Money resolutions to make in 2010

With the economy still in the dumper and many of us feeling poorer, it’s no surprise that many Americans have resolved to clean up their finances in this new year.

The trick is to set reasonable goals. Make those resolutions too difficult and you’re sure to break them. Like dieters who vow to eat nothing but carrot sticks, spendthrifts who swear to pinch every penny are doomed to failure.

A better approach is to start with a few things that are so easy to fix that you’ll stick with the program. You may be surprised how quickly these small changes can add up to real money in your pocket.

Kathy M. Kristof suggests 10 simple resolutions that can improve your financial position in the months and years to come.

Make your habit a treat

Most of us get into a routine, whether it’s going out to lunch each day or stopping at Starbucks on the way to work (or both). Not only are these habits costly, but they are often so rote that we don’t even acknowledge them.

If you make your habit an occasional treat, you’ll save money -- and you’ll appreciate it a lot more.

Consider what could happen if you turned your daily coffee run into a once-a-week reward. Going on Mondays would be a great little morale booster to start the workweek. Waiting until Friday would be a fine way to say TGIF. Or you could celebrate hump day every Wednesday with a cup of designer joe.

Let’s say you do all of the above. Cutting back to even three days a week saves you about $8 (assuming you’re buying a latte -- or a coffee and a doughnut). That’s about $35 a month, or about $400 a year.

Don’t drink coffee? Then save on lunch. Eating out can easily set you back $10 a day. Break up that routine with “pack-a-lunch Wednesdays” (or Tuesdays or Thursdays or whenever). Make it fun. Plan it as an outing. Because you’re not waiting to be served at a restaurant, you can take a walk or eat at a park bench or by the library.

If you do both of these -- cutting out two Starbucks trips and just one lunch, which will save you roughly $800 a year -- you’re likely to lose weight too.

Disconnect that phone plan

If you are over the age of 20, you are probably paying for both a land line and a cellphone. Do you need them both? If you do, consider using a free shopping service like BillShrink ( www.billshrink.com) to see whether there’s a better deal on the cell service. But before you switch, call your existing providers and see whether they’ll match it. More often than not, they will.

No better deals on the horizon? Spend 10 minutes asking your current provider a few questions, such as: Will you give me a discount if I have both land-line and cell service with you? Is there a plan that’s better suited to my usage? I did this recently and shaved $15 a month off my phone costs. That’s no fortune, to be sure, but it adds up to $180 annually.

Shop your home and auto policies

Once a year, every year, you ought to spend half an hour determining whether you can get a better deal on your home and auto insurance. (It can make sense to shop these together because many property insurers offer so-called multiple-policy discounts.)

The reason you have to shop every year is that insurers change their prices based on their claims experience, so the insurer that was the best bet two years ago may not be today.

California’s Department of Insurance makes shopping relatively easy by providing price comparisons on the state website :// www.insurance.ca.gov “> www.insurance.ca.gov . These are particularly helpful for homeowner policies, because there’s less price variation than with auto, where your price will depend on a dozen factors, including your driving record.

How much can you save? That depends on how good a deal you’re getting now, but checking a sample $300,000 policy in Glendale on a 10-year-old home uncovered a price variation of $1,523 between the highest-priced insurer (Chubb at $2,192) and the lowest ( AAA, $669).

Be sure, however, to check the insurer’s complaint ratio before you switch to be sure you’re not paying less simply because you’re getting an inferior product.

To check that, click “info” next to the insurer’s name. That will take you to a page with a prompt reading “company performance and comparison data.” Scroll down that chart to find the company’s “justified complaint ratio.” That’s an indicator of what percentage of the company’s customers are justifiably dissatisfied with some aspect of the company’s service. In this case, you’d see that AAA’s justified-complaint ratio is considerably lower than Chubb’s, which could make you feel particularly good about the savings.

Pay cash

Our grandparents had a foolproof way of ensuring that they didn’t spend more than they made: When they ran out of cash, they stopped buying things.

Banks have done a superb job convincing us that cash is old-school and that credit and debit cards are much more convenient and “safe” because you don’t risk being robbed or dropping $20 bills out of your pocket.

But what the plastic purveyors fail to mention is that a pile of studies dating back to the 1970s shows that we spend more freely when we pay with credit cards. That’s because the “pain of paying,” as one study put it, is far more acute when the method of payment is more transparent. Would you really drop $1,000 on a big-screen TV to watch the Super Bowl if you had to pay cash today instead of using one of those “no interest” teaser payment plans that could cost you a bundle later?

There’s no agreement on how much you’d benefit by leaving the plastic at home. At a minimum you’d save the interest charges on a revolving credit balance or any potential overdraft fees on your debit card. But the biggest savings come from limiting your spending to the cash in your wallet.

Adjust your withholding

Roughly 70% of the nation’s taxpayers get a refund each year. The average amount this past year was $2,753. Cool, you say? Not so very.

You’ve just given Uncle Sam a no-interest loan at a time when you’re probably paying 20% on the revolving balance on your credit cards. If you fix your withholding so you have that $229 a month to pay down your credit card debts, you’ll save yourself roughly $500 annually in interest charges.

Pay off the plastic

If you’ve resolved to do the first few things on this list, you’ll probably have an extra $1,000 annually to spend. Instead of blowing that windfall on a weekend in Vegas, go for a sure thing: Multiply those savings by paying down your credit card debts. Every $1,000 you pay off saves you roughly $200 in interest charges.

Boost 401(k) contributions

If you pay 30% of your income in federal and state taxes, each $100 contributed to your 401(k) costs you just $70. If your company matches your contributions at a rate of, say, 50 cents on the dollar, you end up with $150 in savings for something that cost you only $70.

There aren’t a lot of other ways to double your money (you already shelved the Vegas trip). So why would you let an opportunity like this go by?

Make savings automatic

Need an emergency fund but feel as if you never have an extra dollar left to save? Try having just $25 a month put into a savings account at the beginning of each month. You can always transfer it back if you find yourself strapped to pay a bill.

More likely, however, you’ll just find a way to spend that much less. And at the end of the year, you’ll have $300 socked away to handle emergency car repairs or medical bills or whatever else you need.

Take care of yourself

An increasing number of company health plans are paying you to take better care of yourself. If you quit smoking or promise to exercise at least once or twice a week, they’re likely to give you a break of $50 to $500, experts say.

UnitedHealth Group says a 40-year-old smoker who gives up the habit and invests the savings in his 401(k) will be about $250,000 richer at retirement. Not a bad return for kicking a bad habit.

Prevention can also save you a bundle on medical bills down the road.

0 Volunteer

It’s pretty easy to feel sorry for yourself when times are tough and money is tight. Instead of wallowing in your misery, get out and help somebody who has it worse than you. Nothing can reset your perspective quite like feeding the homeless or nurturing an at-risk kid. You’ll go home realizing just how blessed you really are -- and how much “wealth” you have to share.

There’s another big upside to volunteering: It keeps you out of the stores. Shopaholics say that one of the toughest parts of breaking their addiction is finding another way to fill those lazy afternoons spent wandering the malls.

So, clean a beach. Save the whales. Raise money for cancer research. The cause is up to you. Doing good is good -- and good for you.

Happy New Year.

kathykristof24@gmail.com