How to Make a New Year's Resolution to Eliminate Debt, and Make it Stick

Whether you are suffering from a holiday financial hangover, or have seen increasing financial demands in your life this past year, you are likely resolving to never touch a credit card again and eliminate all of your debt in 2007.

"The time to address financial distress is as soon as possible," says Diane Gray, Director of Education at Novadebt, a non-profit, social service agency that specializes in financial education and credit counseling. "It is never too late to take charge of your finances and make this year the year you finally pay off that credit card or pay down your loans."

With the following tips from Novadebt, consumers can resolve to be financially free of debt in 2007:

• Understand Your Expenditures - Track your expenses for three months to understand how your money is being spent. This will give you a clear picture of your financial expenditures - bills, necessities and miscellaneous spending - which you can use to build a budget that will work for you.

• Quantify: Total Debt/Total Income - Vagueness will only make your situation feel worse, particularly if you feel you owe "a lot of money" when you don't make "a lot of money." When you know the exact amount of debt you owe and monthly resources you have at your disposal, it will be easier to make realistic goals and steps to reducing that debt.

• Create a Budget and Stick To It - Categorize all of your monthly expenses, including both necessary and personal spending, and avoid leaving open-ended categories such as "miscellaneous". Make sure to include a plan for saving within your budget. A well-structured budget still allows you to make the occasional larger expenditures as well, so long as you are able to identify areas where you can make sacrifices in exchange.

• Make clear financial goals - Whether planning to put extra funds to a credit card payment or savings, make sure you develop clear financial goals you wish to accomplish. These goals should be manageable, attainable, relevant and time-bound.

• Prioritize Your Payments - If you have debts that are small and closer to being paid off, you may wish to tackle these first. Understand the terms and conditions of all your outstanding debts, and look into transferring balances to lower interest rate accounts.

• "Roll-over" Your Debt Payments - Once you pay off a debt or a loan, it is recommended that you take that amount and add it to other debt or loan payments. For example, let's say you have two credit cards and pay monthly installments of $300 and $200. Once one of the cards is paid off, you should commit to paying $500 to the remaining credit card. "Rolling-over" payments in this way will help pay of debts faster in the long-run.

By following these steps, you can resolve to take charge of your financial spending and regain your financial footing in 2007 and years to come.

Since its inception in 1991, Novadebt helped over 250,000 people to regain their financial footing and repay approximately $340 million to their creditors. Novadebt maintains an average active caseload of approximately 15,000 consumers at any given time. A non-profit, social service agency licensed and bonded by the New Jersey Department of Banking, Novadebt is a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) and the Better Business Bureau. The United States Government recognizes Novadebt as a charitable organization under 501© (3) of the IRS Code. All of the agency's counselors are certified by the Institute of Personal Finance.