This Year, Resolve to Save More and Improve Your Credit Score

Even though a recession has taken hold, there are things you can do to improve your personal finances. Because we are at the beginning of a new year, it's a good time to do a frank assessment of where you stand. Then create a vision of where you want to be by December.

With some careful planning, you may be able to get there. In this week's column, we'll start a conversation about how to make your finances real estate-ready and get your credit in home-buying shape.

This year, resolve to:

· Put yourself and your family on a budget you can afford. For most Americans, the word "budget" turns the stomach. If that's how the word makes you feel, don't use it. Let's look at concepts instead.

Start with something simple: Spend less than you earn. Buy in bulk (if it's cheaper), at sales and in advance of when you'll actually need something. (If you wait until the last minute, it will generally cost you more to get the same item.) Cook at home more often, and use coupons if you can. Avoid takeout foods and save restaurants for special events.

The concept you want to focus on is "trading down." Each week, try to find a simpler and less expensive way to do the same thing. If you drink a bottle of $25 wine each week, try to find one you like at $8 to $10 per bottle. If you're eating out twice a week, cut back to once every week or two.

You don't have to use the word "budget." But you should find a way to electronically track your expenses (Mint.com and QuickenOnline.com are two of many choices), income and investments, so you can see what you're spending and when.

· Pay off your charge cards. The average American has more than $9,000 in credit card debt. That's in addition to a mortgage and a car loan. More people in their 20s are paying off school debt than ever before.

Debt isn't much of a problem unless you have financial dreams you hope to achieve -- or you like to sleep at night. For future homeowners, every dollar you spend to pay down your charge card or car loan each month is a dollar less that you'll be able to put toward your monthly mortgage payment.

Paying off your charge cards by on time, over time, is the surefire way to improve your credit history.