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    debt managementIt’s the New Year and for many people that means one thing – New Year’s resolutions. Generally when you think of New Year’s resolutions you’ll think of something health related; be it signing up to the gym or organising a healthy eating regime. However, more and more people are opting to take on resolutions that will have a positive impact on their personal finances.

    In the current economic climate, it seems like a great idea for people to take action to rectify their poor financial situations and what better time to start than at the beginning of the year? Christmas is an expensive time of year for many of us, so January seems as good a time as any to start changing those bad financial habits. We’ve listed a few things that you can do in order to make a start with your financial New Year’s resolution.

    First and foremost, you should consider drawing up a budget plan. Calculate exactly how much disposable cash you have after all of your essential outgoings have been deducted from your income. With this calculation in mind, you should be able to start living within your means, which is essential if you wish to avoid worsening your financial situation. At first you may find that sticking to your budget is demanding and you will have to make some sacrifices, but this will get easier over time.

    If you have a bit of extra cash at the end of the month, perhaps you could put it towards paying off any debts. Don’t just stick to minimum monthly repayments if you can afford to. The quicker you can pay off your debts, the less you’ll be paying in interest and the quicker you can start earning interest on savings.

    It might sound obvious but saving is the key to financial success. It is recommended that you save 10% of your income. Once you are debt-free, this can be done with little effort. The money that was being spent on repaying credit cards, loans etc. could be put into a savings account and actually earn you interest! Furthermore, you could carry out some research into investing your money, which could help your savings grow at a quicker rate.

    The first port of call is to clear any outstanding debts and then you can start thinking about planning your finances for the future. If you want to clear your debts, you might want to consider a debt management plan or an IVA. Contact Money Solve today to find out more about your options.

    christmas chutneyShoppers are out in force on the nation’s high streets, sparkly celebrity-filled adverts are taking over our TV screens, and the first flakes of snow are falling.
    Incredible as it seems, another year is drawing to a close and Christmas is just 17 days away!

    Consumers are embracing the opportunity for some festive cheer, with Christmas providing a much-needed distraction from the onslaught of economic doom and gloom that’s dominated the news for what seems like an age. When times are hard, people are even more desperate for the escapism of gifts, good food and gallons of booze.

    But there is a risk that seasonal celebrations could leave you with more than just a slightly bigger belly, some especially garish socks, and a very sore head. If you get carried away, Christmas could be followed by a financial hangover for which there is no easy cure.

    Of course, the next few weeks should be a time for indulgence and enjoyment, but that doesn’t mean financial common sense should go out of the window.

    So grab a Glühwein, stick on some Slade, and check out our top tips for saving money and avoiding debt problems this Christmas…

    1. Be realistic about what you can afford to spend. Create a budget and STICK TO IT.

    2. Do you knit? Are you a great cook? Love taking photos? Then think about making your own gifts using the skills you have. People will appreciate the personal touch.

    3. If you’re buying presents online, be aware of delivery charges. Buying lots of presents from different sites might not be the best idea.

    4. Check voucher code sites to see if you can save money on internet purchases.

    5. Christmas TV is usually an anti-climax so make sure you’ve got plenty of entertainment and activities you can enjoy at home. Staying in is the new going out.

    6. If you’re expecting lots of visitors, head to a cash and carry to stock up on cheap drinks and snacks.

    7. Ensure you’re on the cheapest electricity and gas tariffs and only use the heating when necessary. Invest in draught excluders and warm jumpers!

    8. Make sure you’re taking advantage of any state benefits or tax credits you’re entitled to.

    9. Don’t waste anything. We all love turkey sandwiches but there’s plenty more you can do with your leftovers. Be imaginative.

    10. Don’t rely on credit. If you can’t afford it now, can you really afford it later?

    Do you have any great money-saving tips of your own? Head over to our Facebook page to share your ideas.

    New research indicates that, in the UK, women are better at saving money than men. The Halifax Savings Report found that even though women tend to earn less, they generally manage to save more.

    On average, women have £7,981 in savings (40% of the typical gross salary for women) and men have £7,657 (23% of their average income).

    Bucking this trend, however, were men in Scotland and the North of England, who were found to be saving more than women in the same regions.

    One explanation for women having higher levels of savings is that they have wealthier partners who have transferred money to them for tax purposes. Older women may also often inherit money if they outlive their husbands.

    Martin Ellis, an economist at Halifax, said “the difference as a proportion of earnings is quite substantial. Female savers seem to be managing to devote more of their earnings to savings.”

    Overall, savings were highest in the South of England, even though people in the rest of the UK are saving a higher proportion of their income. Savers in Hambleton, North Yorkshire, were something of an anomaly, with average savings of £11,316 (46% more than the typical figure in the South). By contrast, the figure in Islington was slightly below the national average, with savers putting away just 12% of their earnings.

