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It’s that time of the year again: Setting goals and intentions to improve your life. As you go through the process of identifying areas of improvement, don’t forget about your finances. If you’re looking for new year financial resolution ideas, how about creating a plan to pay down debt?

“Having a plan in place will put you in the driver’s seat and put you in control of paying off your debts and/or reducing interest payments. Most consumers agree that having a clear plan and getting out of debt feels like they’re retaking control of their lives (87%) according to The Hidden Cost of Debt survey conducted by National Debt Relief,” says Marc Russell, National Debt Relief Financial Wellness Board member and Founder of BetterWallet.

Realistic goals are key here. In order to pay off debt, you might have to make sacrifices. But you also need to feel like you’re living your life in a somewhat enjoyable way in order to stick to your habits in the long run. Trial and error is okay – your initial plan might need tweaking. “If you’ve overestimated the amount you can pay or the amount of time it will take, you might be tempted to use an unrealistic plan that may get you into more debt. The plan you start out with may not work for your entire debt journey,” says Russell.

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Ready to set New Year’s debt resolutions and keep them? Russell shared his best tips and tricks to reduce debt below.

Track your spending

Management guru Peter Drucker once said, “what gets measured gets managed.” If you want to stay on top of your finances this year, tracking your spending is key, whether you use a journal, a spreadsheet or an app.

“Whatever method you end up using, track your spending so you know where your money is going and where to make smart adjustments,” says Russell. Once you know your monthly spending, you have the information you need to create a budget and put it in writing.

“Budget guidelines should be flexible to your personal spending habits and current debt. A written budget is more likely to stick, so do the extra work to write out where all your money is going to go,” adds Russell.

Check your credit report

According to him, a smart financial new year resolution is to check your credit report: “Your report will show all of the accounts in your name, including what you owe. You may find mistakes—one in four credit reports contains serious errors, so this is a good time to correct the record and improve your credit rating in the process.”

You get to access a free annual credit report from each one of the major credit bureaus, so use this opportunity to look at your credit score and make sure there are no mistakes – or, even scarier, instances of identity theft – on your report.

Every 12 months

Federal law gives you a right to a free copy of your credit report from each of the three credit card bureaus

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Set up automatic payments

Russell is a big fan of setting up automatic payments for everything, as automation prevents missed payments and takes the guesswork out of paying down your debt. “Make sure your monthly bills, including debt payments, are set up to be paid automatically from your bank account,” he says. “Don’t leave yourself any potential to miss a payment or be late. Automate everything you can to ensure on-time payments.”

Live below your means

At the end of the day, even with the best strategies to pay off your debt, you need to be able to live below your means – so, make doing so a New Year’s financial resolution. “No matter your financial status, it is always important to live below your means to stay away from debt. Credit cards can be a very dangerous habit for people. Especially these days when people are drowning in student debt, inflation is skyrocketing, and the housing market is so high,” says Russell.

If money is tight, the last thing you want is to add more debt. “If you don’t have your spending under control and aren’t living on a budget, you may be tempted to turn to your credit cards for big purchases or even to cover everyday costs such as groceries or gas. I advise you to avoid doing that,” adds Russell,

Coveting a luxury item? Even if you can afford it, it doesn’t mean that you should buy it. Aim to start building wealth instead of spending it.

Related: 20-Somethings Live with Parents to Buy Luxury

Build an emergency fund

While it can be challenging to save money for a rainy day when you want to pay off your debt fast, building an emergency fund should be at the top of your new year debt resolutions list.

“It may seem hard to save money for emergencies when you want to devote every dollar you can to debt repayment. Unfortunately, if you have no money set aside for emergencies, you’re likely going to have to borrow when a problem inevitably requires you to spend, which puts you more in debt,” according to Russell.

Yes, you want to allocate funds to debt repayment – but you also want to make sure your emergency fund is locked down (at least three months of living expenses).

Invest in your health

Hopefully, your resolutions include healthy habits – health is wealth, after all. Prevention is key, but it’s also crucial to have health insurance. The last thing you want is getting slapped with an unexpected medical bill while on your journey to improving your financial health.

“Debt can accumulate very easily and feel overwhelming – especially when it’s an unexpected medical bill. This stress can take a significant toll on one’s mental health and relationships leading to anxiety and depression. Avoid this by investing in your health!” recommends Russell.

Get professional support

You don’t need to figure out how to achieve your financial goals all by yourself. Russell suggests getting professional support if you’re having trouble managing your debts on your own: “They’ll go over your unique situation with you and help you craft the best plan to get yourself out of debt and create a budget you can live with. I recommend National Debt Relief as they have certified debt specialists who serve as your personal advocates. They will work with you in creating a plan to become debt-free, and will work with creditors and banks to negotiate down the total amount owed.”

Commonly Asked Questions

Find painless ways to reduce spending. Make an audit of monthly automatic payments such as subscriptions, and you are bound to find services that you barely use but keep paying for. Meal plan instead of going out to eat. Use online coupons or cashback platforms whenever you shop. Swap the gym for home workouts. Decide which expenses truly add value to your life and are important to you, and which ones you care about less – then, ditch the latter in favor of cheaper alternatives. For example, if you get manicures on a regular basis, you could buy the products needed to do it yourself at home and save cash over time. If you barely watch cable, you can replace it with your Netflix membership.

Use tried-and-tested debt-reduction tactics such as the snowball method or the debt avalanche method.

Get resourceful about increasing your income, too. From selling things you don’t need to asking for a raise at work, there are ways to earn extra money that you might have not even considered. Or you could even get a side hustle or part-time job.

Nurturing your credit score is a good financial resolution you can make in 2023. By reducing your reliance on credit, making payments on time and paying more than the minimum monthly amount due on your bills, you’ll improve your score. And avoid opening new credit cards at all costs.

Refinancing is another great choice. Make a New Year’s resolution to strategically refinance some loans and reduce the amount of interest that you pay on debt. From looking into refinancing alternatives for your student loans to consolidating credit card debt, research your options to choose the right one for you.

Work on your money mindset. The habits that got you in debt are not the habits that will get you out of it. Are there beliefs about yourself, your earning potential, or your ability to manage money that are keeping you stuck? This may sound less tangible than New Year’s resolutions that include practical steps, but addressing your thoughts and reframing them is a resolution that can make a huge difference for your bank account.