Throughout the month of December, The Simple Dollar is posting a daily series focusing on specific activities you can do right now to set the stage for a great 2011. Out with the old, in with the new.

31. Celebrate the year that has passed – and the better one to come.

It’s New Year’s Eve, which for many of us means a party or social gathering of some kind. Our social event will involve a few friends, a great meal, a pile of board games, and a toast to ring in 2011.

As you celebrate the arrival of a new year, I suggest that you do two simple things. They’ll only take a minute, but they’ll add a bit of a wonderful highlight to your celebration of the arrival of the new year.

First, think of the five best things that happened in 2010. What were the best things that happened in your life this year? What new relationships did you build? What ones did you reaffirm? What goals did you achieve? What changes occurred in your life that put you in a better place?

Such thoughts cast the year that has passed in a positive light. More importantly, though, they set the stage for a great year to come.

What else? Start the new year with one simple act that puts the year on a positive track right off the bat. Some possibilities:

Grab your spouse in your arms and give him or her a deeply romantic kiss.

Ceremoniously throw those cigarettes or hard drugs or alcohol into the trash can, then toss the trash bag out of your home.

Go jog a mile right at the crack of midnight.

Go to bed before the crack of dawn, then wake up as early as you can and spend New Years Day productively.

Call the people you want to re-establish a close relationship with and wish them a happy New Year right off the bat.

2011 is another journey, one filled with powerful possibilities. Take that first step in that journey tonight as the new year passes away and the new one arises.

In an effort to talk about the power of goal-setting along with some methods of setting and achieving goals, I’m going to discuss my three resolutions for 2011 this week.

Over time, any voracious reader winds up with a list of books that they intend to read someday, but they find themselves reading more urgent things in the interim. They could read this challenging novel, but there’s this great page turner to read instead. This novel is pretty good, but it’s so long that I’ve lost my place in it. Boy, this nonfiction one is really challenging reading.

As a result, I’ve gradually built up a long list of “to-be-read” and “come-back-to” books that I keep telling myself I’ll read someday.

2011 is that “someday.”

I’ve been assembling an actual list of these books over the last few weeks. I’ve mentioned many times on here that I keep a running Word document of books I’d like to read (or, in a few cases, re-read) at some point. I essentially took that list and eliminated some of the chaff, boiling it down to 100 titles that really sum up some of the things I’ve strongly considered reading over the past couple of years, but put aside for whatever reason.

Here’s that list.

