It’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.

An Individual Voluntary Arrangement (IVA) is a government-endorsed solution for people whose monthly debt repayments and living costs exceed their income, allowing them to pay a manageable amount. IVAs are normally chosen by people who are unable to cope with unsecured debts they have taken out, such as personal loans or credit cards.

If you have a mortgage or other secured borrowing such as a debt consolidation loan, the provider has lent you the money on the basis that the value in your property gives them a means of recouping their losses if you stop making repayments. Because mortgages tend to be large sums, providers need a means of offsetting the risk they are taking by lending you the money. Similarly, debt consolidation loans tend to be utilised by those with a poor credit history, so lenders secure the debt to minimise the risk they are exposed to. Therefore, these providers have a legal guarantee which ensures that, in the event you fail to make the agreed payments, they can force you to sell your house in order to repay the loan.

For this reason, it is highly unlikely that these companies would be willing to agree to take reduced payments within the terms of an IVA. Simply put, IVAs are not designed for situations where borrowers are struggling to repay large secured debts.

That doesn’t mean you can’t set up an IVA if you have a mortgage or another secured loan. If you also have various other unsecured debts that you’re having difficulties repaying, we may be able to arrange an IVA that addresses those debts. If you don’t want to lose your home, however, you need to ensure you keep up the monthly repayments on any secured borrowing.

The Office of Fair Trading (OFT) is aiming to protect British consumers who have entered an individual voluntary arrangement (IVA) by warning them of unscrupulous businesses that are looking to make their debt problems worse.

According to the OFT, there are a number of companies operating around the country that are providing insolvent Britons with misleading information with regard to their financial situation.

These firms have been telling people that they might have been mis-sold their IVA and could be better off if they entered bankruptcy, when this is not necessarily the case, the office has explained.

Ray Watson, OFT director for consumer credit, said: "Tackling companies who are engaging in unfair business practices by targeting vulnerable consumers with misleading advice and information, particularly if it leads to consumers becoming more over-indebted, is a key priority for the OFT."

Credit Action reported recently that one person in the UK is declared bankrupt or insolvent every four minutes.

A growing number of loan sharks are looking to target vulnerable debtors by luring them in with promises of free financial advice, according to reports.

The Bankruptcy Advisory Service (BAS) has stated that about ten more advice sharks are emerging every week.

"A lot are internet based and claim to offer people help with their money worries, when in fact they are pushing them into inappropriate and expensive debt solutions," Joanne McGillan, BAS spokesperson, told the Guardian.

Meanwhile, the Consumer Credit Counselling Service has also witnessed a significant increase in numbers, with some companies targeting customers on individual voluntary arrangements (IVAs).

Consumers are informed that they may have been mis-sold the IVA and are advised that they should instead file for bankruptcy, with the shark taking an inflated fee.

Other scammers are targeting consumers by phone using automated dialing techniques in an effort to track down debtors.

Recent figures from the Ministry of Justice have identified a sharp rise in the number of people filing for bankruptcy in the UK.

The rates at which UK consumers turn to individual voluntary arrangements (IVA) as a solution to their debt problems is set to increase dramatically, it has been claimed.

A report from credit risk management firm TDX has suggested that the UK has around £25 billion worth of "problem" debt and that the scale of write-offs is likely to rise this year.

Close to 60 per cent of the country’s unsecured debt is accounted for by credit card arrears and the rate of entry into IVAs and other debt management solutions could be almost double this year than it was in 2007, according to TDX.

Around 400,000 Britons are believed to have entered either an IVA or a debt management solution last year and TDX has indicated that house price reductions and rising inflation will force many more people to take this action in 2008.

In January, accountancy firm Grant Thornton predicted that around 120,000 people in the UK will be declared insolvent in 2008.

There has been an increase in the number of "high-flying professionals" seeking individual voluntary arrangements (IVAs), an expert has asserted.

