A resolution that pays two ways

Better financial health could improve physical health.

By Sherill St. Germain

It’s January of a brand spankin’ new year – a chance to start fresh and become the person your dog thinks you are. How wonderful life would be if only you lost those 15 pounds, paid off your credit cards, got a better job and (insert lofty goal here)!

But if you’re like most of us, past experience suggests that over-resolving is a surefire way to land right back at square one, usually well before Punxsutawney Phil sees his shadow – or not.

For 2009, pick the one resolution that pays double dividends: Improving your money management habits.

Yes, better financial health is the obvious payoff here, but new data suggests a link between physical and financial health.

A recent Associated Press/AOL survey found that respondents with high debt-related stress were three times more likely to experience health problems such as ulcers, migraines, anxiety, depression and back pain.

Further, that ill health can take a financial toll in terms of out-of-pocket health care costs, higher insurance premiums and time out of work, creating a vicious cycle.

On the flip side, women and money author Barbara Stanny hears from readers who take control of their cash that shedding extra pounds is often an unexpected side effect. For you multi-taskers and bargain hunters out there, this represents a two-for-one that’s hard to resist.

So do your purse – and your person – a favor and make 2009 “The Year I Got My Money Act Together.”

OK, but that’s still a big goal. How do you keep from falling into the same trap of over-resolving yourself right back to square one?

“Focus, people!” as Tim Gunn might tell "Project Runway" contestants. That is, pick just one goal you can commit to – whether it’s the most important one or the easiest one. Then narrow it down as much as possible, get the facts straight on what it will take to achieve it and focus on it like a laser.

Let’s take an example – say you’ve got $16,900 in credit card debt that includes:
• $9,500 on VISA at 12.5 percent
• $5,000 on Mastercard at 15.9 percent
• $2,400 at 27.9 percent (oops, one late payment) on a Big Box Store card

This large debt has been weighing heavily on you, causing just the kind of stress that will ultimately drag down your physical health, too. But the idea of paying off the whole $16,900 is way too daunting. Punxsutawney Phil may not even make it out of his burrow before you give up.

So what about taking on the $2,400 at the BigBox Store? Now that’s more like it!

Not only is it a manageable amount but, at 27.9 percent, it’s also the most expensive debt you’re carrying. Just don’t make the mistake of thinking it’ll be paid off by year-end if you send in $200 per month.

In fact, because of the interest, you will need to make a monthly payment of $231 to make the balance go away by December.

It’s still do-able, and succeeding at this might be just the confidence boost you need to take on more ambitious money management goals – like what to do with the extra $231 per month. (Hint: Look out, Mastercard balance!)

Visit the Kiplinger.com Tools & Calculators for help with the math on your goal.

Sherrill St. Germain is the founder of New Means Financial Planning in Hollis.