The Best American Short Stories 2010, edited by Richard Russo
The Best American Short Stories 2009, edited by Alice Sebold
PEN/O. Henry Prize Stories 2010
PEN/O. Henry Prize Stories 2009
Freedom, by Jonathan Franzen
Makers, by Cory Doctorow
The Savage Detectives, by Roberto Bolano
Quicksilver, by Neal Stephenson
The Confusion, by Neal Stephenson
The System of the World, by Neal Stephenson
Cloud Atlas, by David Mitchell
Infinite Jest, by David Foster Wallace
Wolf Hall, by Hilary Mantel
Tinkers, by Paul Harding
The Thousand Autumns of Jacob de Zoet, by David Mitchell
The Windup Girl, by Paolo Bacigalupi
Then We Came to the End, by Joshua Ferris
Austerlitz, by W. G. Sebald
The Yiddish Policeman’s Union, by Michael Chabon
Wonder Boys, by Michael Chabon
Little Brother, by Cory Doctorow
The Fortress of Solitude, by Jonathan Lethem
Cutting for Stone, by Abraham Verghese
Gravity’s Rainbow, by Thomas Pynchon
House of Leaves, by Mark Danielewski
Kafka on the Shore, by Haruki Murakami
American Psycho, by Bret Easton Ellis
Less than Zero, by Bret Easton Ellis
American Gods, by Neil Gaiman
Extremely Loud and Incredibly Close, by Jonathan Safran Foer
The White Tiger, by Aravind Adiga
2666, by Roberto Bolano
The Hour I First Believed, by Wally Lamb
The Northern Clemency, by Philip Hensher
I Know This Much Is True, by Wally Lamb
Selected Stories, by O. Henry
The Idiot, by Fyodor Dostoevsky
Rainbow’s End, by Vernor Vinge
The Brief Wondrous Life of Oscar Wao, by Junot Diaz
Fragile Things, by Neil Gaiman
Under the Dome, by Stephen King
Never Let Me Go, by Kazuo Ishiguro
Bel Canto, by Ann Patchett
Shogun, by James Clavell
Ilium, by Dan Simmons
Olympos, by Dan Simmons
Accelerando, by Charles Stross
The City and the City, by China Mieville
The Count of Monte Cristo (unabridged), by Alexandre Dumas
Sons and Lovers, by D. H. Lawrence
Zeitoun, by Dave Eggers
The Age of Wonder, by Richard Holmes
Reality Hunger, by David Shields
The Best American Nonrequired Reading 2010, edited by David Sedaris
The Best American Nonrequired Reading 2009, edited by Dave Eggers
Consider the Lobster, by David Foster Wallace
The Best American Sports Writing 2010, edited by Peter Gammons
The Best American Sports Writing 2009, edited by Leigh Montville
The Best American Essays 2010, edited by Christopher Hitchens
The Best American Essays 2009, edited by Mary Oliver
The Best American Science and Nature Writing 2010, edited by Freeman Dyson
The Best American Science and Nature Writing 2009, edited by Elizabeth Kolbert
The Language of God, by Francis Collins
Belief, edited by Francis Collins
The Demon-Haunted World, by Carl Sagan
God Is Not Great, by Christopher Hitchens
The First Tycoon, by T. J. Stiles
Lords of Finance, by Liaquat Ahamed
Just Kids, by Patti Smith
The Beautiful Struggle, by Ta-Nehisi Coates
Before the Storm: Barry Goldwater and the Unmaking of the American Consensus, by Rick Perlsetin
Nixonland, by Rick Perlstein
The Book of Basketball, by Bill Simmons
The Best American Magazine Writing 2010
The Best American Magazine Writing 2009
A Soprano on Her Head, by Eloise Ristad
The Selfish Gene, by Richard Dawkins
The Blind Watchmaker, by Richard Dawkins
The God Delusion, by Richard Dawkins
Play Their Hearts Out, by George Dohrmann
Look Me in the Eye, by John Elder Robison
Fordlandia, by Greg Grandin
The Progress Paradox, by Gregg Easterbrook
Hungry Monkey, by Matthew Amster-Burton
Nudge, by Cass Sunstein and Richard Thaler
What I Talk About When I Talk About Running, by Haruki Murakami
The Cost of Discipleship, by Dietrich Bonhoeffer
American Sphinx, by Joseph J. Ellis
What the Dog Saw, by Malcolm Gladwell
NurtureShock, by Po Bronson and Ashley Merryman
Here Comes Everybody, by Clay Shirky
The Religious Case Against Belief, by James Carse
Kitchen Confidential, by Anthony Bourdain
Manufacturing Consent, by Noam Chomsky and Edward Herman
Team of Rivals, by Doris Kearns Goodwin
The Forever War, by Dexter Filkins
Hurry Down Sunshine, by Michael Greenberg
Out of Sheer Rage: Wrestling with D.H. Lawrence, by Geoff Dyer
Bringing up Geeks, by MaryBeth Hicks
The Trouble with Physics, by Lee Smolin

It’s a wide mix. It’s roughly half fiction and half nonfiction. There’s a fairly strong religious theme running through there, with some strong apologetics and some strong atheist writing, too. I could go on and on with the observations about the list.

In the end, though, my goal is to read every title on that list in 2011.

