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Special section 7 Bankrate experts with 7 top tips for '07

As you transition into 2007, it's a good time to take stock and make plans. Follow Dr. Don's advice to improve your finances in the coming year.


Improve your finances: Dr. Don's top 7 for '07

As you transition into 2007, it's a good time to take stock and make plans.

This is my seventh year writing a New Year's column that suggests steps readers can take to improve their finances in the coming year. Here's hoping you have a safe and prosperous new year and that it's a lucky seven for you, too.

Dr. Don's top 7 for '07

1. Spend less than you make. Easy to say, not so easy to do, but making a commitment to living within your means is a first step toward working toward the future instead of just thinking about today. If you have a big credit hangover, you'll have to take your medicine and get out from under your past spending, too. Debt restructuring can free up some money in the monthly spending plan but doesn't pay off debt, it just changes the terms. Don't make that decision lightly. Put together a spending plan for the coming year. Don't call it a budget. Nobody likes to budget. Accentuate the positive. How are you going to spend your income this year? The "Budgeting 101: Start your own budget" calculator works, even though it's not called a spending plan.

2. Start investing for your future. Once you get the hang of spending less than you make, it's time to look at where you are going to invest the surplus. Building liquidity in an emergency fund is a good second step. Contributing at least up to the limit of your company's matching program in your 401(k) or 403(b) plan is another good second step. The first step is to figure out your investment goals. Whether it's the children's education, a comfortable retirement or a cruise around the world, naming the goal is an important part of reaching the goal. On my nightstand this holiday season is "Lighting the Torch: The Kinder Method of Life Planning." Money can facilitate achieving life goals but isn't much of a goal in isolation. When you know what you're working toward you'll be more committed to investing for those goals.

3. Freeze your credit report. Not everyone can do this, yet. In some states you can only freeze your credit report if you have been a victim of identity theft. In more enlightened states you can freeze your report regardless of whether you've been an identity theft victim. In states yet to be enlightened you can write your state legislators and ask them to get on the bandwagon. The Bankrate feature, "14 myths about credit freezes" sorts through the issues.

I'd like to see everyone who can, and who thinks it's a good idea, freeze their credit reports to send a strong message to the consumer reporting agencies and the government that the current system isn't working and that the credit reporting industry needs to do a better job in safeguarding consumers from identity theft.

On the topic of credit reports, I mark my calendar to get a free credit report every four months from one of the three major credit bureaus: TransUnion, Equifax and Experian. You're entitled to one free report a year from a credit bureau. Rotating the requests through the year helps you stay on top of your credit for free. This Bankrate feature provides the contact information to get these free reports.

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