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Baby Steps for Improved Personal Finances

Set up emergency fund account: If you don't already have a designated emergency fund separate from other accounts, now is the time to set one up. Even if you don't have any extra money right now, that's OK because the key thing is that you don't want funds mixed up. A good solution for many is an online savings account. It's connected to a regular bank account, and you can start it off with as little as $1. Also, it's not easy to withdraw on a daily basis.

Automate everything: Yes, everything. Bills, deposits -- even the new emergency fund. By automating all the things you can, you'll have fewer issues to remember and worry about each month.

Know your debts: It's time to add up all the balances to see how much you owe. Then you'll be in a position to put a payoff plan in place. Decide the order you want to pay off debts -- either the smallest amount first or highest interest first through the snowball method. Once you know, call each credit card company and politely ask if you can have the interest rate lowered. While it won't work every time, a simple request works a lot of the time, especially if you have good credit.

Start tracking your spending: It's difficult to make changes unless you know where you're spending your money. Unfortunately, "I think I'm spending it at ..." isn't going to be good enough. Carry around a small notebook or get in the habit of recording each purchase in a personal organizer or cell phone. Doing this for a few weeks should give you a good idea of how you spend your money, which you can then use to make a formal plan to improve your finances.

Once you have finished the above steps, don't stop. Keep the baby steps rolling. It takes consistency and determination to keep your finances under control. Once you finish one, move on to the next on your list and you'll find that you're well on your way to taking control of your finances come February.

Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and getting their finances in order. He owns and runs SavingAdvice.com.
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