Where will you find time? I currently read just shy of two books a week for personal enjoyment – and this is my “personal enjoyment” list for 2011. Some of the titles are a bit more challenging than my usual stuff, but I plan on coming up with that time by making sure I’m always carrying a book with me when I leave the house so that I don’t find myself idly reading a newspaper at the car repair shop and the like.

Throughout the month of December, The Simple Dollar is posting a daily series focusing on specific activities you can do right now to set the stage for a great 2011. Out with the old, in with the new.

30. Start an automatic savings plan to bank that money.

Yesterday, we discussed how to calculate exactly how much you’re saving per paycheck thanks to the positive changes you’ve made in your life. Today, we’ll talk about how to turn that number into something real in your life.

You have that number in hand. You know that dollar amount you’ve calculated represents the real savings going forward in your life. Now it’s time to do something with it.

First, were you able to make ends meet in your life before you made any changes? Ideally, the answer to that question was yes, but I know that in truth, for many people, the answer was no. I’ve received notes from many people over the years that were slowly drowning in debt even though they were largely making very positive personal finance choices.

If you were not making ends meet before, just sit tight and see if you can make ends meet now that you’ve made these positive changes. Stick to the good choices you were already making and find out if you have enough now to handle the ins and outs of your life and the small emergencies that life brings.

On the other hand, if you were making ends meet, then these changes just added some additional buffer to your life. Put that buffer to use by setting up an automatic savings plan to build an emergency fund and to save for future large purchases, such as a car or a house.

It’s actually pretty easy to do this. Just set up a savings account at a different bank than the one you currently have (so it’s a bit less convenient to just pull the money out for frivolous use – a passive barrier). Once it’s set up, put an automatic transfer in place that transfers the amount you calculated into the new savings account at the frequency you calculated. Just contact your new bank and they’ll happily help you out with this.

What you’re doing is directly taking the money you’re saving due to the positive changes in your life and putting it elsewhere so that it can accumulate.

Why?

The first reason to let it accumulate is for an emergency fund. An emergency fund is a backup pool of cash that makes it possible for you to deal with things like a car repair or a “between jobs” period without dipping into debt. I usually recommend that a person have two months’ worth of living expenses in their savings for each dependent that they have on their taxes. Yes, that means for my family, I need ten months’ of living expenses (and I have that).

If you have your emergency fund in place, save for big purchases, like a replacement automobile. The ability to pay cash for an automobile, for example, has a transformative effect on your finances as a whole. You no longer have car payments. You no longer are paying interest on that loan – instead, the interest is building up in your favor in your savings account. The same is true for any major purchase that you make from your savings account instead of from loans – appliances, home improvements, even home purchases.

This effect won’t be immediate. Don’t lose patience with it. I usually encourage people to start with it and then simply forget about it for a year or two. Let it build quietly in that account, then when you actually need it for something significant in your life, tap the money. Make a huge down payment on your car. Cover that whole car repair without going into debt. Survive through a month or four without a job. When these moments come, you will be extremely glad to have these savings because those savings will truly change your life.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Using recorded financial data
2. Moving away from debt consolidation
3. Student loan forbearance
4. Stopping all retirement contributions
5. Chasing passions without self-sabotage
6. Dealing with college burnout
7. Emergency funds or debt repayment?
8. Debts and responsibilities
9. Homemade windshield washing solution
10. Earning money at home

Several of my friends have the week between Christmas and New Years off of work. This is making me sorely tempted to spend an unhealthy amount of the week goofing off with them.

After some discussion with my wife, we decided to limit hijinks to a New Year’s celebration and one single day of shenanigans, with the rest of the week being spent on getting a large number of year-end projects taken care of.

It’s a reasonable compromise.

Q1: Using recorded financial data
Since 2009, I have been tracking all of my expenses and earned income in an excel spreadsheet. The practice of tracking my cash flow has lead me to some positive behaviors: I’ve taken a conscious effort of curbing my eating-out habits and I’ve allowed for splurges on things that really make me happy (e.g. locally grown fresh produce) without feeling guilty. But even after a year, I still feel like I’m living paycheck-to-paycheck, and I tend to be left with only a few dollars each month when I balance out my spreadsheet (I will note that I consider savings as one of my regular monthly bills, i.e. any leftover cash at the end of the month does not include contributions to my retirement, emergency fund, or targeted savings accounts).

