The year 2020 is coming towards us with lots of surprises, both good and bad. We should prepare ourselves for anything good, and also if anything bad happens. But one thing we can do is to make new year resolutions that can lead our life towards happiness in the coming year.

You need to decide your resolutions based on your prime life goals, mostly on your financial goals. Trust me, managing your debts or getting out of debt is the top priority financial goal in anyone's life. So, you must include debt resolutions as a part of your new year's financial resolution.

If you want to fit debt resolution into your financial resolution, the first thing you need to know is what is debt resolution and its aspects.

Many people believe that debt resolution and debt settlement are identical. The thing is true but there is a little difference between debt resolution and debt settlement. The objectives of both processes are the same - it is to lower your debt amount into a figure that is affordable to pay off easily.

Then what’s the difference? Debt resolution will need the services of an attorney but debt settlement does not. To ease up the negotiation, debt settlement companies may require that the debtor should miss 2-3 payments. Debt resolution does not require missed payments.

Here are 3 characteristics of debt resolution:

a) Debt resolution attorneys

The debt resolution company attorney will help you to fix a debt repayment program according to your financial situation. The attorney would negotiate with each creditor so that they can accept a lower payment towards your debt. It is up to the attorney how skillfully he/she manages to eliminate interest charges and other fees charged by the creditors.

You don’t have to miss any payment to get the debt resolution process started. This will make the creditors less aggressive towards you. As a result, you can expect that they won’t take any direct legal action against you. If any legal matters arise in between, the attorney will handle them on behalf of you.

b) Payments

Debt resolution payments might be in a lump sum or spread over a while, based on how skillfully your debt attorney has managed your creditors and negotiated the terms.

c) Effect on your credit scores

I have cleared it earlier that debt resolution and debt settlement are quite similar. In both cases, you’ll be paying your creditors less than what you owe. There may be a slight advantage that you are getting in debt resolution. You don't have to stop paying your creditors, so it won’t hurt your credit initially.

Late payments affect your credit score and stay on credit report for 7 years and 180 days. If your debt attorney can convince your creditors to report the payment of the debt as "paid" rather than "settled," it won’t affect your score as much as it might be. But your score would get a blow as you're paying a less amount than your total due debt.

So basically, you need to make payments to your creditors without missing a single payment. Once you decide to initiate a debt resolution strategy, ask your attorney to start negotiating with creditors to settle the debt for a lower amount.

So, based on the debt resolution, these should be your prime financial resolutions in 2020.

1. Saving money

About 48% of US citizensbelieved that building their savings in 2019 was their top financial priority. So, if you are also believing in this financial resolution, here are some categories to save in 2020:

• Initiate automatic savings to a retirement account
  Automatic savings can make your retirement accounts successful. The money will be going from your checking account into your retirement account before you even realize it. You just have to set up a recurring transfer. It will ensure that you do not spend that money. This way one of the most important life goals will be fulfilled, starting from this year.
• Contribute towards high-deductible health plan
  This health plan may include a health savings account (HSA). You may contribute to this plan as much as possible. You might earn HSA's triple tax benefits and save for healthcare in retirement.
• Have an emergency fund
  ou need to save about 3 to 6 months' worth of expenses, only the major ones. You should be focusing on saving at least 15% of your pre-tax income every year.

2. Paying down high-interest debt

Around 29% of US citizens call it their top financial priority in 2019. If you want to follow that same resolution also in 2020, you may start paying down your high-interest debts.

You may create a list for managing your debts in chronological order. Then, as per your affordability, you can choose the debt snowball or debt avalanche method to repay your debts. You still have to make minimum payments on your debt accounts each month.

Getting out of debt would be easy if you can choose a debt resolution or debt settlement option. By paying off debt, you may make yourself happier and certainly can improve your financial future in the long run.

3. Control spending

The easiest way to control your finances is to use the envelope method for budgeting. This method will help you to maintain a balance in every category. You need to fix how much you need to spend on certain spending categories such as groceries, entertainment, and transportation on a particular time frame (one month!). If you get paid bi-weekly, you can use that time frame too.

Prepare an envelope for each spending category. Use it to meet the expenses for the entire 2 weeks or 4 weeks. Do not use money from one category for another.

People normally spend less when they use cash rather than using credit or debit cards. So, you can also lower your card usage. If you depend on credit cards to spend, you should hide the cards for a while.

If you can maintain this habit, you may skip a few weeks and months without overspending on a specific category. You can use credit cards if you need to. Just remember to pay them off in full each month.