Ditch your debt by February
Here's lovemoney.com's step-by-step guide to getting on top of your Christmas debt by the end of the month...
Presents, food bills, New Year celebrations – the festive season certainly isn’t easy on the wallet.
In fact, it’s estimated that more than half a million Brits will take over a year to clear their Christmas debt.
So to help you get on top of your finances and make a frugal start to 2011, here’s my week-by-week guide to sorting out your debt before the end of the month.
8th Jan – 15th Jan: Budgets and bills
If you haven’t done so already, this is the week to finally face up to your post-Christmas debts and stop burying your head in the sand. I know that opening the credit card bill and checking your bank account balance in January is not nice, but it won’t get any better if you keep putting it off.
You can use lovemoney.com’s own online banking tool to keep tabs on all your bank accounts at once.
Rachel Robson highlights five easy ways to master the art of budgeting.
So you’ve gritted your teeth and assessed the financial bombshell that landed in your bank account over Christmas – what next?
Time to budget!
Clear any important bills that could cause you to lose an asset or essential service if left unpaid. If you’re not able to pay off the debt in one lump sum then draw up a realistic schedule of repayments – and stick to it!
It’s also a good idea to get in touch with the company or companies you owe money if you can’t meet their repayments. Many utility providers and banks will tend to assume the worst if a customer misses a payment. So if you’re honest about your financial troubles and assure them they will eventually get their money, they may be a bit more understanding.
Setting yourself a weekly cash budget will also help you save on spur-of-the-moment card purchases. Head to the cash machine on the Monday morning, take out your allowance for the week and leave your card at home.
If you find yourself with a little extra cash left over each month it’s always a good idea to start a financial cushion. A nest-egg could prove vital if you land yourself in an expensive emergency or need to make a pricey purchase. Read Seven ways to maximise your savings in 2011 to find out more or head over to our savings account comparison centre to find the right account for you.
16th Jan – 23rd Jan: Cards and accounts
Now it’s time to take a look at all your existing cards and accounts and make sure you're getting the best deal on your debt and savings.
If you’ve hammered the credit card over the festive period then you should make sure you’re not paying an exorbitant APR.
There are now several credit cards that will give you at least 16 months at 0% on balance transfers, though Barclays have topped this recently with a market leading 17 month 0% deal – you can read more about this card at The best balance transfer card ever!
As insolvencies reach record levels, Ed Bowsher looks at some of the ways to deal with a personal debt crisis.
If you are paying interest on your festive credit card debt, taking advantage of one of these cards and shifting your balance over means you'll pay off your debt quicker, as you won’t be charged any interest for the first 16 or 17 months!
You will need a good credit history to pick up the best 0% deals – but even if you have the odd black-marks, you may be able to get some sort of 0% card. Head over to our credit card comparison centre for more information.
But if your balance sheet really is in severe turmoil then a last resort could be a loan. Fortunately the best personal loans are now at just 7.3% APR – their lowest rate for over two years. Read Quick! Get the cheapest loan rate in year to find out more.
It may also be worth looking at switching current accounts. Santander and First Direct are both offering £100 in cash if you switch now. But make sure you check the overdraft charges whenever you take out a new current account – especially if the Christmas spend has left you dangerously close to the red.
Read The best current accounts for 2011 for a full run-down of the best deals.
24th Jan – 31st Jan: Policies and contracts
So you’ve set your budget, applied for a 0% card and changed your current account – now it’s time to shave some more money off your monthly outgoings.
But these increases do also mean that there are savings to be made by switching suppliers. Read 10 million energy bills rise for some tips on changing suppliers and head to our energy centre to find the cheapest rates.
Mike Kielty hits the streets to find out what you know about debt.
Another simple way to cut your utility bills is to ensure you always pay via direct debit.
January is also the perfect time to take a good hard look at your phone, broadband and TV packages. Do you really need Sky with all the channels? Is 1500 free minutes a bit excessive for your mobile phone needs?
Buying your TV, broadband and phone as a bundle deal could save you hundreds of pounds every year. Head to Broadbandchoices.co.uk to compare different multimedia bundles or have a read of Two ways to cut your mobile phone bill to save even more money.
If you’ve been with the same insurance provider for a few years it may also be worth switching. Letting policies roll over year after year is one way to guarantee that you won’t get a good deal – as the best prices are often reserved for new customers.
If your debt really does get too much and you feel unable to get on top of it there are several organisations who you can speak to. The Citizens Advice Bureau can offer free legal and financial advice, as can the National Debtline.