4 Quick Financial Fixes

Want to supersize your savings? Control the urge to splurge? Fit into a size-six bikini? It must be close to New Year's!

Resolutions are great ... until about the third week of January. While your resolve is strong, vow to whip your finances into shape. Here's a workout plan that you can stick to. Or at least it's one you can put into place, ignore for months, and still see results a year from now.

Put these four financial fixes into place and get on with your celebration:

Curb the urge to splurge
Spend less? Puhleeeze. You might as well ask us to cut back on carbs or quit Starbucks.

When a case of "the wants" comes on, try a homemade remedy: The "Spending Patch." Wrap a Post-it note around your credit or debit card and write on it: "Stop. Think. Walk." (Extra credit for arresting illustrations.) In moments of weakness, it'll help curb the urge to splurge.

Diets and finances have a lot in common. If you are what you eat, you are what you spend, too. (To get to the bottom of those mindless binges, consider keeping a money-mood diary. The food-mood version taught me to finally eat breakfast before I left the house.)

Denial's no fun without a reward. So set up a savings account that's separate from your regular checking account (one with a higher interest rate, too), and have some money automatically directed into it. With the account inaccessible by debit card, it'll be less tempting to break in and blow the balance come February.

Control your credit
You can shed thousands in debt by bikini season. All it takes is one phone call.

Simply ring up your lender and ask for a lower interest rate. More than half the people who call their credit-card customer service departments are successful in reducing their annual interest rates by an average of one-third. So pick up the phone right now and start bargaining.

If debt's really got you down, pick the credit card with the lowest balance (or the one that carries the highest interest rate), and devote all your energy and extra dough to paying off that card. (Be sure to keep up with the minimum payments on all of the others.) Lather, rinse, and repeat as you knock off each balance. Print out our free "Get Out of Debt" guide for some light New Year's reading.

If you're going to spend, do so responsibly. Pick a credit card that'll help you manage your money. Find one that carries no annual fee, has a year-end spending summary, offers a perk that you'll use (such as airline miles, cash back, or a 0% balance transfer if you're carrying debt), and with a grace period that won't leave you sprinting to the mailbox every month.

Do a little math
Statistics show that two-thirds of us have never attempted to calculate how much we'll need for a comfortable retirement. A shocking 15% haven't even saved a dime for that fateful day. Why? These excuses may sound familiar:

  • "I'll have Social Security and my pension."
  • "I'll inherit a lot of money."
  • "I'll save later."
  • "I can't afford to save."
  • " I plan on working forever."

Here's help: Resident retirement guy Robert Brokamp combed actual spending figures from the U.S. Census Bureau to see how much older Americans actually shell out annually for housing, clothes, health care, insurance, and fun. Here's the rundown.

Take a few moments to do some back-of-the-envelope calculations with the Ballpark Estimate worksheet (we explain how). Once you see where you stand, you'll be ready to ...

Pump up your portfolio
Go ahead, be selfish. Vow today to be more generous to your future self and devote a little time to ensuring your retirement can be the carefree romp it should be. First on your "to do" list: Up the contribution to your work retirement plan (401(k), 403(b), or whatever Mr. Boss provides). Jot yourself a note right now to ask your human resources department for the proper contribution change form. It's painless in the short term and quite fortuitous in the long term. Even just a few percentage points' increase will make quite a difference to your 65-year-old self.

Don't stop now. With visions of retirement dancing in your head, go with the momentum and give your retirement savings a bonus gift. Send an IRA contribution check to your brokerage account for the year 2005 (you have until April, but why not do it now?). If you're really on a roll, make one out for 2006, too.

You don't have to quit your day job and become a stock market genius to improve your investment returns. Index investing, such as the SPDRs (AMEX: SPY  ) exchange-traded fund (ETF) or Vanguard Total Stock Market Index (FUND: VTSMX  ) , allows you to essentially bet with the house for a very low cost. Doing so means that you at least match the overall returns as measured by that particular index (in the case of SPDRs, it's the S&P 500; Total Stock Market tracks the overall returns of the entire stock market). Historically speaking, that's 10% average annual returns.

And, finally, if you don't accomplish all you want by Dec. 31, 2006, don't worry. There's always next year.

The bottom line
If you're 10 or fewer years from retirement (you lucky devils), you have a few extra considerations. In particular, start thinking about things like safer investments, withdrawal rates from your retirement accounts, and taxes. Let the Fools at Rule Your Retirement check your math and offer a shoulder to cry, er, lean on. Take a free 30-day trial today, or order for a year and get Stocks 2006 -- the picks for the new year from our top analysts -- for free.

Dayana Yochimis a fan of financial shortcuts. She and the Fool are all aboutfull disclosure. She owns shares in an S&P 500 index mutual fund.

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