Straightening out your finances begins with a single step: Deciding where you want to be at the end of the year. But don’t set the bar so high that you can’t reach your goals.

Welcome to 2008 — a clean slate, a thrilling opportunity to hit the financial targets you missed in 2007!

At least that’s how I’m trying to look at it. The truth is, I wish my financial house was spotlessly in order now and that all I had to do was get myself on the cover of Money magazine.

• Tell us: Share your financial goals for ‘08

Those people always look so happy. Of course, I’d be grinning from ear to ear on a beach someplace, too, if I knew I’d be retiring rich.

But that’s just the point, isn’t it? Financial security is built from making steady steps, setting reasonable goals and meeting them, year in and year out. So cue the marching drums: Here are the money battles I plan to win by 2009.

Step 1: Review the strategy that failed

Recently I conducted a thorough review of what went right and what went sour in 2007.In case you missed this riveting installment of the financial soap opera of my life, let me give you the CliffsNotes version:

The biggest mistake my husband and I made was not having any clear-cut money goals, except surviving as new parents and making a big move to a small town.

Survival is always a worthy goal, but financial success requires that you be specific about the numbers. It was a top-earning year, but we lost out by not setting firm targets for retirement or for getting out of debt.

If you haven’t done a year-end review, ask yourself why. Is your calculator broken? C’mon: You need to know the potholes and pitfalls that knocked you off track in order to make 2008 a truly banner year.

Step 2: Set reasonable goals

A winning tenet of the Women in Red is that you can easily derail yourself by setting the financial bar so high you would have to take steroids to reach it. It’s far better to set targets that you know you can achieve and enjoy the satisfaction of getting there.My husband and I set four goals for this year:

• Pay off the last $6,000 of our credit card debt.

• Crank up our retirement savings to 10% of our gross income.

• Save an additional $5,000, to be divided between our emergency fund, vacation fund and unexpected expenses.

• Get life and disability insurance, and set up a will.

‘7 Weeks to Financial Sanity’

Take control of your finances in 2008 by signing up for MP Dunleavey’s teleclass with personal finance expert Galia Gichon. Click here for more details.

Maybe that’s actually six goals. But the last three are already in the works. We’re adding life and disability coverage through our health insurance carrier (more on that below).

And we found a lawyer who will draw up a will for $150. Now we are trying to select a guardian for our son.

(Side note: It’s often the emotional issues that prolong financial tasks. We found the lawyer three months ago. We just haven’t worked up the nerve to ask our relatives about guardianship.)

Step 3: Put a number on each goal

Saying you want to save money or earn more is like saying you want to lose weight. That’s nice. But pointless.Things get real and challenging when you specify how much, by when. A goal is a dream with a deadline, as they say.

• I just got a $3,000 freelance check that’s going toward our credit card debt. (Note to new readers: This isn’t a windfall; it’s how I make a living.) That leaves about a $3,000 balance, which would take about $250 a month to knock down. We pay at least $300 a month, so we’re on track to pay off that debt by the end of the year, if not sooner.

• Jacking up our retirement contributions from 5% (or $300 a month) to 10% is ambitious. We would need to come up with another $300 per month.

• Saving $5,000, in addition to the above retirement increase, would require us to find $400 more a month.

• The cost of disability coverage as well as term life insurance policies for my husband and me comes to $132.50 per month.

Hmmmm.

Step 4: Re-evaluate your definition of reasonable

Those are all worthy goals, but there’s no way my husband and I can make that all happen. We’d need a windfall or a major income increase.My husband just took on a part-time job to afford the higher cost of our new mortgage. (For those who missed the Big Drama about MP’s new house, click here.) But his monthly haul of $400 to $500 will just cover that gap.

We can afford our goals only if we manage the rest of our income better than we do now — or by lowering the bar. What’s really reasonable?

• We’re on track to pay off our debt. That’s reasonable.

• Because my husband and I are self-employed, we can’t afford to forgo the insurance coverage. That’s essential.

Should we scale back our savings targets?

Given that we don’t quite have $20,000 saved for retirement, it’s foolish to save less than 10% of our income at this stage. Dilly-dallying at 5% is just pathetic. (You can see what a difference this makes by running some numbers on MSN Money’s Retirement Planner.)

So although it would be terrific to fatten our various other savings accounts, perhaps we have postpone that until our debt is paid off. Our current savings transfers to our blessed ING Direct account are:

• $75 a week to our emergency fund.

• $50 a week to our unexpected-expenses fund.

• $10 a week to our vacation fund.

• $10 a week for miscellaneous.

Total: $580 a month.

Once our debt is paid off, we can add $300 to that $580. Meanwhile, a more reasonable goal is to focus on coming up with $300 more a month to meet our retirement goal and $132.50 a month for our added insurance costs.

Step 5: Find the money

How am I really going to achieve my grand plan for 2008? How are you? How do we all end up together on the cover of Money magazine?The key to any financial endeavor always boils down to the same issue: Whether you earn it, save it, beg, borrow or refinance it, you have to come up with the money.

Though I highly recommend big raises, offshore investing and trust funds as new sources of income, my husband and I are going to tackle our personal downfall: the eighth deadly sin, carelessness.

If you did your year-end review, you probably noticed where your budget broke down, your resolve failed or when you were taken prisoner by old habits. Those are the places where lost money can be recovered.

Here’s our money retrieval strategy:

• With a new home arrive new expenses and the need for a smarter, stronger budget. We are tracking our expenses now to stay in control of our cash flow throughout the coming year. My hope is that with the mortgage increase covered, the rest of our expenses will remain steady. That said, the cost of oil and gas are a bit of a wild card and will require constant discipline.

• We already cut our grocery bill 25%, down to $300 a month from $400. Our goal is to get down to $200 a month.

• Our worst money leak comes from thoughtless spending. In addition to having a smarter spending plan in place, my husband and I have vowed to stop wasting money on stuff that doesn’t matter so we can spend it on what does.

In our recent budget conversation, he pointed out that two spontaneous stops at a local diner, over just two days, had cost us $30. Add $9 for the late fee at the video store (grrrr) and we’re down about $40 for the week.

Keep that up all year, and it’s a good way to kiss nearly $2,000 goodbye — or a good chunk of our erstwhile savings goal.

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