PersonalFinance: Be your own bailout in 2009

By Linda Stern

WASHINGTON (Reuters) - A brand new year does offer the opportunity to make a fresh start -- even in trying times like these. But those financial New Year's resolutions seem to have lost their zing this time around. Why promise to invest more, if the market is going to chew it up? Why pledge increased frugality, if you're already living small?

So forget those stale and discouraging resolutions and come up with new ones. Make them practical, small and specific, so that you'll really follow through on them. Here are some new behaviors to adopt on January 1 that will make you wealthier and happier (I'll leave thinner to someone else) in 2009.

-- Photocopy your wallet. Just go to your local copy shop, empty your wallet onto a copier, and make sure you've got copies of every card and ID you carry. Stick it in your files, just in case.

-- Photograph your possessions. Walk around your home with a videocamera or digital camera and take pictures of all of your valuables... and your closets. Tuck these photos in your safe deposit box. Here's hoping you never experience fire or theft, but if you do, you'll be prepared.

-- Learn a money-saving skill. Cooking from scratch, mowing your own lawn, sewing some of your own curtains or clothing, building your own shelves. Choose at least one skill that interests you and learn it; it's a hobby and an activity that will eventually save cash.

-- Re-shop your insurance. If you've had the same auto, homeowners, life and disability insurance for a long time, you should make sure you're still paying reasonable amounts for good policies. Check insurance sellers like Geico.com and Progressive.com for auto and home, and comparison sites like intelliquote.com for life insurance. Raise your deductibles to keep your premiums low.

-- Get a handle on your investment fees. Mutual fund fees don't hurt that badly when markets are booming, but when stocks and bonds are both sinking, high fees make your situation that much worse. If you can choose your own retirement plan investments, look to put large chunks of that in low-fee index funds. Actively managed funds should have below-average costs when compared to their peers. Use the fund analyzer at the website of the Financial Industry Regulatory Authority (here).

-- Reduce the amount of interest you are paying on your debts. If you're not in financial trouble, you have a lot of options. Grab a low (or zero) interest credit card and transfer your balance to it. Use your home equity line to pay off your credit card debt, if you are confident that you'll make the payments and not rack up more credit card bills. Pay more than the minimum every month, even if that's really, really hard. Use the money you save on interest to pay down extra principal. If you are in financial trouble, don't use home equity to pay down credit cards. Do whatever it takes to pay minimums on your credit cards every month. In six months, apply for a new, lower-rate card. If you don't get it, keep up the minimum payments and apply again in a year.

-- Put at least one savings/investing account on auto-pilot. Instruct your bank or mutual fund company to withdraw a set amount from your checking account every month. It can be as little as $25. You won't miss it, and the savings will accumulate, slowly but surely.

-- Establish a baseline. Use financial planning software, such as Quicken, or an online money management site like Mint.com, or old-fashioned pencil and paper. List everything you own and everything you owe. Find your net worth: the number left when you subtract your debts from your assets. Resolve to make that number bigger and better by December 31, 2009. And have a happy new year.

(editing by Gunna Dickson)