Financial Resolutions 2002

N E W &nbsp Y O R K, Jan. 2 -- If you are feeling financially exhausted from a volatile 2001 and are slowly coming down from the holiday buzz, rest assured you are not alone.

With consumer debt at a record estimated $1 trillion, personal bankruptcy filings at an all time high, and mounting unemployment rolls, like millions of Americans, your New Year's resolution may be to save more, spend less and get rid of your debt.

Resolving to get your financial house in order in 2002 sounds great but by the end of January, at least 50 percent of average Americans will have abandoned their resolutions and up to 90 percent will have abandoned them by the end of the first quarter.

While many look to New Year's traditions like eating black-eyed peas or consuming donuts (as the Dutch do) for good fortune, the road to financial success takes work. Consider the following strategies as you embark upon having a more prosperous New Year.

Know What You Owe. If you are one of millions of Americans who charged an estimated $121.4 billion to major credit cards this holiday season, you are probably not feeling very jolly this New Year. Before you think about saving or taking care of other debts, get rid of these financial burdens first because major credit cards carry some of the highest interest rates around.

The average American household has $8,523 in credit card debt and about 12 credit cards. To get a handle on your own credit card debt, the first thing to do is collect all your credit card bills together and add them up.

Looking at the total amount due to all of your creditors can provide a much needed wake up call to get you out of debt. To downsize this debt, if you usually pay the minimum amount due, try paying two times the minimum. In so doing, you will shave years off your repayment schedule and save a considerable amount in interest.

By paying only the minimum on America's average of $8,523 in credit card debt, it would take 15 years to pay off the balance and ultimately cost an additional $5,184 in interest.

However, by doubling the minimum payment, the original $8,523 balance would be paid off in 5 years and 10 months — more than 9 years faster — and the interest paid would be $1,976 to a $3,208 interest savings.