Because at the end of this month I will have accumulated exactly one year of personal financial data, I feel like I should do something with this. Are there any trends I should look for, ratios or percentages of income I should examine in certain budget categories? How do I use this data to reevaluate my situation?
- Stephanie

The biggest thing that such accumulated data can do for you is give you a real sense of your true budget – where you actually spend your money.

I would suggest totaling all of your expenses in each category for the full year, then calculating the percentage each represents of your total income. Then, go through each category and ask yourself if that spending is appropriate or whether it should (or can be) cut.

Looking at the amount you’ve spent in a category will often encourage you to re-evaluate how you spend within that category and push you to find more efficient ways to use your money.

Q2: Moving away from debt consolidation
I signed up for [debt consultation through a particular company] when I was a college student. I have been using them for about three and a half years now. At the time it seemed like my only option, but now that I am older and actually have a decent credit score I want to drop [that company] and just see about doing a balance transfer to one credit card and pay it off that way. Do you know if this is possible to do? Or at least maybe have any good directions to steer me into? I am paying $50 a month to [that company] that I could be applying elsewhere. Thank you in advance for your time.
- Kristen

It depends on the agreement you entered into with the company in question. Your first step is to get out your agreement with that company and find out what you need to do to terminate the agreement. It should be in the initial documentation provided to you when you signed up.

Of course, when you do figure out how to terminate the arrangement, they won’t make it easy on you. The monthly bill you pay them for their service is their gravy train and they don’t want to let go of it. They will most likely make it very difficult (as difficult as they can) for you to end the agreement.

If you find it unreasonably difficult to end the arrangement even after following the procedures in the agreement, contact a lawyer.

Q3: Student loan forbearance
Over the past few months, we have had a bunch of unexpected expenses that put a big dent in our emergency fund. In addition to these expenses, many of our bills increased as well. Our electric bill was through the roof because of the consistent 100+ degree days we had all summer, our water bill rate increased, plus our sewer bills have more than doubled because the city has decided to make repairs that should have been made decades ago. So, looking at our situation today, the emergency fund and little bit of savings we had is depleted, and I am having trouble getting the bills paid. I am looking for a temporary solution to ease the financial burden so that we can get upright again. I am considering applying for forbearance on student loans so that we can use the money that would go towards them and put it towards our other expenses. The student loans total about $10,000 and have a 3.58% interest rate, which means that over the course of the allowed year, it would accrue about $360 in interest, but over the short term, it would free up about $240 each month that I could use towards utilities, etc. Is there any reason why I shouldn’t go ahead and apply?
- Alecia

Your situation, from the information you provided here, is the reason that forbearance exists. You’re having difficulty paying the bills, while at the same time the lender doesn’t want to waste resources chasing people who can’t pay their bills right now. Forbearance helps you both for a while.

Look at it this way: if you don’t do the forbearance, you’ll likely have to go into debt of some other form to continue paying your bills. Those other forms of debt are going to have a higher interest rate than those student loans, thus your overall debt load will increase, as will your risk of defaulting and damaging your credit score.

Use the forbearance, then use your energy as best you can to ensure you don’t have to use the forbearance again.

Q4: Stopping all retirement contributions
I have a mountain of debt right now. I’ve read the TMM by Dave Ramsey and according to him he said to stop all contributions to your retirement account. So I did do that. I was only having $25 taken out of my paycheck towards retirement. It was being placed in a 401b account. Not a lot but all I can afford at the moment.

So do you think I should go back to having the retirement stopped or continue with the $25 deducted?
- Justin

People could argue all day about this one, but I don’t really think there’s a wrong answer here. In either case, you’re spending less than you earn and improving your financial state.