Director of comparison and advice website Iva.com Terry Balfour made his comments to the Scotsman newspaper, highlighting that there has been a "significant" increase in insolvency queries from people who earn higher-than-average salaries.

He told the publication that the average level of debt is about £25,000 but that some people have approached his organisation because they are considering the route for debt of just £6,000.

A number of property developers, accounts, lawyers and bankers are now considering IVAs as a route out of their problem debt, Mr Balfour continued.

"The level of contact from people whose finances would usually be regarded as watertight indicates just how pervasive the current crisis is and points towards more casualties to come throughout the year," he added.

Research conducted last year by CreditExpert.co.uk found that five per cent of the population have considered or entered insolvency – either bankruptcy or the IVA alternative.

As the cost of borrowing rises, it could impact on the British economy, an expert has acknowledged.

Gareth Mackie, a spokesman for high street bank Halifax, warned that people who find themselves in financial difficulties should seek advice and support from their lender or bank.

"It’s not in anyone’s interest for people to get into financial difficulty so don’t leave it until things are in a precarious situation," he added.

However, for some Britons, Mr Mackie’s advice may be too late and their debts through credit cards, loans and other sources of borrowing have become too great for them to cope with.

One possible alternative to bankruptcy in such cases is an individual voluntary arrangement, more commonly called an IVA.

These agreements allow the debtor to repay an affordable monthly sum for a fixed period at the end of which they can be set debt-free.

IVAs can allow people to retain ownership of important assets such as their homes.

Wales is experiencing a huge rise in personal insolvency, it has been reported.

The Insolvency Service has released figures which show there has been a 400 per cent increase since 2000 in the number of people turning to bankruptcy and individual voluntary arrangements (IVAs) to escape debt.

Jenny Willott, Welsh Liberal Democrat MP for Cardiff Central, told local current affairs sources News Wales that the figures show the "personal debt time-bomb" is beginning to detonate.

"Credit card debt is soaring, repossessions are rising and now we see a huge jump in the number of people in Wales going into bankruptcy or turning to IVAs," she added.

IVAs were created by the government to provide an alternative to bankruptcy and are an informal agreement made through a county court.

The debtor makes an affordable monthly payment for a fixed period – often five years – and at the end of that time, the remaining sum can be written off.

Around 4.5 million Britons are living in fuel poverty, a new report has warned.

Online price comparison source uSwitch.com has revealed that while energy prices rose by 15 per cent this year, basic pensions increased by just 4.38 per cent.

It claimed that this is forcing many vulnerable people to cut down on their heating costs or their spending elsewhere.

Ann Robinson, director of consumer policy at uSwitch.com, said: "If the government is truly committed to breaking the stranglehold of fuel poverty in this country then it needs to work with the industry and regulator."

It is not just the cost of energy which is rising; many households have been hit by an increase in the cost of food and other living-related costs, making their household income increasingly squeezed.

For some people, this could mean that maintaining their debt becomes increasingly hard as their disposable income shrinks.

There are many options open to people whose borrowing has reached problem levels, the government lists debt management companies, informal agreements and individual voluntary arrangements as just a few of the potential routes out of debt.

One in six Britons believes the country is already experiencing recession and one fifth admit the thought of such an economic slump actually frightens them, a new survey has revealed.

A study conducted by financial news resource Fool.co.uk discovered high levels of uncertainty among UK adults over the country’s fiscal status and one in 20 are concerned the credit crunch will continue "indefinitely".

One alarming figure revealed by the survey is that one-third of people who have not yet experienced a recession believe they have no choice but to use credit to manage.

Fool.co.uk discovered that almost three-quarters of all Britons believe the cheap availability of credit has damaged society.

However, many people may have found their financial situation is already tight even without a recession, as rises in the cost of credit and an increase in the cost of fuel and food has left many household incomes strained.

One option for people who are concerned they could be heading for bankruptcy as a result of their debt in an individual voluntary arrangement, usually called an IVA.