    Wondering how to keep costs down this Christmas? Keep an eye out for our top winter money-saving tips later this week.

    New research for the Consumer Credit Counselling Service (CCCS) suggests that 5 million UK households are at risk of facing debt problems due to a lack of savings. The research, which was carried out by the Financial Inclusion Centre, found that 4.3 million households have no savings whatsoever, and a further 1.1 million have less than £1k.

    As we have been reporting over recent months, the cost of living has been rising sharply, and this has made it increasingly difficult for many people to meet all of their existing financial commitments. In situations where there are no savings to draw on and wages aren’t stretching till the end of the month, people are turning to payday loans and other forms of credit to keep them afloat. Many such cases will result in people being unable to repay the additional debt they have taken on, which can cause major problems.

    27% of households without savings routinely depend on credit for essential expenditure, according to the Department for Business, Innovation and Skills. By comparison, only 9% of households with £1k – £10k in savings rely on credit in this way.

    The CCCS cited inadequate savings as a major reason for people getting into financial difficulties. They advise people who have no substantial savings to avoid borrowing money, especially if they are already in debt. A spokesman for the charity said: “When you are struggling financially, it can be very tempting to borrow more so that you can simply make your payments to current debts. However this practice of robbing Peter to pay Paul almost always makes a debt situation worse.”

    If you are already in debt and struggling to make ends meet, you may be able to benefit from debt consolidation or another form of debt management. Our team of experts can provide confidential advice on the most suitable course of action for you.

    Financial information services firm Markit has released its monthly Household Finance Index, which shows that British households are seeing their finances decline more rapidly now than when the recession was at its peak.

    Markit surveys over 2,000 households each month, gathering data on things like spending, savings, debt, job security, availability of and requirement for credit, and perceptions of inflation.

    The latest report indicates that the spending power of UK households has fallen for 3 consecutive months, and is now at its lowest ebb since the first survey was undertaken in February 2009. Between July and August this year, nearly 40% of households saw their finances deteriorate. Less than 6% said their financial situation had improved.

    Just 9% of respondents said they had been able to increase their savings, and 34% said their savings had dropped. 22% said their levels of debt had risen, compared with 17% who reported a reduction in the amount of money they owed. 24% believe their property has dropped in value, whilst 7% think their house is worth more now. In this climate, 50% of people are less willing to make a major purchase now than in the past.

    Tim Moore, senior economist at Markit, said: “With a global economic slowdown and an escalating eurozone debt crisis lapping on the shores, it was unsurprising to see households’ appetite for major purchases reverting to its lowest since the start of the year.” He added that take-home pay had dropped more sharply in August than in any of the previous 9 months, and said the increasing cost of living had compounded the fall in disposable incomes.

    If you are experiencing a deterioration in the state of your finances, don’t let things get out of control. Get debt advice from one of our specialists today.

    New research published by insurance company Saga shows that 1 in 5 people aged over 50 have cut back on the amount they spend on what they consider to be essential items, whilst 68% have reduced spending on non-essential items in an effort to save money.

    The report, based on a survey of nearly 12,000 over-50s, identifies the rising cost of living as the primary concern for this age group, with income from pensions and savings following closely behind. Health was less of a worry for the majority of respondents.

    Although the latest consumer prices index put inflation at 4.2%, the latest figures from the Office of National Statistics indicate that pensioners are experiencing an inflation rate of 6%.

    The Saga Quarterly Report also shows that, of those in work, a significant proportion are increasing their hours or delaying retirement, whilst the number of 50-64-year-olds who have lost their jobs has also risen. Women were hit hardest by this, with a 9.5% increase in unemployment levels. 43% of unemployed respondents had been out of work for over a year, up from 30% in 2009.

    Since the research was carried out, the stock markets have fallen sharply, causing pension funds to drop in value and annuity prices to rise. That means that those preparing for retirement will find their savings equate to a smaller pension income.

    Pensioners could see a £278 reduction in their spending power over the next year as inflation surpasses interest rates, according to research undertaken by another insurance company – Prudential.

    The financial crisis is affecting everyone, but these figures suggest that it may be pensioners who suffer the most.

    A study carried out earlier this year claims that the average adult in their twenties plans to postpone many of the key stages I their lives, such as marriage, having children and purchasing properties.

    The study revealed that the average couple back in 1985 would have spent £35,000 on property. This equates to four times the average annual salary. Today, a couple would be looking to spend £163,000 for the same property. This is eight times the national average for a twenty-something’s salary, which eliminates a huge number of people from getting a foot on the property ladder.

    First Direct conducted a poll back in February of this year and of the 3,000 participants, 75% agreed that young people are, “the most financially pressured in history”. 20% either had or believed they had to postpone wedding plans, whilst 25% thought they would have to postpone having children due to lack of funds. Sadly, 1/3 of participants claimed that they were considering not having children at all because they would never be able to afford to raise a child.

