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Six resolutions for a debt-free new year

PLANNING TIME: Work out your true financial position

JUST AS it is easier to stick with resolutions to shape up physically if you have concrete and realistic goals, giving yourself some attainable financial goals will help you develop – and stick with — a financial programme that will produce results.

One of the key goals to tackle in your financial planning for the new year is unmanaged spending using credit cards. This is the number one root cause that drives most people into credit card debt.


If you are currently in debt and thinking of having a debt-free life in the near future, you need to start to look into your debt seriously. Steering clear of unwanted debt is a great way to manage your finances and relieve the stress caused by debt.

Here are six debt-free steps which you can put in place as your new year’s plan:

1. Change your spending behaviour

We are all guilty of having them – those bad spending habits that mean you regularly bust your monthly budget.

For example, it could be that you like to eat out at restaurants four or five times a week. Maybe you just love shopping for shoes that you probably can’t afford. Or perhaps you are one of those people who just has to have the latest gadget.

Whatever it is, you probably already know it’s a problem. You cannot become debt-free if you spend more than you earn. It’s that simple. Financial stress relief is called 'money in the bank' or positive cash flow'.

You need to know where your money goes. This can be done by listing your regular and non-regular expenses. Think twice about any item you plan to buy – ask yourself whether it is a need or an optional item.

2. Have a budget plan

Make a budget plan for yourself and eliminate or at least reduce optional stuff, such as entertainment, dinner at restaurants and luxury holidays. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need or would like to do. Budgeting is simply balancing your expenses with your income. If they don’t balance, and you spend more than you make, then you will have a problem.

Many people don’t realise that they spend more than they earn and slowly sink deeper into debt every year. If you don’t have enough money to do everything you would like to do, then you can use this planning process to prioritise your spending and focus your money on the things that are most important to you.

Plan your budget according to your financial capability and spend according to your budget. You will be able to achieve your debt-free goal if you can plan for a positive cash flow, which means you spend less than what you earn.

3. Pay your bills on time, every time

Managing monthly bills is an essential part of staying debt-free and maintaining a good credit rating. If you find this difficult, come up with a system to ensure that bills are not paid late.

For any current credit card debt, you may get help from financial experts, such as credit counselling or debt-consolidation services – they are widely experienced in helping people in debt-management.

4. Set your financial goals for both the long-term and short-term

Changing your spending behaviour may be difficult, but if you set your financial goals, both for short and long-term, it is easy to make the necessary spending cuts to get what you really want. So set your realistic financial goals for 2017 and a few years down the road – and manage, control and cut unnecessary expenses, so that you can achieve your financial goals.

5. Plan for an adequate emergency savings fund

You never know what will happen tomorrow. There may be some emergencies which will need a lump sum of money instantly, such as a broken boiler, flood damage or emergency accommodation, or money to cover income shortages if you lose your job or have to take time off due to illness. Three to six months’ worth of bare-bones living expenses should shield you from most of these problems. Make saving your habit.

6. Learn to invest your money

Investing can make your money earn more money, and keep you out of debt. Learn to invest with your money to grow it. There are many investment plans available in the market, ranging from insurance, to mutual fund, to stock market.


Investment can make you grow your money – on the flip side, it can also cause you to lose it. Normally, high-gain investment will have higher risk than low-profit investment.

You need to understand your own risk profile and select the investment schemes that meet that risk profile. You can boost your knowledge on investments by taking a class, finding a referral to a great adviser or by just starting to read.

Do it your way, but do it – and start now.

We wish you a happy and debt-free 2017!

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