Money Management

Getting a grip of your finances

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 and so on). 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.
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. 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.
8. 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.

• 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.