A New Year, a New Financial Plan

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Fixing personal finances is usually at the top of many New Year's to-do lists. Alex Chadwick speaks with Day to Day personal finance commentator Michelle Singletary, who has tips on how to make 2006 a money-smart year.


`Get my finances together' ranks right up there with `I'm going to lose weight' as one of the most made and most broken New Year's resolutions. I've broken it myself. If you plan to make 2006 the year to fix your financial house, Michelle Singletary is here to tell you how. She writes The Color of Money column for The Washington Post, and she's DAY TO DAY's regular contributor on personal finance.

Michelle, welcome back to the show. And what can I do, what can we all do? How do you begin to organize your financial life?

MICHELLE SINGLETARY (Financial Adviser): Well, thank you. I'm glad to be here. And you know what? I totally believe in making New Year's resolutions because you can continue to try, try, try until you get it right. And so this is a perfect resolution. In fact, I would put it ahead of losing weight because if you cut back on your money, you're going to cut back on the money you spend eating out, and that's going to cut back on your waistline. So you see how I, like, tied it together?

CHADWICK: OK. Well, let's start here. How do you begin? You're going to write something down, you're going to make a list of things to do?

SINGLETARY: Absolutely. You know, there's something about writing something down that just sort of sears it or makes it a permanent record. And studies have found that when people write down their resolutions, you know, on a sheet of paper, in a book, on your computer, it sort of makes you feel guilty if you don't follow it 'cause it's there in writing. So absolutely. And when you write it down, just don't say, `I want to get my finances straight.' Say, `I want to get out of debt and this is how I plan to get out of debt.' Do some research. Figure out how you want to do that, and so that with each resolution there is a solution as well.

CHADWICK: OK. So if you were going to do this, what would you do? You'd start off with a list, say, `I'm going to get my finances straightened out.' Number one you already mentioned, `I'll eat out less.'

SINGLETARY: That's right. You know, start with your expenses because if you're in debt, you've got to find some place to find that money to pay off that debt. And if you're not going to get another job or work yourself silly, then the only other place is your expenses. And eating out is one of the largest places in people's budgets where they can cut. Now that doesn't mean that you shouldn't eat out at all because, you know, like a diet, if you deny yourself everything, you're going to fall off of it. So just say, `I'm only going to eat out once or twice a month,' or, `When I eat out, I'm going to eat out at brunch instead of dinner where the lunch meal is less expensive.'

CHADWICK: Where could you go to find something perhaps online or in the papers or where to get advice and help in how to organize your finances?

SINGLETARY: Well, or course you go to my column in The Washington Post. But, you know, most, if not all, newspapers have a business section that has some personal finance column. That's the first place to start because it's also the cheapest. I mean, most local newspapers are still a quarter or 35 cents. And then on the Web, there are a number of resources on the Web. I tell people to always go to, for example, ChoosetoSave.org, which is a non-profit that has a ton of information on how to get your finances straight, your local newspaper's Web site and again The Washington Post and even NPR, which we have links to my past commentaries which has a ton of information on how to start to get your finances straight.

CHADWICK: Michelle Singletary writes The Color of Money column for The Washington Post and joins us regularly for conversations about personal finance. Michelle, happy new year.

SINGLETARY: Happy new year to you as well.

CHADWICK: And if you have questions for Michelle, we'd like to hear them. Go to our Web site, npr.org, click on the `contact us' link found on the top of the page for DAY TO DAY and be sure to include `Michelle' in your subject line.

DAY TO DAY is a production of NPR News with contributions from slate.com. I'm Alex Chadwick.

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