New Resolutions for a New Decade

As the calendar moves steadily towards a New Year and a new decade, it’s common for people to consider resolutions for the year ahead. Fitness and weight loss goals are the most popular. Loads of people start off at the gym in January, less make it back in February and most give up on their fitness resolutions by early March. In my opinion, the best way to ensure to success is to build accountability into your resolutions.

For many years, I was the best and most committed exerciser for two weeks. Then life (or the snooze bar on my alarm) would get in the way, I’d miss a day or two and would never restart. It wasn’t until I agreed to meet friends to run or go to a boot camp class at 5:30 AM that it truly became a habit and part of my life. I realize how awful 5:30 AM sounds, especially to this former late sleeper – but it’s the only time of day that you can truly control. At that time of the morning, it’s you versus the pillow. The kids are still asleep and work (for me) doesn’t start until 8:30. If I tell someone that I will meet them, I will peel myself out of bed. I have found that getting my heart rate up first thing in the morning really helps me face the days’ challenges with a greater sense of calm.  I have also found that I sleep way better at the end of the day! An added bonus is the friendships you build over early morning miles or yoga poses. I’ve met some of my best friends through the running community even though my gimpy knee keeps me from running now. These days, I’ve transitioned to hot yoga and lots of tennis with the occasional bike ride thrown in.

Another area that is a focus of New Year’s resolutions is personal finance. Whether the goal is to save more or finally pay-off student loans or credit cards, the New Year is a great time to put some financial fitness habits in place. Instead of saying no to a night out with friends, agree to be the designated driver and feel way better both physically and financially the next morning. For those of you that have a hard time saying no to the shiny new thing, I recommend placing your credit cards in a big Tupperware container and storing it in the freezer. Once frozen, you won’t be able to see the credit card number and it will take a while to thaw them so you can use them again. Be sure to delete them from your Apple wallet and online shopping accounts while you’re at it.

If you’re not sure where to start, Dave Ramsey’s method of the debt snowball is surprisingly effective. It’s easier to stay committed when you’re seeing progress. If you’re not familiar, Dave advocates paying the minimum balance on all debts and credit cards except the smallest one – throw every penny you can at the smallest balance. Once it’s gone, pay off the next smallest debt, rinse and repeat. Eventually, you’ll be left with one debt and by that point, living on less than you make, should be a habit. One way to make this work even faster, assuming you have a good credit rating, is to transfer some of the balance to a new credit card that charges you zero interest for 6-18 months. This way, more of your payments go to paying down principal and will reduce the time it takes to become debt free.

Before you start on any debt repayment plan, we recommend setting aside $500-$2,500 in a savings account for emergencies. Stacey’s version of Murphy’s Law states that, “What can go wrong, will go wrong at the absolute worst possible time!”  If you have some money earmarked for emergencies, you’re much more likely to take care of the small problems (car service light, water spot on the ceiling, etc.) before they become big problems (major engine or plumbing repair).

Once you’ve paid off your debts, it’s important to start saving! If your employer offers a 401k or other retirement plan, that’s a great way to put aside money each paycheck. Many employers offer a match or other “free money” as a reward for contributing. But don’t fall into the trap of thinking that a 401k loan is an easy way to pay off debt. Studies show that employees who take 401k loans wind up with substantially less in retirement balances than those who don’t. Also, the payments required to repay a 401k loan will reduce your take home pay and often leave you less money to pay other bills. It’s a dangerous spiral.

While it can be hard to stick to any resolutions, the results are huge. Better health, greater peace of mind and improved financial security. Eliminating debt makes it easier to say yes to so many wonderful things. In my case, that’s helping others and starting a financial planning firm with some great friends.

I wish you much success in the New Year pursuing the life you Envision!


Stacey Hyde, CPA, CFA, CFP® is a financial planner at Envision Financial Planning who works with individuals and families to help them live the life they envision. Money is a tool, use it wisely.