We’re getting close to the holidays, and with that comes New Year’s. If you’re like us, you’re putting together a list of New Year’s Resolutions. You know what they look like:

“I want to learn to build a birdhouse.”

“I want to start painting again.”

“I want to lose some weight.”

That last one is probably pretty familiar to a lot of you.

And how would you go about doing that – losing weight? Unless you’re on Oprah or the Miracle Network, saying out loud, “I HOPE I lose some weight,” likely won’t yield very favorable results. You have to have a plan. Something like this:

  • Set a goal weight.
  • Drink more water.
  • Switch some fatty foods out for more protein heavy snacks…

Having that solid plan, and sticking to it, might give you a better chance of meeting that Resolution and feeling better about yourself.

So why are you HOPING your financial worries will suddenly end? Why not have a PLAN?

Creating a plan for getting past a bankruptcy or other financial distress is really no different from creating a weight-loss plan – start simple. For example: What was the issue that got you into this fix? Overspending? An unexpected bill?

Step One and/or Two of your plan should be to create a budget and begin creating a little emergency fund. Your budget should be realistic. There are certain things you HAVE to do, like pay rent or mortgage, insurance, etc. What can you eliminate or trim down to ensure that you can live within this budget? Likewise, your emergency fund should be realistic. Some research says that as little as $250 in savings can prevent most people from falling into a crisis-creating trap. Sock away as much as you can – as little as $5 a week – until you hit that $250 threshold. This isn’t $250 to freely spend or some sort of rainy-day fund. This is “In Case of Emergency, Break Glass” money.

The next important step of your plan needs to be a commitment to consistent payments. Your history makes up as much as 35% of your credit score. When you begin to lag behind and delay payment, you’re seen as a risk, and lenders are less likely to want to work with you. You may not yet be flush with cash, and you may have some skeletons in your financial closet, but establishing a consistent payment history will help you towards your goal.

Another possible step is to get a secured credit card. Unlike a regular credit card, a secured card (which is popular at many credit unions) requires a deposit. If you put down $300, you can charge up to $300. If you put in $1,000, you can spend $1,000. The downside is that if you fail to pay, the issuer gets to keep your deposit. The upside is that many banks and lenders will often gladly upgrade you to a regular credit card after a history of prompt payments.

As long as we’re on the subject of credit cards, one of your goals must be to lower your card balances. We don’t advocate cutting up your credit cards. We believe in consistently paying them down or off. Remember – a history of payment. It’s okay to use a card. In fact, it may help. But use it to make small purchases, and then try to pay more at the end of the month. It’s your card, and your right to use it, but try to pay more than you spend. And don’t use it just to use it. A colleague tells their clients, “If you can eat it, drink it, or smoke it, don’t charge it.”

When you consider your weight loss plan, you’ll likely try to identify how you got there in the first place. Did you quit exercising? Stopped going for that daily walk? Decided the elevator was easier than the stairs? Discover a new Haagen Dazs flavor?

Stop doing that. Get some exercise. Take a walk. Choose the stairs. Eat a strawberry.

At the bottom of your Financial Resolution Plan should be just that: STOP DOING THAT. Look at the simple things that slowly built up to create this situation. Granted, an unexpected emergency like an injury or illness may have driven you over the financial cliff, but take a step back and examine the little things you may have done differently. A purchase not made. A credit card offer not accepted. A home upgrade put off.

If you create a realistic PLAN, and stick with it, you won’t need to HOPE you’ll lose weight in 2020. If you do the same with your finances, you won’t be making this list a year from now. We know, because we make New Year’s Resolutions just like you, and have helped hundreds and hundreds of people remove the weight of their financial burdens.