How to get your finances back on track in the new year

When it comes to money, it seems there's never enough, and with the holidays looming ahead, it's easy to accumulate more debt than you had intended.

LaKenya Taylor, author of the book "Improving Your Money Flow," says having a plan is important.

"Have a holiday financial plan and stick to it," she says. "Keep yourself in the black and not in the red. ... I know you want to be kind and get a gift, plus cook for everyone, but this year, do something a little different."

Taylor is known as the "Money Clues Lady" on the The Heartland's CW, where she dispenses financial advice five days a week at 6:30 a.m. She emphasizes the importance of self-discipline.

"With a holiday financial plan, you are setting boundaries that should not be crossed, not even by you," she says. "Once it is set, there is no turning back."

high angle view of a young woman talking on a mobile phone

The only acceptable changes to spending are ones that reduce the amount of spending, she says.

"If you need to update the plan, that's OK, but only do it if decreasing the amount is the plan; otherwise, get creative when it comes to gift-giving," she says. "Perhaps make some gifts. You can always check out Pinterest."

Tracking your spending is a must.

"It's important to know where your money is going," says Tracy M. Bonner, branch operations manager at The Bank of Missouri. "Every dollar spent and every dollar saved adds up. Develop a spending plan as well as a savings plan. The two go hand in hand."

When the holidays loom, it's easy to whip out a credit card and say, "Charge it." Balances can pile up fast, but it takes time to pay down the balances.

young woman lying in front of a laptop and holding a credit card

"Don't let this be daunting," says Ashton Balsmann, assistant vice president and mortgage loan officer at Wood & Huston Bank. "Whether it's the credit cards that may seem like they'll never go away, or the house payment that feels like it just keeps going up because of that escrow account, continued diligence will allow you to pay down debt."

She suggests using a Google search to find out about the debt-snowball effect and using the information for an increased chance at success.

For those with more than one credit card, consolidating the debt is an option.

"Consider your options for transferring your balance(s) to a credit card offering zero percent on balance transfers," says Balsmann, who cautions consumers to read the terms and conditions before consolidating credit cards. "Beware! Typically there is a fee associated with this transaction. However, if you do your math, you may come out ahead in the long run."

After the holidays, when cash is short, some people pay bills late or miss payments, which might affect the credit rating, so it's a good idea to keep an eye on check credit reports.

Woman paying bills

"Knowing your credit score and what makes up that score is a start," Bonner says.

Everyone is entitled to three free credit reports each year, and a copy of it after being denied credit.

"The three major credit bureaus (Experian, TransUnion and Equifax) will provide you one free credit report each year. Just visit www.annualcreditreport.com," Balsmann says.

Spacing those requests out helps consumers monitor their score throughout the year.

"If you only pull one of the bureaus this time around, you still have two more pulls left for the remainder of the year in case you like to keep tabs every so often," she says.

The number on your credit report could be wrong, and credit reporting agencies must investigate possible errors and correct them.

"One in five people have mistakes on their credit report that they are unaware of," Bonner says.

Those who suspect their credit scores are incorrect may file a dispute.

"The credit bureaus each have an online process for disputing incorrect information," Balsmann says. "They are obligated to reply to your dispute or resolve the issue within 30 days."

If a low score on a credit report is correct, don't despair -- it can always be improved.

"If you have accounts that are reporting unsatisfactorily on your report, clean them up," Balsmann says. "By that I mean pay off those collection accounts, get rid of those judgments, bring those past due payments up to date, and reduce those maxed-out credit cards."

One of the best ways to avoid credit card debt is by paying in cash, and a savings plan can help make that possible. It's never too early to start one and start saving for next year.

"State your goal for the new year and write it down," Taylor says. "Make the goal visible by posting a picture of it on your refrigerator or computer screen."