By the end of the month, some 30 percent of resolution makers are expected to have ditched their new year goals, researchers estimate. And if money matters are on your list, it's easy to understand why.
"The problem with new year resolutions is that people set these lofty goals and then they really don't know how to accomplish them," says finance expert Michelle Singletary. The difference between dreaming about getting out of debt, for example, and actually doing it is laying out a plan and being specific about it.
"'I want to get out of debt' isn't really a goal," Singletary says. "That's a wish. That's a dream." Instead, she recommends listing all of your debt, starting with the one with the lowest balance, then paying the minimum payment on the rest. That, she says, is how you start the process of paying it off.
"If you're able to pay off a couple debts that are not that much -- a couple hundred, maybe a couple thousand -- you're thinking 'I can do this, it's off my list!' There's a psychological boost that you get from that," she says.
In this economy, however, even small steps may seem like a challenge, especially if you're relying on a single source of income to do it. Finding extra money or a "side hustle," if you will, can help, and it isn't as hard to do as you think.
"It's a little different than saying everybody ought to be a small business owner," Singletary says. She herself double tasks, writing a money advice column called "The Color of Money" for The Washington Post while also doling out advice on ABC's new lifestyle makeover show, "The Revolution."
Here, Singletary shares her best advice for channeling your most resourceful self and bringing in some extra income in the process.
Be very specific about what your skills are, what you're good at, how can you do it in a way that won't interrupt your main job and, most importantly, whether you can make money doing it. If you're a teacher, can you do tutoring on the side? If you work in public safety by day, can you take on a security job at night?
"The problem with [many] side hustles is that they need a loan, they need a building, they need somebody to help," Singletary says. "They end up spending more money than they're taking in, and that just becomes a hobby. That's not a hustle." Avoid endeavors that require kits and other expenses that could take years for you to recoup.
"The IRS doesn't play," Singletary says. "If they find that you've made some extra money and you haven't given them that, you are in trouble." It's the number one problem people run into with side hustles and small businesses, she adds. "You can't look back and try to grab that money back. Once it's in your hands and it's spent, it's very difficult to do that," Singletary says. If taxes aren't already deducted, put enough money aside the moment you get your cash and avoid having to set up a payment plan with Uncle Sam down the road. For Singletary, that means taking 50 percent off the top -- enough for state and federal taxes and contributions to her local church.
Yes it's an added expense, but the work they'll do helping you figure out estimated taxes and avoiding the high interest rates you could end up with on a repayment plan, will be well worth it in the end.
Talk to your tax guy and find out what's allowed as far as deductions are concerned, but don't get so caught up on making them that you end up spending money throughout the year, Singletary says. "People think things like 'I should get a [car] lease, because I can get a tax deduction for a lease," she says. "You're not going to deduct a whole lease, and now you've got a car that you're going to have to give back after a couple years...Never let taxes drive how you handle your money." Think of deductions as a bonus, she says. Save the money you'd spend on, say, a car or a computer, and use it to pay off debt instead.