Get a grip of your finances in 2008
Julia Harris of Moneyfacts.co.uk looks at sorting out your finances if you’ve lumbered yourself with more debt than you’re comfortable with in 2007 and want to put that New Year’s resolution into action to regain control in 2008
“Many people are predicting that it is going to be a tough year in the personal finance world, so now is the time to get prepared for the rough ride ahead.
“Here’s the Moneyfacts.co.uk guide to getting to grip with your finances and how to make better financial decisions in 2008.
- 1 Sit down and write a list of all the money you owe (credit cards, loans, overdraft, friends/family etc) - This is the hardest bit. Many people know they have money problems but are not prepared to face up to them.
- 2 Draw up a list of your monthly expenditure (excluding debt repayments) and make sure you make a monthly allowance for annual expenses such as car tax, Christmas and birthday presents and holidays, rather than having to pay for them out of one month’s salary. This is where problems start!
- 3 Subtract the total monthly expenditure from your monthly income to show how much you can afford each month to repay your debts.
- 4 Apply for a personal loan and/or a 0% credit card balance transfer (if you have a good credit history) and start paying off the amount you owe – see details and best buys below.
- 5 Make sure you know how much interest you are paying on your debts. Check against what’s out there at the moment to make sure you are getting the best deal.
- 6 Be realistic about the amount of debt you can pay off.
- 7 IMPORTANT - If you are repaying existing credit card debts, ensure you destroy the cards and close the accounts - otherwise if you keep the cards in your purse or wallet you may be tempted to use them in a moment of weakness.
“If you find that your financial problems are more severe, then you should seek free confidential advice from your local Citizens Advice Bureau or telephone the National Debtline on 0808 808 4000
“Once you know exactly what you need to borrow, look at the refinancing solutions that are out there to help you to regain control your finances.
Credit Card Balance Transfer Deals
“If you have built some debt on credit cards and store cards and you are paying interest rates of 20% plus, you could be paying a great deal less. 0% balance transfer deals can work well for those with expensive debt to switch over. The best thing to do, once you’ve transferred your balances, is to close the old card/loan accounts and also cut up your new card to stop you being tempted to use it for purchases.
As with all free deals there are catches to be aware of:
Look out for the balance transfer fees. For the longer term 0% deals these can be up to 2.98% of the balance.
Take control of the debt: it won’t just disappear. Use the 0% period to try and pay as much off as you can, not just the minimum monthly repayment.
An insider’s tip is that you should find out which bank funds the card you have. Even though it may seem that there are plenty of credit cards available, in reality they are all funded by a handful of banks. You will not be able to transfer money from one card to another if they are funded by the same bank, so check this out before you apply, otherwise you could end up being refused and be faced with having to go through the application process all over again.
Here’s the latest best buys http://www.moneyfacts.co.uk/cards/bestbuys/cards_balance_rates.aspx
Personal loans
“If you are paying high rates of interest on numerous credit cards and store cards and want to pay it off and be left with a more manageable single monthly repayment, then an unsecured personal loan could be the best route for you. The advantage of a personal loan is that you have an agreed interest rate and monthly repayment, both of which are fixed for the full duration of your loan agreement.
If you do look into the possibility of getting taking out an unsecured loan, keep an eye out for the loan provider pushing you into buying expensive insurance to go with it. If you want some cover to protect your loan, you can find cheaper payment protection insurance through independent providers such as paymentcare.co.uk or British Insurance.com.
Here’s the latest best buys
http://www.moneyfacts.co.uk/loans/bestbuys/loans-10k-over-5years-without-insurance.aspx
“The New Year will undoubtedly pick up where 2007 left off, with some 0% credit card balance transfer deals and low rate loans available for those with a spotless credit history. The problem is that, because of the credit crunch and increased levels of bad debt suffered by lenders, consumers with a less than perfect credit history will find it more expensive to borrow money.”
Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.
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