Without seeing your full picture, it’s hard to say which route really is the best. If you find that you’re getting value from Dave Ramsey’s plan, stick with what he advises. If you feel more comfortable contributing a bit to retirement, do that.

You’re not really losing no matter what you choose here, so don’t stress out over the choice.

Q5: Chasing passions without self-sabotage
I’m a second year veterinary student, and although I’ve always firmly wanted to be a veterinarian, I tend to settle on different specialties that interest me every six months or so. For a while I was certain that I wanted to be an equine general practitioner. Then I wanted to practice equine sports medicine. Most recently, I was convinced that I’d be an equine surgeon. Now, I don’t know – small/mixed animal practice, emergency medicine, and every variety of equine practice all seem like they could be right for me.

Do you have any advice on finding my passion in medicine without sabotaging myself later?
- Martha

Go to a person practicing each of these fields. Explain to them what you’re going through and ask if they have advice for you. Seek out any opportunities you can to shadow these people and get as close as you can to what they actually do.

It sounds to me like you simply love animals, particularly horses. Just keep in mind that all of the choices you have are great for these animals. No matter what you choose, it’s the animals that benefit.

I don’t know how important specialization is in the veterinary field, but I would trust the people who are actually practicing.

Q6: Dealing with college burnout
I am a senior in college at UNL (Nebraska) I’m a secondary education major and my endorsments will be in Spanish and English as a Second Language (ESL). I am hoping to get a job after graduation in my field in this town or at a nearby high school.

Do you think if I was frugal enough, I would be okay? or am I being just too wishful?
- Kayla

You’re burning the candle at both ends. There are only so many hours in the day and you’re essentially choosing between time spent studying to get the best grades or time spent working to reduce your bills.

If I were you, I’d choose the grades. The financial concerns raised by one semester of not working a part time job are much less than the problems that could be caused by a semester of extremely poor classroom performance. If you’re reached a point where you feel this is an either/or choice – and it sounds like you have – choose the classroom.

The only alarm bell I have here is a car payment that’s more than $200 a month. That indicates that you’re not driving a low-end car, which means that you’re making at least some financial choices that aren’t in line with getting a low-cost education. Take a look at your lifestyle choices and see if there aren’t any other areas you can cut back on while you finish up your degree.

Q7: Emergency funds or debt repayment?
I read a lot of people asking your opinion about several things, and one pattern I found is the fact most of them are full in debts and at the same time having savings, usually summing the same amount they owe.

My question is: do you believe it’s wise to manage the damages of these unexpected expenses and at the same time re-build the emergency funds?
- Igor

The reason people encourage an emergency fund is because the bank is an unreliable supplier of credit. At the whim of the bank, they can simply close your line of credit, leaving you in a very painful situation if your car breaks down or you lose your job. Banks do this quite regularly, reducing lines of credit or canceling credit cards.

On the other hand, if you have cash, it will get you through the emergency without much worry at all. Unlike a credit card or a line of credit, a bank can’t close off your access to the cash you have.

That’s why it’s a good idea to always have some cash on hand. No matter what happens to your credit, your cash supply will help you handle the emergencies in your life.

Q8: Debts and responsibilities
Nearly 11 years ago, my ex-husband and I filed bankruptcy as part of our divorce. Through the bankruptcy, my ex-husband reaffirmed on our house and I did not (he kept the house – I kept the car, children, and my self-esteem, which is all I wanted). I was told the mortgage would become his and I would have no responsibility for the debt.

Also, I have talked with my ex-husband and he has not kept any bankruptcy papers. I was hoping he had a copy of the reaffirmation paper for the mortgage (like I have for the car which only has my signature). He also stated that a few years ago, he talked to the mortgage company and they refused to remove my name from his house.
- Christina

Typically, the only way to remove your name from a mortgage is through refinancing. If your husband did not do this, then your name is still on the mortgage.

