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How to Get 'Fiscally Fit' in 2014

NEW YORK (TheStreet) -- With the holidays over and the new year off and running, it's a great time to declare war on personal debt and get your fiscal house in order by the time 2015 rolls around.

That's right: On top of shedding some of that holiday weight, it's high time to shed your personal financial burden as well.

According to a December release from Allianz Life Insurance, 30% of Americans say that achieving "financial stability" is their biggest priority for 2014 behind getting healthier (the main goal for 43% of U.S. adults).

For that 30%, or even for the 43% of physically fit-minded Americans when they get around to it, Christopher McGill, president and CEO of Philadelphia's East River Bank, has some advice for consumers fighting personal debt this year:

Look in the mirror. McGill says the first step to take to reduce personal debt is a tough one -- it's to "pay yourself first." Few consumers want to do that if it means bypassing or short-changing other household bills. But that really isn't a big issue, he says. "Every month you sit down to write checks and pay bills online," he says. "The first person you should be putting on your payroll? Yourself!" He says to aim for 6% of your income in personals savings each month, an amount that shouldn't eat into the household budget.

A bonus? Use the "thirds rule." If you earned a holiday bonus in 2013, good for you. But instead of spending the cash on a new big-screen television or trip to the Bahamas, abide by this rule: "Take one third and invest it or put it directly into your savings, take another third and put it towards a past debt and take the final third and treat yourself," McGill advises.

Pay down credit card debt. With personal credit card debt averaging about $7,000 in the U.S. today, paying down your plastic is a big priority. Pay more than the minimum amount due on your card bill each month, until the debt is paid down completely. That alone will bolster your bank account and put you well on the road to being debt free.

Make and stick to a budget. McGill says a good household budget breaks down like so:

  • 30% directed to housing and debt.
  • 26% to household and living expenses (including food, clothing and gas and vehicle maintenance.
  • 25% to taxes.
  • 15% to savings.
  • 4% to life, health auto and homeowner's insurance.

McGill also advises using cash for your payments (or using a debit card), and taking time to build an emergency fund of at least six months' worth of income. That will allow you to better absorb a job loss or health-related scenario that keeps you out of work.

Take the time on the calendar to make amends and improve your financial situation. By 2015, you'll be glad you did.

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