Top Five Financial Resolutions...

When making New Year's resolutions, people often vow to improve some aspect of their financial lives.

So on the first day of the year, The Early Show asks financial advisor Ray Martin which financial resolutions he believes are worth pursuing, and how to keep them.

Martin has picked five he thinks are essential and do-able.

"Each resolution, if accomplished, improves cash flow, protects assets and provides for the financial security of loved ones," Martin says. "Making money and having more of it is by itself is not necessarily a good thing -- it's what can be gained by having more money, less debt and better plans in place to keep what you've saved that's really important."

1) Discuss Money with Family

This can be as simple as writing down why money is important to you and then sharing it with your spouse and/or kids. While a number of couples handle day-to-day finances with no conflict, they may be surprised to discover that they don't share the same financial goals or perhaps they don't agree on how to reach certain goals.

Also, although many people have no problem discussing money with their families, they simply choose not to. Martin says he has run across many couples in which one person is totally in charge of the family finances and the other is completely uninvolved. That's not smart, he suggests.

Finally, Martin stresses that it's essential to talk to your kids about money, because they won't learn how to be good stewards of their own money through osmosis.

2) Replace Bad Debt with Good

What is bad debt? It is debt on things that aren't increasing in value and on which you're paying a high interest rate. The best example: credit card debt. Of course, no financial resolution segment would be complete without at least touching on credit card debt.

Americans are carrying more and more debt all the time -- and balances rarely go down during the holidays. This year, commit to tackling the debt that carries the highest interest rate. You can "replace" this bad debt with "good" by getting a home equity line of credit or a loan from a credit union. Use this money to pay off your credit card debt, and then set about repaying the loan. Martin particularly likes the idea of using a home equity line of credit to pay off credit card debt because it's a low interest rate loan, the interest is tax deductible, and the asset on which you've based the loan, your home, will appreciate.

3) Boost 401k Contributions

Sorry, can't escape this one. With the New Year also come new 401k contribution limits. You can now put away $14,000 tax-free, and if you're over 50, you can put away $18,000. If you can't afford to put that much into your retirement account -- and many people can't -- at least make sure you are putting in enough money to take full advantage of your company match. Most companies will match the first 5 or 6 percent of money you invest. If you are already at this point, commit to upping your contribution by two percent. While you're at it, make sure your account is diversified: You don't want vast portions of your money in company stock, for instance.

4) Make a Will

This resolution isn't exactly uplifting, but it is important. And if you've handled this issue, it will make the time following your death that much easier on your family. Believe it or not, less than half of American adults have a simple will. This document stating what happens to your money, property and, perhaps most importantly, any young children upon your death is truly essential. If you are one of those people without a will, Martin suggests buying computer software that enables you to create your own will. This will help you realize all of the issues that are involved in drawing up a will, and help you research your options. Once you've done this homework, seek the advice of a lawyer. How much you'll pay will depend on how simple or complicated your document is. A simple will may cost as little as $250; however, you can easily spend $500 or more.

5) Create Document Locator

Again, if something unexpected would happen to you, it would be really difficult for your spouse, child or parent to know exactly what financial accounts you have, where they are located and how to access them. Martin suggests putting together a personal document locator that includes not only the information on your investment and retirement accounts, but also pertinent information on your property (cars, homes, etc), insurance, legal agreements, etc. Be sure to include a list of contacts -- lawyers, guardians, etc., and the location of any safe deposit boxes.

Of course, making resolutions is easy -- it's keeping them that hard. Part of Martin's job as a financial planner is to help people set and meet financial goals. So how does he insure that his clients stick to their financial resolutions?

"Basically, I'm a pest!" he jokes. "I just keep after them, reminding them why they're doing this."

Martin says taking some basic steps could help anyone achieve his or her financial goals.

1. Write It Down: If you can't bother to write down your goal, it must not be worth very much, according to Martin. Having to clearly state your goal and how you intend to achieve it will keep your resolutions realistic. And when you get discouraged or lose sight of the goal, this will help you re-focus. In addition to writing the goal itself, you need to formulate a plan - write down why you're working to achieve the goal, and when and how you intend to do it.
2. Break It Into Small Pieces: Financial goals often seem overwhelming and unwieldy. You need to break your big goal down into smaller "action steps" that you can accomplish bit by bit. This will also help you feel less discouraged, because you'll be able to see yourself making progress toward the goal.
3. Seek Professional Advice: Too many people get through steps one and two, only to get bogged down in the technical details. It's important to know when you can do-it-yourself something and when you need professional help and advice.

   For example, if you need a will and have organized your thoughts on the "whos and whats," don't procrastinate over what to do next. Seek the advice of a local lawyer who can help you get the job done. And even if you know what to do, but you can't find the time to do it properly -- it's valuable to seek a professional advisor who can help you complete a financial resolution by providing and keeping the pressure on until the objective is attained.