January is the month for tightening our belts in more ways than one. One in eight Britons could struggle to make ends meet after spending more than they could afford over the festive season, according to the Money Advice Trust, the debt advice charity, which runs www.nationaldebtline.org. Research from credit checker, Experian, has also highlighted that suffering from a financial hangover in January is becoming widespread with 35% of those surveyed facing such an issue from overspending during Christmas.
So what’s the advice? Firstly, set a budget for the year. It sounds obvious but do work out how much money you have coming in and going out each month. Don’t forget to add in yearly costs such as car and household insurance and holidays and divide it by 12 to reach a monthly cost. Secondly, don’t ignore bills and statements as it could only make the situation worse. List all of your debts plus repayment dates for each. And finally, do seek advice early as the sooner you do the quicker and easier it will be to solve the situation. There’s lots of helpful advice to be found on www.moneyadvicetrust.org.
By spending just a few minutes of your time reviewing your finances you could save a few hundred pounds a month. Here’s how.
If you have a mortgage it probably is the single largest expense for most families. Looking around for the best deal could save you a fortune. Don’t forget that if you’re in a fixed deal you can fix another three months before your previous rate expires. Try using a combination of different comparison sites to search for the best rate such as www.moneysavingexpert.com, www.money.co.uk or www.moneysupermarket.com.
Spring cleaning your current account is a priority as it’s such an important place for your cash. Check through all those direct debits and standing orders that you don’t use any more like magazine subscriptions or gym memberships and you could cut costs. Be honest about whether you use your overdraft to the hilt or barely touch it. And then get an account that suits you whether it’s lowering that overdraft rate or getting a better interest rate if you’re always in credit.
Credit cards are an essential element in your financial armoury. However, you must first decide what kind of credit card user you are? If you pay off your balance every month then get the best deal for spending, perhaps a card which is generous with ‘cash back’? If you don’t always pay off your balance then look for low or zero interest cards to cut the cost of borrowing. Don’t forget to factor in the transfer fee! Try looking at a comparison sites such as http://moneyfacts.co.uk or www.confused.com for the latest deals.
Do look around for the best deals on your energy bills, TV, phone and broadband. A few hours research could save you a lot each month. Switching to a new gas and electricity supplier can save you as much as £100 per year, with an additional savings if you pay by direct debit There are loads of price comparison sites you can use to compare deals. Try www.gocompare.com or www.uswitch.com to get the deal that is right for you.
If you are putting money aside into a savings account make it pay for you. First decide on the access you will need. Usually, the greater the access you have the lower the interest rate. Watch out for high initial rates that disappear after a few months. And don’t forget to take advantage of your New Individual Savings Account (NISA) allowances, which increased to £15,000 from 1 July 2014 and allow you to save tax-free. It will rise to £15,240 from the next tax year which begins 6 April 2015.