Did your mortgage decree state that he had to remove your name from the mortgage through refinancing in a certain timeframe?

Another concern is whether or not you’re outside any statute of limitations to do anything about this. I would consult a divorce attorney with regards to this.

Q9: Homemade windshield washing solution
Do you have a windshield washer solution recipe that I can put in the car reservoir? Something less expensive than $2.00 I pay at the car parts store for 1 gallon.
- Mickey

I use a homemade solution most of the time.

I just take a gallon milk jug, fill it about a third of the way with water, add three drops of liquid dish soap, two or three squirts of whatever window cleaner I have on hand, and about half a cup of vinegar, then add water to fill it to the top.

In the winter, if you live in a cold climate, increase the proportion of vinegar in the mix, even up to as high as 1:1.

Q10: Earning money at home
I am 67 and my husband is 72. A couple months ago I had to ‘spend down’ our meager savings to split in half in order to have him approved by Medicaid because he needs care in Nursing Home. I am not physically able to care for him in his condition.

We both have SS direct deposited to bank. I feel strapped on a monthly basis. I don’t have your talent for writing (I don’t think); my question… is there really any ‘work at home’ realiable, trustworthy ways to earn some extra money? And if so, what are they and how do I get in touch?
- Lani

There are no “work at home” opportunities where you can just sit down and earn even minimum wage at a computer without some very significant training. There are opportunities to earn a small amount through services like Mechanical Turk, but it takes a lot of time to get them to add up to much of anything.

Generally, when you’re trying to earn a living from home, you’ve either got a marketable skill set or you’re willing to slog through a lot of work that earns nearly nothing in order to build up something (like a popular blog).

For you, the best move you could probably make right now is to just make sure you’re utilizing all of the resources your community has available to financially disadvantaged folks, such as food pantries and the like.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

Throughout the month of December, The Simple Dollar is posting a daily series focusing on specific activities you can do right now to set the stage for a great 2011. Out with the old, in with the new.

29. Calculate the monthly money you’ve saved due to these changes.

If you’ve been reading the Out with the Old series, you’ve probably thought that several of them were good ideas and many were not good fits in your life (and that set was probably different for different people). Among those good ideas, you may have taken some sort of action on a few of them or been inspired to some different action by one of two of them.

Likely, at least a few of these actions have either saved you money or, more importantly, set up some sort of structure by which you’re spending less money in the future.

Perhaps you improved the fuel efficiency of your car. Maybe you made your home more energy efficient. Perhaps you developed a plan for a resolution that will reduce some aspect of your spending in the coming year. Maybe you banked some meals so that you eat out one less time a week. Did you get a grip on your debts and reduce your monthly debt bills? What about your telephone and cable bills?

Each of these things (and many other things during this series) results in a regular reduction in your spending that will continue into the foreseeable future. Your monthly energy bill is $20 lower than before. Your monthly phone bill was cut in half. Your monthly credit card bills went down $25. Your costs for eating out went down $25 a week, counterbalanced by only a $5 increase in your weekly grocery spending.

Spend some time to figure out the exact (or as close to exact as you can) savings of your choice. This might require you to see a bill or two or might require several weeks to get a bead on the real change in your life, but spend some time now to get the best estimate that you can on the savings that the changes you’ve made will bring about in your life.

Here are some steps to help with that.

Go through each monthly bill. What have you done to reduce that bill? What can you do to reduce that bill? Don’t look for the radical changes that you won’t be able to sustain. Look for simple steps – particularly one-time steps that permanently lower your bills. Many of the items discussed in this series fall under that umbrella, like making your home more energy efficient or improving the fuel efficiency of your car. Write down how much you’re saving on each of your regular monthly bills due to steps you’ve taken recently.

Go through your regular spending routines. Where do you spend money? If you’ve altered your routine so that you’re not eating out as often, make note of that. If you’re shopping at a different grocery store now, take note of that. If you’re not buying gas quite as often, take note of that, too. If you’re using the library instead of the bookstore or the video rental place, there’s another source of savings.

