If given the choice, would you rather lose 5 pounds or save $5,000 this year?
When asked that question, most people (84 percent) said saving money would be the higher priority, according to a recent report by Fidelity Investments. The online survey of 3,000 adults indicates that American families want to pay down debt (51 percent) and save more money (53 percent).
The key to making your financial resolutions a reality this year is to get started now. Wishing won't do it; you need a plan.
Goal #1: Paying down credit card debt
Credit card debt is the most expensive kind of debt — significantly costlier than borrowing money to go to college, buy a car or even purchase a house. The average credit card interest rate is 17.3 percent, according to CreditCards.com. People with poor credit or those who carry a balance on a retail credit card could be paying 25 percent or more.
"Think about paying down credit card debt as an investment with a guaranteed return," said Ted Rossman, an industry analyst at CreditCards.com. "Every dollar you put towards reducing that credit card debt is earning you a 17, 21, maybe 25 percent return. That's really a tremendous savings."
There are two basic ways to pay down credit card debt: the avalanche and snowball methods.
With this approach, you prioritize your debt from highest to lowest interest rate and focus on the card with the highest rate.
"Take all the extra money you have and apply it towards the balance with the highest interest rate," said Bruce McClary, a vice president at the nonprofit National Foundation for Credit Counseling. "As soon as you pay off that card, take all of your extra money and apply it to the next-highest interest rate. This process repeats until all the debt is paid off."
Because you pay the most expensive debt first, the avalanche approach should save you the most money.
With this method, you prioritize the accounts by the size of the balance and start with the smallest one. Seeing results more quickly can be motivating for some people.
"It may not save the most money in interest over time, but it's a great way to ensure successful completion for those who look for more visible signs of progress at earlier stages," McClary told NBC News BETTER.
No matter which debt repayment strategy you choose, make more than the minimum payment on the balance you're focused on eliminating. Otherwise, you're just spinning your wheels.
"You really want to avoid that minimum payment treadmill. It's really a disaster for your finances," Rossman said. He gave us this example: If you have $5,700 of credit card debt at 17 percent interest and you make only the minimum payment each month, it will take you almost 20 years to pay off the balance. You'll also pay more than $7,000 in interest.
If you have good credit — a FICO score of 690 or higher — you might be able to stop the interest from accruing for 12 to 18 months by getting a 0 percent balance transfer card. That could save you hundreds, possibly thousands, of dollars in interest.
"Look for a balance transfer card that gives you the longest amount of time to pay off your debt without interest, while charging you the lowest balance transfer fee possible," said Sara Rathner, NerdWallet's credit card expert. "Some of the best options we've seen charge a 3 percent fee on the transferred balance and give you 18 months interest free."
Don't know where to start? NerdWallet has a list of balance transfer cards, and some of them have no fee.
If you go this route, be sure to calculate your monthly payments (the balance divided by the number of months) so you'll get that balance down to zero before the promotional rate ends and the interest rate skyrockets.
Some people find themselves so deeply in debt that they can't see a way out. In that case, contact a nonprofit credit counseling agency in your area. It can negotiate with your creditors to create a plan that works for you. The initial consultation is typically free, and the ongoing cost is minimal.
Goal #2: Build your savings
Life happens — the water heater goes, you need some new tires or someone in the family gets sick — and when it does, there can be unexpected bills to pay. A rainy-day fund is the buffer that lets you pay emergency bills without going into debt.
"Our surveys show that people tend to incur an emergency expense that's unplanned every 24 months or so, " said Greg McBride, chief financial analyst at Bankrate.com. "And when it happens, it tends to average around $1,500. So you have to be prepared."
But most Americans aren't prepared. A Bankrate survey found that 60 percent of U.S. households don't have enough saved to cover a $1,000 emergency. A third would need to borrow the money in some way, such as from a credit card or a personal loan or from family or friends.
How much should be in your emergency fund?
Personal finance experts contacted by NBC News BETTER recommend having enough to cover your expenses for three to six months. That could be a very intimidating figure. But remember, this isn't going to happen overnight; it may take a few years. The important thing is to get started.
Matthew Frankel, a certified financial planner who writes for The Motley Fool, advises his clients to "start with a small but attainable goal" — maybe $1,000 — and to make a concrete plan to achieve it.
Rather than waiting until the end of the month to see whether there's any money left to put into your emergency savings account, do the savings first, he said. Automate the process, so you don't have to think about it.
"I always find that those who make it automatic tend to do better than those who don't," Frankel said. "Instead of saying, 'I'm going to save the $50 out of every paycheck,' set up a deduction plan at work — it will greatly increase your odds of success."
It's best to open a separate account for your emergency fund so you're not tempted to use it for daily expenses. Consider keeping the money in a high-interest online savings account. They pay significantly more than a traditional savings account, and they tend to have no or low fees.
Many of the best high-yield savings accounts require minimum opening deposits of only $100 or less and are currently paying about 2 percent annual percentage yield, according to Bankrate.com. Compare that to the average savings account, which pays only 0.09 percent APY, according to Value Penguin.
Most online savings accounts are FDIC-insured, and you can typically transfer money to your checking account within a day.
How to get out of debt
- How to pay off your loans using the 'debt avalanche' method
- How to get out of debt and build a 'wealth snowball'
- The unique budgeting system that helped this single mom pay off $77,000 in debt
- The '50/50 path' helped one couple pay off their mortgage in four years
- How the 50-20-30 rule can help you get out of debt and save money