    In comparison, most of the parents of those questioned, never had to delay any key stage of their lives. The most significant barrier keeping many young people from planning for their futures is the difficulty of buying property. A typical parent of 45 would have married and had their first child at 26 and would have been on the property ladder by 27. Today, it is expected that the average age for a first time buyer would be more like 37, for people not supported financially by their parents.

    A new report on consumer saving carried out by ING Direct shows that average household savings are lowest in Manchester, and highest in Chiltern, Buckinghamshire.

    In central Manchester, the average household has just £569 in savings. Also in the bottom 5 are Hackney, Lambeth, Islington and Tower Hamlets (all London boroughs) – all those areas have average household savings of less than £780.

    At the other end of the scale, the average household in Chiltern has savings of £15,712, closely followed by Mole Valley in Surrey, where the average is £15,435.

    ING Direct began gathering their data at the beginning of 2009, and surveyed a total of 45,000 savers from around the UK. The report pointed out that savings aren’t simply a reflection of earnings – rather, the areas with the highest levels of savings tend to be home to an older population with few dependents, meaning they have had time to build up their savings.

    The overall picture the report paints of savings levels in the UK is fairly dispiriting – it indicates that 26% of Britons don’t have any savings whatsoever. Additionally, in the last 3 months average savings per individual have fallen by £99 to £1,684, and since the start of 2009, there has been a 20% drop in average savings. This shows how people have had to dip into their reserves in order to cope with increased financial pressures in the current economic climate.

    If you don’t have any significant savings, coping with debt problems can be particularly hard. Get in touch today to discuss how you could reduce your monthly outgoings.

    New research published by Santander and the Personal Finance Education Group (an educational charity) indicates that the rate of inflation on items commonly bought by children has risen far more sharply that the retail price index (RPI) over the last three years.

    The RPI has increased by 8.5% during this period, whilst kidflation’ has increased by 14.3%, the data shows.

    Items typically purchased by children include confectionary and chocolate, which cost 24% more than they did 3 years ago, soft drinks (up 16.2%) and clothes (up 17.4%). Of the children surveyed, nearly half said sweets, snacks and drinks were what they spent most of their money on. One in three said they spent money on going out with friends or family, and one in four regularly bought video games, which have seen a 27% price hike. Mobile phone calls and texts (up 10.4%) were also listed as a common expense.

    Nici Audhlam-Gardner is the director of banking at Santander. She said that this research dispels the idea that inflation is something “that only affects adults”. She added that the costs of routine purchases made by children are “rising at a very worrying rate” and said that the above-inflation rises are also making life difficult for patents.

    The situation for kids is exacerbated by the fact that nearly half of parents have either cut back on pocket money or stopped it altogether. 10% of children now get less pocket money than they did before the recession, and 2% no longer receive anything. 13%, meanwhile, now have to do chores to earn less than what they used to get, and a further 21% have to earn their allowance but still receive the pre-recession amount.

    Researchers surveyed 500 children, and found that, for children aged 10-16, the average weekly pocket money was £5.50. In 2007, by comparison, that figure was £8.01. That amounts to a 46% reduction.

    More than 40% of 10-year-olds regularly deposit money in a piggy bank or savings account, but just 23% of 16-year-olds do so. It has been argued by groups including Which? Money that the pitiful interest rates offered to children make saving pointless, and that this makes it harder to encourage them to practice good money management.

    In this economic climate, many of us are faced with debts, far greater than we’ve ever experienced. The total UK personal debt currently stands at around the £1.5bn mark. The average household debt is approximately £16,500 (excluding mortgages) and it is estimated that 346,000 loan accounts are in arrears. However, even with these grim figures, credit companies are still more than happy to offer credit to anyone, it would seem.

    Most of us will recognise the situation all too well; you’re weighed down with the day’s shopping and just about to pay for your goods at the till. Just before you hand over the cash, the cashier offers you a discount on all of your purchases if you sign up for a store card. “It’ll only take a second”. How could you possibly resist such an offer?

    However this offer may sound at the time, you should always be wary; unless you are extremely careful with your money, store cards can come back and sting you in the future. In the UK, store cards have an APR of anything up to a staggering 30%.

    Many store cards offer an interest free period, usually between 30-55 days. In this time you should aim to clear your balance and reap the full benefit of the discount you made when signing up. If there is a balance on your card after this period, be prepared for the interest to stack up.

    With credit being offered left, right and centre, it is easy for debt to spiral out of control. What is being sold as a ‘convenience’ could actually end up putting you firmly in the red.

    If you do take a store card, or any other credit card for that matter, make it your priority to make payments on time to avoid substantial late payment charges. Also, refrain from making the minimum payments. Pay as much as you can each month to clear the balance as quickly as possible.

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