FORT RUCKER, Ala. -- As the new year begins, Army Community Service officials want to help people become more financially stable by offering a series of steps to help them get on the right track.

Mike Kozlowski, ACS Financial Readiness specialist, has 12 steps to help those who are looking to put themselves back on the right financial track.

* Step 1: Create a budget"It's important to understand where your money is coming from and where it's going," said Kozlowski. "January is a good month to do that because it's the time when people are working on resolutions and the Christmas season is over, so the dust has kind of settled after a month of larger spending."

* Step 2: Set up a spending plan.
"Get your receipts together," he said. "People don't write checks very much anymore. Everyone is relying on the internet to keep track of their money."

"I advise people to write everything down, even if they don't write a check," Kozlowski continued. "This allows people to keep better track of their money. It helps in figuring out what expenses are fixed and what can be cut. It will help determine what your limits are."

* Step 3: Enforce spending discipline.
"Spending plans create spending discipline if you abide by them properly," Kozlowski said. "Become a micromanager with your money. Don't let it control you. You need to be in control of your money and spending."

* Step 4: Don't depend on the internet for keeping track of money.
"If the internet were to fail for any reason and you have to pay for something that day, you're in a fix," he said.

* Step 5: Get tax records together.
"If you have an accountant, it's important to communicate with the accountant and find out what he or she needs from you," Kozlowski said.

* Step 6: Try to break even on income taxes.
"A lot of people depend on a sizable tax refund to pay off debts," he said. "However, that means you've sent a sizable amount to the Internal Revenue Service for them to manage and you expect to get a good bit of that. You'll actually only get a fraction of that back.

"Your goal should not be to get a refund, but to get as close to zero as possible and use your money throughout the year and apply it toward paying your debts," Kozlowski explained. "Claim the proper number of exemptions and withholdings."

* Step 7: Save money.
"Get into a habit of saving money," he added. "You should be able to live on 80 percent of your income.

"Get into a habit of putting 10 percent of your gross in a money market account. Most people who put it into a savings account habitually delve into it to replenish their checking account," Kozlowski said. "If you put it into a money market account, it pays interest and it has restrictions around the account to keep you from spending as much."

* Step 8: Look at debts.
"Anything that has an interest rate attached to it, like a loan, should go on the list," he said. "Call your creditors if you're having problems making the payments. Creditors want to hear from you before your accounts go into collections. The company can probably negotiate a lower rate during those tough times. Snowballing is a good way to pay off debts quicker. You start by paying the smallest amount you owe completely and then take the money you used every month for that debt and move it to the next largest amount you owe."

* Step 9: Set up legal documents.
"Know where your money is going if you were to leave this Earth unexpectedly," he added. "Make sure you have a will. There's no excuse, especially for Soldiers, not to have a will. Also, set up a general power of attorney and have that on file."

* Step 10: Check insurance coverage.
"Most Soldiers probably have adequate coverage," Kozlowski said. "It's a good idea to have anywhere from eight to 10 times your gross salary for life insurance coverage. Auto, homeowners and renters insurance are good things to have. Even for Soldiers living on government property or in the barracks, renters insurance is a good thing to have - the government won't pay for things lost in a fire."

* Step 11: Communicate with spouse or significant other about financial goals.
"Talk about what you want to achieve by the end of the year," he said. "Make sure you hold each other accountable for the things you want to achieve. Make sure you have a clear line of communication and establish clear boundaries with your spouse."

* Step 12: Pay cash whenever possible.
"It makes a lot more sense to pay with cash than to set yourself up for payments with interest rates," Kozlowski said. "Paying for small things with cash is a lot better than paying with a credit card."

For more Financial Readiness information, call 255-2594 or 255-2341.

Page last updated Thu January 6th, 2011 at 15:15