I’m not a big fan of New Year’s resolutions. I rarely make them; and those that I’ve made are often broken long before the Orioles are mathematically eliminated from winning the American League East. But 2008 was such a watershed year from an economic perspective, I’ve decided to remind myself of an important financial credo I call the fruit-cake box rule.   

 Before I became a writer, I was a CPA specializing in taxation and an adjunct-tax professor at the Graduate School of Business at New York University. Over a couple of decades of practice, I learned a great deal about how people handle, or, all too often, mishandle their financial lives.  Simply put, most families have no idea how much they’re spending, and because of credit cards and home equity loans, they end up spending way more than they should. 

 The solution to this problem sounds simple, but in reality, it’s not easy:  Set a budget and live within it. 

In honor of my two baker uncles who in reality never baked anything, I call this the fruit-cake box rule.  Imagine all your income (wages, pension, dividends, interest, etc.) was converted into cash and placed in a fruit-cake box. Logically, you can’t take out more than you’ve put in.  Now, you, your wife, and your children have to live within the money stored in that fruit-cake box. The only way to do this is to set down all your expenditures -- including your out-of-pocket cash expenditures like that weekly Starbucks latte you love so much -- and see where you stand.  Has your box sprung a leak?  If so, tape it up, and live within your means.

Why use a fruit-cake box? For decades, my two immigrant uncles, Joseph and Harry Wolk, bought bread and cake from large wholesale bakeries and sold it from a dilapidated little store on the Lower East Side of Manhattan. They lived in a subsidized housing project and they gave the world, including myself, the distinct impression they were poor. They drove an ancient Buick station-wagon that was once rear-ended on the Williamsburg Bridge and looked like a giant accordion.

For years, they frequented the deeply discounted dental clinic at New York University where interning students treated them. And well into the Reagan administration, they wore suits dating back to the New Deal. 

After they died, I learned their dark secret: they were millionaires many times over.  Ironically, when I cleaned up their apartment (they were life-long bachelors and the job fell to me, their only nephew) I found  boxes filled with rolls of cash that had disintegrated over time in part, due to lack of use, but mostly because my uncles never bothered to clean out the fruit-cake boxes before storing their cash away.  Old dollar bills and fruit-cake residue do not mix well.       

I know what you’re saying. And it’s true. Yes, my uncles didn’t have the typical fruit-cake box problem most of us have.  But don’t waste your time looking back in jealous anger at either my uncles, or the financial geniuses of Wall Street who bundled billions of dollars in never-should-have-been-made mortgages into financial instruments, sold them as AAA rated-investments, and then received a bail-out from Congress. And to add insult to injury, according to a recent Associated Press report, the banks and other financial institutions that received the bail-out can’t say exactly what they did with the money. 

Sounds like most of our major financial institutions could use an oversized fruit cake-box. But I will leave that to President-elect Obama to straighten out. God help him.

In your case, I suggest you find a left over holiday fruit-cake box and start cracking. You know what you have to do.