Resolution or not, the new year always comes with planning for the year ahead and a more concerted effort to be more organised across your day-to-day life.

Setting up good money habits now means you’re giving yourself the best chance to turn yourself into a money hero by the end of 2015 – and that will be worth celebrating come December 31.

1. Crack your credit card debt 

The average Australian has a credit card debt of $4,200 and it is absolutely possible for you to pay it off completely. It just means two things, you’ll need to transfer your balance to a new card which takes some effort but will save you $713 in this year’s interest – instantly.

The next thing you have to do is stop using the card altogether. To rid the debt you’ll need to divert $450 from your spending money each month. It sounds drastic but it means you’ll be debt free by the end of the year.

If your income simply won’t allow for this level of repayment you could give yourself a few extra months – according to Mozo.com.au, there are 340 Balance Transfer offers of 12 months or more.

2. Build up a savings buffer

According to RBA figures, we’re saving 10% of our pay check, which means, based on the average Aussie salary, we should have around $7,500 in our savings accounts. If that figure doesn’t look familiar to you, now is the time to set up a solid savings habit for the rest of the year.

If you were to save $400 a month in a savings account earning today’s best rate of interest, you’d have $4,891 tucked away this time next year.

The key word here is buffer, which is important now that you’ll no longer be using your credit card. So rather than blow it on a mid year shopping spree, it should be saved for those extra bills, your car service or in case of emergency.

Top 3 Savings Account interest rates:

1. ME Bank Online Savings Account – 4.10%. Bonus rate for the first 4 months if you link to an ME Bank EveryDay Transaction Account within the first 14 days.
2. UBank USaver with Ultra Transaction Account – 4.02%. Bonus interest only applies on funds held in linked USaver account if $200 deposited into either account in the month from an external source.
3. Bankwest Hero Saver – 4.00%. Minimum deposit of $200 and no withdrawals in the month.

3. Treat your mortgage like a piggy bank

Paying your mortgage may already seem like a big financial burden but throwing some extra dollars towards it each month could have a big impact over the long term and prepare you for any interest rate rises in the short term.

If you were to pay an extra $100 a month, you could get ahead by $1,200 this year. This may seem like peanuts compared to your credit card repayments but over the life of the loan that’s a saving of $27,688 and you’d be mortgage free 2 and a half years sooner. And who wouldn’t want that?

Notes:
1. Interest amount based on making minimum repayments for 12 months on the average credit card interest rate of 17.49%.
2. RBA figures refers to the Household Savings Ratio, released 7 Jan 2015. Average Australian salary of $75,556 calculated from the ABS’ Average Weekly Earnings Report, May 2014.
3. Figures are based on increasing monthly repayments to $1,892 on a $300,000 loan over 25 years (with 80% LVR, 5.22% variable interest rate). 

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