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Financial Amnesia Can Hit You Hard

NEW YORK (MainStreet) — Making new financial resolutions and promises to pay off debt, spend less and save more money is common among many consumers as they kick off the new year.

The National Foundation for Credit Counseling (NFCC) said its December poll revealed that more than half of the respondents or 56% predicted they would be in a better place financially at this time next year. This response rate tripled the next highest category where 18% of respondents indicated their situation would remain about the same as it is this year.

"Financial optimism is a healthy sign, but it's going to take more than hope and more than a New Year's Resolution to make financial success a reality," said Gail Cunningham, spokesperson for the NFCC. "People need to guard against financial amnesia, the affliction of too quickly forgetting the financial mistakes and pain of the past."

Consumers should focus on establishing or maintaining a realistic and viable financial plan, she said.

"Although the future can't be predicted, consumers can protect themselves from financial unknowns by making smart money decisions today," Cunningham said.

Financial control should start with financial awareness. While New Year's resolutions typically involve getting out of debt; however, many consumers skip the basic step of creating a spending plan.

"It is rarely on anyone's list, as many people don't want to face the financial facts," she said. "Continuing to ignore current spending patterns can prevent a person from identifying and addressing the very reason that debt reduction is not achieved."

NFCC encourages consumers to take the first step toward debt reduction by building a 2014 financial plan, including the following often forgotten or ignored areas. The result will be a comprehensive and realistic budget, moving the goal of debt reduction closer to becoming a reality.

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