Financial Resolutions for the New Year: 17 for '17
Susan Tompor/Detroit Free Press

29 December 2016

Nobody needs to tell us we're wasting our money. Really, we know if we tend to overspend, rack up fees or never pay off credit card bills.

So let's not make ridiculous New Year's Resolutions such as "I will stop wasting money." Sure you will; just like last year. The only way to get the job done in 2017 is to take very specific steps, even if necessary baby steps, to tackle your challenges.

So we offer a get-down-to-it list of New Year's Resolutions for 2017:

No. 1: Set aside cash for non-emergency emergencies.

If you have children, you know they're going to lose something. If you own a 30-year-old refrigerator, you know it could break down. We are not talking about real emergencies here.

"If you own a car, there are going to be repairs. If you own a home, there are going to be repairs," said Katie Bossler, a financial wellness expert for GreenPath Financial Wellness in Detroit.

Her advice: Consider the bigger bills that can hit you in 2017 and start saving a set amount each month. If you have a $2,000 medical deductible each year, set aside $167 a month. Ditto for car repairs, home repairs, extra spending on children.

No. 2: Could you unsubscribe from e-mails from retailers? I have one e-mail account that I use when a retailer asks me for my e-mail. One month recently I received more than 900 e-mails in that account. Seriously?

Bossler, who did unsubscribe from promotional e-mails a year ago, said she knows she might miss out on some bargains. But it's better to avoid temptations.

"If you're trying not to spend money, you not going to spend Saturday at the mall. But essentially, we do that every single day with our e-mail account," she said.

Another thought: Review your credit card statements for recurring charges — maybe the fee you pay for a monthly box of cosmetics — and cancel what you don't value or use.

No. 3: Check another box on your 401(k) or put money in a Roth IRA.

Make a date to take action, such as signing up to have more money automatically taken out of your paycheck and put into your 401(k).

"Be sure you are taking any 401(k) match offered by your employer," said Derek D'Angelo, president of the Michigan Council on Economic Education.

If your employer offers a 50% match for every dollar you contribute up to a 10% of contributions, don't just save 4% of your pay.

A Roth IRA offers tax-free growth and tax-free withdrawals in retirement. A Roth contribution can be made if you're single with an adjusted gross income of less than $133,000 for 2017 or if you're married filing a joint return and have an adjusted gross income of less than $196,000 for contributions made for the 2017 tax year. The income limits for being eligible for the Roth are slightly lower for the 2016 tax year.

The maximum amount you can put into a Roth IRA remains at $5,500 for 2017. Or it's $6,500 if you're age 50 or older.

No. 4: Start saving $1 a week — and keep adding more money each week.

Gain traction by adding another dollar to the piggy bank each week. In early February, you're saving $5 that week. By the last week of December, you'd save $52 that week.

At the end of the year, you should have $1,378 in savings, said Crystal Nickson, a financial well-being coach for Operation HOPE in Detroit.

Is it easy? Not really. Often, you need to set up a reminder. But even if you fall short, you're establishing a savings pattern.

No. 5: Save every dollar.

Set aside every $1 or $5 bill you get.

"I have one client who does this every year and he has routinely saved $500 to $750 every year before Christmas," said Nickson, of Operation Hope.

"He uses the money to buy presents."

No. 6: Keep an eye on Fed's Janet Yellen.

The Federal Reserve is expected to raise short-term interest rates by three times or maybe more throughout 2017. As a result, consumers will pay higher rates on credit card debt.

Every time Fed Chair Yellen raises rates in 2017, you've got another reason to pay off credit card bills.

No. 7: Look for a new job.

The job market is the strongest it has been in a decade. The U.S. jobless rate for November was 4.6% -- a nine-year low. If you're looking to pay off debt and need more money, maybe find a second job.

No. 8: Dig out what you already have.

Looking in my gift closet for some holiday items that I bought during the year, I found a tote bag stuffed with four newer sweaters that I had forgotten that I had put away last winter.

No. 9: Expect 2017 to be a year of big changes.

"A new administration in Washington brings with it the possibility of change, especially given the Republican majorities in Congress," said David Joy, chief market strategist at Ameriprise Financial in Boston.

Investors already saw financial and industrial stocks rally in anticipation of reduced regulation and increased infrastructure spending.

Some say volatility could be on the rise. But there may continue to be opportunities for investors, such as in some areas of health care.

"What comes to fruition with the new administration remains to be seen, but if nothing else in 2017, investors should watch for the possibility of significant change," Joy said.

No. 10: Don't lose money chasing quick fixes.

Credit repair scams target those with bad credit. But hold onto your wallet and boost your own credit score — pay bills on time, pay off your credit card debt, don't borrow more money, don't use more than 30% of your available credit line on your credit cards, don't open a new credit card at every turn.

No. 11: Do not close all your credit cards.

While it's tempting to start the New Year by canceling each and every credit card, it's possible such a drastic action could drive down your credit score, according to Heather Battison, vice president, consumer communications for TransUnion in Chicago.

About 31% of consumers surveyed think that closing unused accounts is good for credit, according to a Capital One Credit Confidence Survey. But the average age of your accounts is a significant part of credit scores, so it's often important to keep open the oldest cards.

No. 12: Put that attractively-priced bottle of Pinot Noir back on the shelf.

Reflect on any impulse purchase at the supermarket. Stick to the aisles that offer fruit, vegetables, lean meats and dairy.

No. 13: Get a copy of your annual credit report.

See www.annualcreditreport.com to make sure that a fraudster didn't open accounts in your name. You can get reports from TransUnion, Experian and Equifax.

No. 14: Sign up for automatic payments on student loans.

"Not only are you less likely to be late with a payment, but many lenders give a slight discount (interest rate reduction) as an incentive," said Mark Kantrowitz, publisher and vice president of strategy for Cappex.com.

No. 15: Start saving for your child's college education.

The average debt per borrower at graduation with a bachelor's degree was about $37,000 in 2016.

In Michigan, the Michigan Education Savings Program offers state income tax breaks on contributions for Michigan residents in many cases. See www.misaves.com. See www.SavingForCollege.com for more information on tax-favored 529 plans.

No. 16:  Give yourself some fun money.

What if you took $200 — maybe money you receive during the holidays or from a tax refund — and set it aside to spend in 2017 or 2018? Create an emergency fund for fun.

No. 17: Do something you wanted to do in 2016.

Maybe you vowed to get a will in 2016 but didn't do it. Or swore you'd meet with a financial planner. Or look into buying a home. A New Year gives you another shot at getting the job done.