1 - Clear Debts

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Clearing debts may very well be the most prominent New Year’s resolution of 2009 as people strive to revive their financial situations.

Because lenders pay less interest on savings than they charge on credit it is usually more cost-effective to pay off debt than it is to save. But you must prioritise.

Firstly - Deal with debts that threaten your home and life, such as your mortgage, utility bills, and council tax arrears.

If you can, try and make small overpayments on your mortgage as it will benefit you in the long term. Also consider switching your mortgage at the end of your current deal for a lower fixed rate. Moving from 5.5% to 4.5% on a £150,000 loan will save you £1,068 per year.

Be open and honest with your lender before defaulting on repayments as they may be able to implement a manageable repayment plan. Be honest with your friends and family, too; it will be one less thing to worry about.

Secondly - Sort out your credit card payments by considering 0 per cent balance transfers and trying to pay off more than the monthly minimum.

2 – Review Investments

The current investment climate can be regarded as a disaster area or as a buying opportunity as many experts are divided in their assessments; some expect equities to rise in 2009 whereas others think they will stagnate or fall. Our in-house Independent Financial Advisor can help you review your investments and advise on the most suitable course of action.

3 – Accurate Budgeting

Make an accurate list of your income and all your monthly outgoings. And be honest. List everything from mortgage repayments to magazine subscriptions, and even the pocket change you spend on snacks at work. You may be surprised at how much money you “waste”.

Budgeting properly will identify whether you end your month with a surplus or deficit and will enable you to set realistic goals for the coming months, whether it be to eliminate debt or fund a holiday.

It might be an idea to build up a “just in case” fund for unforeseen problems or emergencies, and at the same time, review your insurance needs.

Regular budget and financial planning reviews keep you up to date with changing circumstances. We can help you with every aspect of financial planning and we may present solutions you had previously not considered.

4 – Optimise Savings

Remember that the savings of an individual are guaranteed up to £50,000 per financial group, so you really should spread large amounts between different establishments. But, also bear in mind that what appear to be separate brands may be part of the same group, for example Halifax is part of the HBOS group.

5 – Minimise Tax

Tax–efficiency is especially important if your assets cross the Inheritance Tax Threshold (IHT) which is currently £312,00 for an individual and £624,00 for the surviving spouse from a married couple or a civil partnership. IHT stands at 40% so on a couple’s estate worth £1million, the tax payable would be £150,400.

You can reduce the amount of IHT facing your heirs by making gifts in your lifetime if you do so more than seven years before your death. Anything given away less than seven years of passing is subject to the 40% rate.

As accountants and Independent Financial Advisors, we can help you minimise the amount of tax you pay.

6 – Affordable Lifestyle

Whatever happened to simple ways of saving? Cycling or walking to work could save you hundreds of pounds each year on petrol or public transport and also gives you an almost free workout whilst helping reduce your carbon footprint.

Shop around for your food and services, or take a packed lunch to work instead of visiting that sandwich shop on the corner. There are lots of ways in which to cut costs. If you smoke, why not cut down? Why not try and source non-food items from charity shops? The credit crunch is continuing to affect charities badly so you would be helping out worthy causes, and you can find almost anything in some of these shops.

7 – Switch Utilities and Telecom Services

Many householders unnecessarily waste large sums of money on energy and telecoms bills simply because they don’t compare the deals on the market. There are many deals available from a plethora of providers but whichever one you choose, you can save money by paying by direct debit.

Also consider sending your energy provider regular meter readings. If you don’t, you will be subject to an estimated reading which may be a lot higher than your actual usage. Conversely, it may be a lot lower, so beware.

However you look at it, there are many ways to reduce your outgoings and restructure your financial circumstances. If you need any help with any of the points raised above, please do not hesitate to contact us. We are here to help. Contact us now on 01472 345888 or email Victoria Carmichael at victoria.carmichael@aprobinson.biz