Clark Howard on resolutions: Take it slow!

NEED TO KNOW
  • Survey: 46 percent may make a financial New Year's resolution
  • HLN's money expert says being realistic is the key to success
Clark Howard on resolutions: Take it slow!

The new year brings with it a sense of possibility. Although we can make positive changes in our lives at any time, there's something about the flipping of the calendar that makes us believe now is the time to hit the reset button and make a fresh start.

And so, as surely as the Ball, Peach, and Shoe dropped and fireworks lit up the sky, millions of us woke up today, cleared away the cobwebs and resolved to do all sorts of things in 2013. And they're not all about losing weight, eating more healthfully, and being a better spouse/parent/friend/boss/employee/listener.

Money matters play a big part in New Year's resolutions. According to a survey from Fidelity, 46 percent of us are considering a financial resolution. The most popular ones are saving more, spending less and paying off debt. But, like most other resolutions, those concerning money aren't easy to keep -- 38 percent of respondents in the Fidelity survey said financial resolutions are harder to follow through on than non-financial resolutions.

How do you increase your chances of success? HLN Money Expert Clark Howard has one rule, no matter what you're trying to accomplish: Take it slow! Be realistic. There are still only 24 hours in a day, and big goals take time to reach.

So, whether you've resolved to bulk up your emergency fund or slim down your waistline, embrace the process of making slow and steady progress toward your ultimate goal. Here's advice from Clark on a few big things you might be thinking about in 2013.

Buying a home. The market is recovering, but prices are still low, and interest rates remain at near-record lows. So it's still a great time to buy, especially if you're shopping for your first house.

Good credit is essential to get a mortgage and the best possible loan terms. So, as a first step, go to annualcreditreport.com and get copies of all three of your credit reports. You can do this once a year for free. Make sure there isn't anything dragging down your credit score, and if there is, get it cleared up.

Next, save for a down payment. Lenders are requiring more money down, and even if you qualify for an FHA loan, you'll still need 3.5 percent. If your down-payment fund is lacking, set up an automatic deposit into a savings account every pay period. Then, get pre-qualified for a loan with a mortgage broker, a credit union or a small, local bank so you know how much house you can afford.

And once you've got a price target, follow Clark's "hundred home rule." That's right. Look at 100 houses, both online and in person, so you know everything that's out there in your price range, and what's a good deal.

Buying a car. Whether you're buying new or used, the key thing is to do you homework.

First, make sure you're good for the money before you start shopping. Get pre-approved for a loan at a credit union or small, local bank. Don't finance at the dealer! Eighty percent of car buyers make this mistake. It may be easy, because you're already at the dealership and the "finance department" is right down the hall. They may even be offering incentives like 0% financing. It looks good on paper, but these offers may require you to take out a five- or six-year loan (Clark recommends no longer than three and a half years on a car loan.) Most buyers will be better off taking cash back on the car and getting a low-interest loan somewhere else. If you're not sure, check out the car loan calculator at edmunds.com.

Another thing about the dealer: don't go before you're ready to buy. If you don't know exactly what you're looking for and what a fair price is, you can get talked into a car that's not right for you. Shop for your car online at websites like carsdirect.com and overstock.com. If you're a member of one of the warehouse clubs - Costco, Sam's Club and BJ's - you can shop through their car-buying programs. Build the car online with the exact options you want and get the best price you can before going to the dealer. And if you're buying used, it's absolutely essential to get the car inspected by an independent mechanic. Most used cars are sold "as is" so if there are any problems, you're stuck with them.

Saving: With taxes going up regardless of what happens with the fiscal cliff, it may be tough to think about long-term savings goals. And getting to a six or even seven-figure number may seem impossible, especially if you have little or nothing in your retirement account. But you have to start somewhere.

If you have a retirement plan at work, that's a great place to save. It's an automatic deduction from your paycheck, so you won't notice it. Start small. If you're not saving anything right now, begin by contributing one percent of your pay. If you're saving two percent, bump it up to three, and if you're putting away five percent, make it six. Then, six months from now, bump it up another one percent. Again, slow and steady progress, one penny on the dollar at a time.

If you don't have a retirement plan at work, open a savings account. You won't get an employer match or a good interest rate, but the important thing is, you're saving money. Set up an automatic deposit for a small amount from each paycheck. You won't miss it, and your savings will start to grow. Over time, savings can have invaluable side effects, like peace of mind and financial security.

Getting fit: Clark likes to say you should be physically fit as well as fiscally fit. Getting in shape is a popular resolution every year and health clubs will launch their advertising blitzes aimed at people looking to shed a few pounds. You'll see and hear offers like "two weeks free" and "free trial membership." But these are often one-way streets that lead directly to a contract.

Never, ever sign a contract at a gym! The most obvious reason is, you may not carry through on that resolution. Clark says at the health club where he works out, it's always packed for first six weeks of new year with all the people who made resolutions. By mid-February, they're gone. Even if you stick to your resolution into the spring, you're still locked into a contract. Paying month-to-month or quarterly gives you more flexibility, and the club has more incentive to keep you happy.

Remember, slow and steady wins the race! Good luck with all your resolutions in 2013.

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