How much are you saving a week (or a month – whatever is easier) with these little changes? Come up with an estimate for each change you’ve actually made in your life.

What will your resolutions change? Many people make spending resolutions for the new year and if you’ve been following the resolution advice in this series, you’re likely making better resolution plans for this year and have a much higher likelihood of success. Use this plan to make an estimate of how much money you’ll save per week or per month (whichever is more convenient).

Convert everything to match your pay period. Are you paid weekly? Are you paid monthly? Twice a month? Biweekly? Convert each of these to match your pay schedule.

If you’re on a weekly or biweekly schedule, convert all of the monthly ones to the amount saved in a single month, then divide that amount by four to get close to your weekly savings. If you’re paid biweekly and have calculated weekly savings for everything, double those amounts.

If you’re paid on a monthly or twice monthly schedule, convert all of the weekly ones to the amount saved in a single week, then multiply that amount by four to get close to your monthly savings. If you’re paid twice monthly, divide all of the monthly savings by half.

Once you’ve converted all of the savings, add them together. That’s how much of your take-home paycheck you’ll be saving because of these positive changes in your life. That number alone can be inspirational – and I sincerely hope it’s a large number.

Tomorrow, we’ll talk about a real use for that number, one that can change your life.

Over the past week, I’ve done a lot of reading and thinking about the art of the successful New Year’s resolution. I thought I’d share some of the best with you this week.

What to Do When Your Fire Runs Out I wrote this article for OPEN Forum as a look at how to handle any life situation where your fire to move forward is gone. Although I’m specifically talking about small business ownership here, the principles apply to any aspect of life. (@ open forum)

One Problem, One Correction: How to Set New Year’s Resolutions You’ll Actually Keep This is a great guide for defining a single actionable resolution. The idea of identifying one problem, then identifying a single solution for that problem, is a strong one. (@ get rich slowly)

Why you’ll probably fail your New Year’s resolution This article was posted on September 6. It makes a brilliant key point about resolutions. (@ i will teach you to be rich)

The Ingredients Necessary For A Healthy Financial Plan Many people resolve to get their finances in order. This is a great guide for making that type of resolution work. (@ christian pf)

People Fail at Financial New Year’s Resolutions The key thing to understand is why people fail at resolutions. (@ consumerism commentary)

Throughout the month of December, The Simple Dollar is posting a daily series focusing on specific activities you can do right now to set the stage for a great 2011. Out with the old, in with the new.

28. Create a plan to achieve that resolution.

Yesterday, we discussed the usefulness of coming up with a single specific resolution for the coming year. A good resolution is one that offers a way to measure your progress, is very clear on whether or not success is achieved, isn’t based on unrealistic expectations, and is in line with something you deeply want in your life.

You have this resolution in place, but how do you really get there? The key to actually achieving a resolution is to have an actionable plan right from the get-go. Don’t just stumble into an audacious goal – know before day one what exactly you’ll need to do on day one to get there and what you’ll need to do on subsequent days as well.

Over the last few years, I’ve had great success in achieving my New Year’s resolutions thanks to simply applying four principles before I ever even start.

First, identify the precise day-by-day steps you need to take to achieve your resolution. In order to achieve the two resolutions I’ve discussed so far, I need to have an exercise session five times a week that lasts between an hour and an hour and a half. I also need to continue (and possibly expand a bit) my piano practice schedule. Within each of these sessions, I already have a plan in place that covers at least the first month of work. I know exactly what I’m going to do to achieve those goals, at least at the start.

What about after that? In each case, I have a teacher or trainer to turn to for feedback, ideas, suggestions, and future directions. This will make it very easy to make specific plans for future sessions after the first month.

For you, I suggest coming up with a specific daily plan for your first month towards the goal, as well as some mechanism for reviewing your progress and coming up with plans after that. How you choose to do that is up to you.

