Detox your finances

It's been a tough couple of years financially and most householders are feeling the pinch. If the recession has left your finances in a mess, now is the time to take control so try these five financial New Year's resolutions and make the most of your money.

detox your finances
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Give yourself a fresh start financially by setting a new budget for the new year. Take a good look at your bank statements and make a note of income, regular payments, outgoings and other expenditure.

It is only when you know how much cold hard cash you have left over that you can properly budget for the month in terms of disposable income so be honest about what you can afford and, when you've made a plan, stick to it.

Cut back
While you're perusing your bank statement, keep a look out for unnecessary spending - the gym membership that doesn't get used or the premium bank account that charges you for perks of which you never take advantage.

Monthly direct debits and standing orders will likely be taking a chunk out of your salary so cut back where you can. On a day-to-day basis, money can be saved simply by taking a packed lunch to work, walking or cycling instead of driving if you aren't too far from the office and saving your pennies by swapping that early morning trip to Starbucks for a free coffee at your place of work.

If you are not one to keep track of your spending, consider writing a money diary - after a month, it'll be easy to see where all your hard-earned is going!

Check your interest
Interest rates have been low for some time now - great for mortgages, not so great for savings. If the interest rate on your savings account is lower than the rate of inflation, you're not getting any value from your stashed cash. Time to move on to a savings account with a competitive rate. Anyone with money to spare should consider an ISA where you can create a tax-free emergency fund.

On the other side of the coin, you may be paying a premium rate on your credit card, loan, or mortgage so get comparing and switch to a better deal.

Go compare
From car and home insurance to gas and electricity, there is money to be saved by switching suppliers. Make a note of when your various contracts are up for renewal and shop around. Most insurance companies, for instance, will happily offer you a better deal in order to get new business so why not take advantage, even it is only for one year.

Deal with debt
Plunging your head into the sand is just about the worst thing you can do if you are mired in debt. Face up to the problem and begin prioritising.

Make sure you pay the essentials first (ie. utility bills, mortgage payments and council tax) and get in touch with the creditors you are struggling to pay. Most will help by advising on how you can pay off your debt, often with a fixed monthly payment plan that will allow you to clear it gradually.

For those seriously struggling with debt, there is help available. Organisations such as the National Debt Line and the Citizens Advice Bureau can offer free, impartial and confidential advice.
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