restaurant meals or fast food? Are you paying too much for insurance? Do you have a gym membership or magazine subscriptions that you don't get enough value from? Look for opportunities to trim money out of your monthly budget and put that money toward paying off debt.

Make a Plan

Set specific goals for how you want to improve your personal finances. For example, how much debt do you need to pay off, in total? How much of that debt can you afford to pay off each month? Make a detailed monthly plan based on your latest budget. Dedicate a certain amount of money to paying off debt, a certain amount for savings, and a certain amount to reward yourself with a few fun splurges, whether it's restaurant dinners or a weekend vacation. Getting out of debt doesn't have to always be about self-denial; you can still have fun along the way.

Seize Momentum

There are a few schools of thought on what is the "right way" to get out of debt. Some financial advisers recommend paying off the highest-interest credit cards or loans first, and then once those debts are paid, dedicate the monthly payments to other debts. This approach will save you the most money on interest payments. However, another approach is to pay off your smallest debt first (regardless of interest rates) and then use that momentum effect to keep attacking your debt until it's all gone. Financial adviser Dave Ramsey calls this approach the "Debt Snowball" plan.

Once you have a clear plan and sense of purpose for getting out of debt, you'll find a renewed sense of energy. Whether you need to cook at home every day, do meal planning to avoid multiple trips to the grocery store (with all the impulse purchases that tempt you in the store), or even get a part-time job to earn extra money, making a plan and sticking with it is the best route to financial success in the New Year.

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