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A New Year and a new start to your finances. It can be pretty depressing to see how much money you owe and how much interest you pay on a monthly basis. Money you could be saving or using to enjoy the finer things in life. Especially with the current credit pinch that we are feeling, as lenders tighten up their criteria and are getting tougher on missed loan re-payments, it makes absolute sense to clear your debt as soon as possible.
The start of the year is always a brilliant time to review your finances and set new goals - a bit of a spring clean as it were. Follow our guide which shows you where to begin the road to financial freedom.
Don't be too ambitious, but set yourself some goals. Decide what you want to pay off by the end of the year but make sure it is do-able, otherwise you could be setting yourself up for failure which will make you feel even worse.
Sit down with all your accounts and make a list of what you actually owe. It is surprising that most people don't realise how in debt they are. You cannot make plans if you don't know exactly what you owe.
Write down all your incomings and outgoings to work out how much disposable income you have each month. Work out after paying for essential items like food, how much extra you will be able to contribute to your credit card bills and loans.
Be organised. Find out where you are wasting your money, where you can cut back on spending - you'll be surprised just how much we spend without realising. That morning take-away coffee on your way to work, grabbing lunch at M&S - it all adds up. Simple changes like taking a flask of coffee with you to enjoy during your commute. Make lunch at home and take it in to work with you not only is it cheaper, it'll be healthier too.
Set yourself a realistic budget and stick to it. This way you won't spend more than you can afford.
Avoid saving any money at this point - just work on putting all your extra money into paying off your debt. Any interest you earn on savings will be negated by the interest you are paying on your credit cards and loans. It is in your best interest to pay off this debt as quickly as possible. Saving into a separate account will only slow this down.
If your debts are large, it may be well worth looking into a debt consolidation loan. These aren't the right choice for everyone, but in some cases they can help make your debt more manageable and easier to clear if you only have one monthly repayment to keep control of.
Following this simple guide could help you sort out your financial situation. It takes a bit of time, willpower and determination but it can be done, and you'll feel great for it. Make it your mission to finally clear your personal debt during 2008 and be completely debt free for 2009.
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