New Year money guide
What would you like to achieve this year? Everyone has different hopes and goals in the New Year, but one thing we'd all like to do in 2012 is improve our finances, so we finish the year better off than we were at the start. A few pointers on how you could achieve that…
1. Reviewing your finances
The future starts here; any plan for the future should take your position today as a starting-point. So, step 1 is to sit down and do a review of your finances. How much money do you receive each month? How much do you spend? How are you spending it?
At the end of the day, it boils down to this:
- If you're earning more than you're spending, you can think about what to do with that 'spare' money.
- If you're spending more than you're earning, you need to do something about it (which probably involves spending less and/or earning more).
2. Earning more
However well you're doing, it's always good to get more money coming in! Ask yourself…
- Could you do any overtime at work?
- Could you realistically hold down a second (part-time) job?
- Are you receiving all the benefits you're entitled to?
- Could you make any money from your hobbies?
3. Spending less
The end result of spending less is pretty much the same as earning more. There are all kinds of ways to do this, so here are just a few things to think about…
- Are you entitled to any reductions? Council Tax, prescription charges, rail tickets, etc. Are you using the cheapest utility provider?
- Could you carpool / cycle to work?
- Do you know which petrol station near you is the cheapest?
- Did you actually get your money's worth out of the things you paid for last year? Gym memberships, subscriptions to movie channels, newspapers, magazines, etc.
- Could you save money by shopping at different places? You might find half your weekly shopping is cheaper at one shop, but the other half is cheaper somewhere else.
4. Using your spare money
Keep in mind that your circumstances might change - this time next year, money could be tighter than it is today. So if there's some money left over from your monthly budget, are you making the best use of it? You might decide to…
- Get your home insulated - and save money on heating next winter.
- Build up a savings account - so dealing with a 'rainy day' in the future won't be such a struggle.
- Overpay your debts - you could get out of debt faster and save money on interest.
- Save up for a new(er) car - you could save a lot in the long run if it's more fuel efficient than your old one, costs less to insure, or runs for thousands of miles without needing any repairs.
5. Dealing with your debts
If you're carrying debts, the sooner you can deal with them, the better.
If you can't afford your monthly payments, click here for a look at some debt solutions that could help.
If you're pretty much on top of your debts but looking for a simpler way of repaying them, read on and find out how debt consolidation could help...
6. Consolidating your debts
Sometimes, the actual amount of debt someone's carrying isn't a problem - but the way they're repaying it is.
If you're paying off multiple debts today, you might be able to simplify things with a debt consolidation loan, which is simply a new loan you'd use to pay off your other debts. This would leave you with just the debt consolidation loan to repay, which means one monthly payment, one interest rate, one lender to deal with - and one date when you know your debt will (or should) be repaid in full.
If that sounds like an interesting idea, you could use our debt consolidation calculator to see how it might work out.
The debt consolidation calculator uses just three sliders to give you an idea of how much your monthly payments might be. You'd need to tell it:
- How much you'd need to borrow to pay off your current debts. Obviously, the more you borrow, the more you'll have to repay every month and in total.
- How long you'd like your repayment period to be. Repaying a debt consolidation loan more slowly means you'll pay more interest overall - although your monthly payments will be smaller.
- What kind of interest rate you think you might get. The better your credit rating, the more likely you should be to get a loan with a low rate - and the lower the rate, the less interest you'll pay.
Bear in mind:
- Our debt consolidation calculator is designed to give you an idea of how debt consolidation could work for you. It can't tell you for sure what a loan will cost you - or whether you'd actually qualify for a loan.
- If you're thinking of securing debts against property, remember that your property could be at risk of repossession if you don't keep up with your repayments.
Image © iStockPhotos / Julia Nichols