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Financial Resolutions for 2012

Posted: 09 Jan 2012 06:35 AM PST

According to a survey from TD Ameritrade, 73% of Americans will make at least one New Year’s resolution that is money-related. Here are some of the more crucial – and doable – goals worth putting on your list:

1) Reduce credit card debt

Did you know that 14 million Americans – 6% of us – are still paying off their holiday bills from 2010? Or that the average household currently has about $15,000 in credit card debt right now?! As you rethink your needs versus wants in the New Year, think about regaining control of your spending and coming up with a plan to pay off this high interest debt.  Chip away at the cards with the highest interest rates and work your way down to the lowest. Or, look into doing a balance transfer (Go to a site like or to see what your options are).

2) Boost your credit score

Analysis from Zillow Mortgage Marketplace shows that you need credit score of 720 or higher to get the best rates, and that you’re unlikely get a single loan quote if your score is below 620. Lenders aren’t the only one looking at this all-important three-digit number. So are landlords,  employers and numerous others. It’s therefore crucial that you work toward improving it.  You do this by paying your bills on time (This accounts for 35% of your score); paying down your debt (The amount you owe is 30% of your score), and spending less, using no more than 30% of your available credit; ideally, just 10%.

> Estimate your credit score

3) Fund an emergency account

Fewer than 4 in 10 Americans have a fully funded rainy day account! That’s crazy, given how fragile this economy is. You need a cushion — 6 months to a year’s salary — set aside in an accessible account, such as a basic money market account.  It’s the best way to protect yourself.  Use this money to cover unexpected expenses and replace interrupted income.

4) Invest smarter

It’s been a crazy ride on Wall Street this year. Now’s a good time to take a look at what you have.  Are you properly diversified?  Do you have a nice mix stocks, bonds, and cash? Is this mix both age and goal appropriate?  Stocks may be up and down (and the swings have been substantial in 2011), but historically, equities give you the best returns long-term.

5) Get serious about retirement

Stop complaining that you’ll “never” retire and simply come up with a plan to make it happen.  First, run the numbers to see how much you’re going to need to live comfortably in retirement (Go to for ballpark estimates), and then get to work, stashing away as much as you can into an employer-sponsored plan.  Also take advantage of company matches, and catch-up contributions. Finally, consider spending less (!), and redefining your vision of retirement.

Vera Gibbons is a financial journalist based in New York City and is a contributor to Zillow Blog. Connect with her at

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.



 Need a Family Budget

8 Steps to Getting Your Finances in Order



  1. Develop a family budget. Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.


  1. Reduce your debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 percent and 10 percent of your total income.


  1. Get a handle on expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.


  1. Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.  Multiple unrelated cash flows are a vital part of creating the security against losing a job, or a company going out of business.


  1. Save for a down payment. Although it’s possible to get a mortgage with only 5 percent down—or even less in some cases—you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.


  1. Create a house fund. Don’t just plan on saving whatever’s left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.


  1. Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.


  1. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.

Budget Basics Work Sheet


The first step in getting yourself in financial shape to buy a home is to know what you make and what you spend now. List your income and expenses below.




Take-Home Pay/All Family Members


Child Support/Alimony


Pension/Social Security


Disability/Other Insurance






Total Income







Life Insurance


Health/Disability Insurance


Vehicle Insurance


Homeowners or Other Insurance


Car Payments


Other Loan Payments


Savings/Pension Contribution




Credit Card Payments


Car Upkeep




Personal Care Products




Food Prepared Outside the Home




Household Goods




Child Care




Charitable Donations




Total Expenses=


Remaining Income After Expenses=



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