Second, keep a diary of your progress. For years, I’ve kept an electronic diary in which I journal such things. This year, I’ve decided to actually move back to a pocket paper diary, a small Moleskine daily diary that my wife got me as a Christmas gift.

In either case, one consistent element of these entries is to simply note how I moved forward on the important things in my life that I’m really focused on. Did I exercise? Did I play the piano? Did I read? Did I spend valuable time with my wife, my children, or my friends? Did I learn something new? These daily entries help me to keep stock of what I’m doing and whether I’m moving forward on the important things.

Later on, when I look back at such entries, I have a great grasp as to how my life was going then. What was important to me? What progress was I making on those things? What was I thinking about? I get a great sense of how I’ve grown and changed since then and it helps me to realize how effective my goals have actually been in terms of improving my life.

Third, plan how you’re going to come up with any additional time needed for the goal. For example, for my final New Year’s resolution, I’m going to need to scavenge a bit of regular time from some other activities in my life. This involves taking a look at my life and figuring out what activities I’m willing to give up in exchange for this goal. I’ve chosen to give up online computer games for that goal, which actually adds almost the perfect amount of time to make that goal happen.

How much additional time will you need in an average week to pull off that resolution? Where will that time come from? Figure out now where you’ll get that time from so that you’re not stuck having to make hard choices later on which can easily drive you off the rails of your resolution.

Finally, write it down. Write down your resolution. Write down your plans for achieving it. Write down how your plans change over time. Write a statement about how you’re feeling at the start of it, then write another statement at each interval throughout it (like once a month). The more words you put down on paper with regards to your goal, the more concrete that goal becomes. It goes from being a vague idea in your head into something real and tangible, something that you don’t just walk away from because the ice cream is calling from the freezer or because you’d rather watch The Big Bang Theory.

Make a plan. Add the details. Write it down. Keep a journal. This is the structure you need to make this work and to really change your life.

In an effort to talk about the power of goal-setting along with some methods of setting and achieving goals, I’m going to discuss my three resolutions for 2011 this week.

Another of my 2010 resolutions was to learn to play the piano, which is something I feel is coming along very well. For 2011, I’ve been thinking about tackling some intermediate-level pieces and working with them until I can play them very well.

For the moment, I’ve settled on four pieces that I want to be able to play without error by the end of 2011. Two of them are classical and two of them are pop.

1. Scheherazade (piano solo) by Nikolaj Rimsky-Korsakow (listen to excerpt)
2. Beautiful Day by U2 (listen)
3. In the Hall of the Mountain King (piano solo) by Edvard Grieg (listen)
4. Clocks by Coldplay (listen)

My plan is to continue my piano lessons as they are and work through these (at first) completely on my own. As I start making breakthroughs, I’ll then take the piece to a piano lesson and go through it with my teacher, as she’s good at spotting where my problems are. I’ve basically asked her not to pull punches as I’d rather get good than have my ego fluffed.

For this resolution, I don’t have to set aside (much) time that I’m not already setting aside for piano practice. Instead, what I’m doing is setting new goals and renewing my commitment to learning an instrument.

Are these pieces over my head? Maybe. It really depends on the arrangement I wind up working with. I have arrangements in hand for three of them that I can at least comprehend and work through slowly at the keyboard.

I view these pieces as my “challenge” pieces. In a normal one hour practice session, I usually spend fifteen minutes on finger exercises and scales, fifteen minutes on a piece or two I know well, and thirty minutes on pieces that challenge me. They’re complex enough that I can’t just sit down, flop the piece in front of me, and just play it.

Why is this a goal? One, music education is a piece of my own personal education that I feel I missed when I was younger. I’ve always wanted to play an instrument and now I’m learning how. Two, I want to show my children that music is part of a normal, healthy life. Three, I might someday end up playing at my local church as a backup pianist for services. Fourth, I want to show myself that I can do this.

That’s reason enough for me.