Money Insider: Serious about sorting your finances? Start from scratch


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The Independent Online

Many people will have made a resolution to sort out their money matters this year. In fact it's probably among the top three 2013 promises, alongside losing weight and doing more exercise.

With the Christmas credit card statements set to arrive at the same time as the big winter gas and electricity bills, it's not surprising that people are concerned about getting their finances back on track at this time of year.

But just like the quest to diet and get fitter, getting to grips with your finances isn't a five-minute job, and requires a big dose of self-discipline, as well as being prepared to accept a little discomfort along the way.

Just telling yourself that you need to be better with your money and a bit more careful with your spending isn't going to be enough to turn your fortunes around and rid yourself of those nagging debts; it's all about going back to basics and adopting a new mindset and a structured plan.

The first step is to look at exactly where your money goes. For that you'll need to go through your last three months' bank and credit card statements. Compile a monthly budget and list everything that you currently pay out, and crucially, don't forget to include a contribution to those annual bills such as the MOT for the car, holidays, birthdays and Christmas.

Once you have a list in place, review each item in turn and ask yourself two questions: can I manage without it? or can I reduce the amount I'm paying?

For some items, such as gym membership, dental insurance or magazine subscriptions, it could be as simple as cancelling your standing order, but at the other end of the scale when it comes to things like council tax, you just have to bite the bullet and pay up.

But in terms of your mortgage, gas, electric, water, telephone and broadband payments, consider ways of reducing your costs, either by switching provider, changing your tariff or in some instances by trying to cut down on your consumption.

Another exercise that is essential if you are to improve your financial wellbeing is to identify where your cash goes. While your list of outgoings details your standing orders and debit and credit card payments, it doesn't show where that £50 or £100 from the ATM is being spent.

Carry a notebook with you, or use a smartphone to record everything you spend. It's a real eye-opener, and can help you to identify where you can cut back and make some quick savings.

Only when you've got a grip on where your money goes can you start to improve matters by using the cash you've freed up to start repaying your most expensive debts.

It's not a quick job and a financial makeover requires a concerted effort and willpower, but much like losing weight or getting fitter, the effort will be well worth it in the long run.

New year kicks off with cheaper loan and credit card deals

Barely a week into the new year and the battle for consumer credit is in full swing, with a flurry of new deals and rate cuts from personal loan and credit card providers.

Personal loans

Tesco Bank has taken top spot in the best buys with its new rate of 5.2 per cent APR for amounts of £7,500 or more. Borrowing £7,500 over five years costs £225.05 per month with the Tesco best buy, but it's only 64p per month cheaper than nearest rivals Sainsbury's Bank and Derbyshire Building Society charging 5.4 per cent APR.

Co-operative Bank has cut its rates too, also offering 5.4 per cent APR for loans of £7.5k plus for packaged account customers, 5.5 per cent APR for current account customers, and 5.6 per cent APR for new borrowers.

Credit cards

There are plenty of 0 per cent balance transfer opportunities if your credit record is up to scratch, with Barclaycard leading the way, offering interest-free borrowing for two years, or 4.9 per cent fixed for three years.

Nationwide has halved the balance transfer fee for online applications to 1.55 per cent for customers applying online for its 20-month 0 per cent credit card or select credit card.

A couple of rate-for-life deals to consider: AA is offering 6.9 per cent for life subject to a one-off money transfer fee of 2 per cent; MBNA has a similar deal at 5.9 per cent and has reduced its money transfer fee from 4 per cent to 1.5 per cent.

With a money transfer you can switch funds into your current account and clear your overdraft.

Andrew Hagger is a personal finance analyst at

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