Jan 20, 2013 4 min read

WEST PALM BEACH, Fla. – The Christmas decorations have been put away, and people have settled back into their ordinary routines.

For many people, the creditcard bills are rolling in, and paying them isn’t a time of joy. In fact, for some, it’s a struggle. They overspent.

Even those who did not overextend themselves might need to curb their spending.

That’s because everything from the cost of groceries, forecast to rise 4 percent, to health insurance, new cars, college tuition and shipping costs are expected to cost more this year.

So, whether you are in a pinch or not, it’s a good time to sit down and assess your finances, said Christie Hardcastle, community development officer for CredAbility, a nationwide non-profit credit counseling and education agency with offices in West Palm Beach.

“One of the best things you can do at the start of year is to take a look at what you owe, your debt, and what you have in the bank,” Hardcastle said. “It’s taking a good look at your current financial picture and facing the reality of where you are right now.”

Know how much you owe and keep track. Then create a budget or “spending plan” that is flexible and includes all monthly expenses. If the expenses are more than your income, go back to the plan and make adjustments.

Look at your checkbook, and ask your credit card companies to send you a summary by category. Gather up all your bills. You might be surprised at how many times you dined out, or how many clothing items you purchased that you could have done without. Even adding up what you’ve paid for tree trimming or lawn maintenance can be a shocker.

“Once you’ve looked at everything and see what you’ve been doing, then you can start to make better choices about how you can use your income in the future,” Hardcastle said.

Of course, any credit card debt should be paid off as soon as possible, especially any high-interest debt, Hardcastle said.

Hardcastle says her rule-of-thumb is if you cannot afford to pay your credit card bill in full at the end of the month, then you have purchased something you cannot afford.

People who received credit counseling from CredAbility in 2012 had an average of $16,200 in credit card debt.

If you need help managing your finances and credit, see a counselor at CredAbility (800-251-2227) or another qualified agency.

The Federal Trade Commission offers advice about how to select a counselor at consumer.ftc.gov/articles/0153-choosing-credit-counselor.

Scott Scredon, CredAbility spokesman, said mid-January through income tax season is the busiest time of the year.

“We are on the verge of the surge of a lot of calls and people who will be looking for help,” Scredon said. “The credit card bills start coming due. Over the long Martin Luther King Jr. weekend, people have an extra day to sit down.”

An additional challenge this year is increase in the Social Security payroll tax to 6.2 percent from 4.2 percent, Scredon said.

Hardcastle said once you’ve assessed your income, spending and debt, created a budget and paid off your credit card balances, the next step is to build a savings cushion. Determine what you can afford to have set aside, by direct deposit from a paycheck or other income if possible.

“I am a big fan of doing things automatically – having a set amount,” Hardcastle said. “Just like it is easier not to eat the cookies if the cookies are not in the house, it is easier to not spend the money if it is automatically deposited.”

The goal should be to have three to six months of living expenses in a savings account.

Once you’re on the road to financial recovery, set aside time at least twice a month to manage your finances, including paying bills, balancing your checking account and analyzing your expenses. Don’t forget your long-range goals. Begin thinking about and planning for retirement.

“It’s a great time to do this for yourself,” Hardcastle said.