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Spend & Save

Maryrose Fison: Britons must get a grip on their personal finances – or get fined

The Barmy Army will begin returning to Britain this week, bleary-eyed and jet-lagged after a weekend rejoicing at England's defeat of Australia in the Ashes.

But there are lessons to be learned from the success of the England cricket team, which gave the country its first Test match victory Down Under in almost a quarter of a century. These lessons can be be applied to personal finance.

Like the triumphant story of "Los 33", the Chilean miners who endured 69 days and nights in the collapsed San José mine last year, the focus, discipline and determination shown by the England cricket team over the past month are a lesson to us all on how to achieve the results we truly desire. With more than two decades of being defeated by the Australians to look back on, the team set a goal to break the cycle and, with it, show the country that ambitions can be realised. The lesson couldn't be more relevant at the moment, as Britons struggle to get a handle on their personal finances.

Walk down any major high street this month and you'll find yourself bombarded by billboard advertisements from loan providers who have cut their rates in a blatant attempt to draw in new borrowers. But for most of us, these are temptations we should resist. Loans are big business for the banks, but they should not be a necessity and nor should debt. So while the providers try to pedal their new rates to all and sundry, take a moment to consider just how much money goes down the drain on a supposedly "small loan".

Taking out a £7,500 loan over five years with an APR of 7.4 per cent – one of the lowest rates available on a loan of this size – and monthly repayments of £149.08 will flush £1,445 of hard-earned cash down the toilet in interest payments. On the face of it, the figure might not seem that much, but in real terms, it's the equivalent of several months' rent for a single person, a luxury holiday for two to the southern hemisphere or a couple of season tickets for a Premier League football club.

For those with a chequered borrowing history, even higher interest rates apply. Specialist lenders catering to this part of the market will frequently charge a typical APR of 17.9 per cent. On a loan of £7,500 taken out over five years with monthly repayments of £185.05, this would equate to £3,603 in interest.

Britain is one of the most indebted nations in Europe, with more than 33,000 personal insolvencies recorded in the third quarter of 2010, and the desire for instant gratification driving demand in credit card sales.

Unless we can break the cycle of debt, we risk being trapped in a downward spiral that ends in misery and desperation. The new year should be the time to make financial as well as personal resolutions which will have lasting benefits on our health.

Don't miss the tax-return deadline

In a little over a fortnight, more than nine million people will have to file their self-assessment tax returns to avoid facing a penalty – almost a seventh of the UK population. When most of us would prefer to put our feet up after the mad rush of returning to work after Christmas, a little work early on can save a headache further down the line.

Anyone who is self-employed, a higher-rate taxpayer or in receipt of an income from more than one source, has a legal obligation to complete the tax form online by midnight on 31 January or prepare to receive a less than attractive £100 fine on their doormat shortly before Valentine's Day.

Last year, hundreds of thousands of late returners padded out the taxman's coffers by millions in penalties. But that's not all. Those who submit after the deadline face further surcharges on top of the amount they still owe at the end of February and a second surcharge if they haven't paid it by 31 July.

To fill in the form, visit www.hmrc.gov.uk and ensure that all relevant forms are to hand. People who are employed but earn money through a second or third income stream will need their P60, which outlines earnings for the year, and their P11D form, which outlines any company benefits. The self-employed will need accounts for the year, including purchase and sales ledgers, petty cash books, invoices, and details of any expenses and receipts. And investors need any dividend vouchers, interest certificates from banks or building societies.