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Get a grip of your finances in 2008

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.

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• Sit down and write a list of all the money you owe (credit cards, personal loans, overdraft, friends/family etc) - This is the hardest bit. Many people know they have money problems but are not prepared to face up to them.

• Draw up a list of your monthly expenditure (excluding credit card and personal loan 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!

• Subtract the total monthly expenditure from your monthly income to show how much you can afford each month to repay your debts.


• Apply for a personal loan or a 0% credit card balance transfer and start paying off the amount you owe.


• Make sure you know how much interest you are paying on your credit card and personal loans. Use Moneyfacts' Best Buys to check against what's out there at the moment to make sure you are getting the best deal.


• Be realistic about the amount of debt you can pay off.


• IMPORTANT - If you are repaying existing credit card debts, ensure you destroy the credit cards and close the accounts - otherwise if you keep the credit cards in your purse or wallet you may be tempted to use them in a moment of weakness.

If you find that your financial problems are more severe, then you should seek free confidential advice from your local Citizens Advice Bureau or contact the National Debtline. You can also read our article on Getting out of debt for more top tips.

Once you know exactly what you need to borrow, look at the refinancing solutions that are out there to help you to regain control your finances.

Credit Card Balance Transfer Deals

If you have built some debt on credit cards and store cards and you are paying interest rates of 20% plus, you could be paying a great deal less. 0% balance transfer deals can work well for those with expensive credit card debt to switch over. The best thing to do, once you've transferred your credit card balances, is to close the old credit card accounts and also cut up your new credit card to stop you being tempted to use it for purchases.

As with all free deals there are catches to be aware of:

• Look out for the credit card balance transfer fees. For the longer term 0% deals these can be up to 2.98% of the balance.
• Take control of the credit card 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 credit 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 credit 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.

Personal loans

If you are paying high rates of interest on numerous credit cards and store cards and want to pay it off and be left with a more manageable single monthly repayment, then an unsecured personal loan could be the best route for you. The advantage of a personal loan is that you have an agreed interest rate and monthly repayment, both of which are fixed for the full duration of your personal loan agreement.

If you do look into the possibility of getting taking out an unsecured personal loan, keep an eye out for the personal loan provider pushing you into buying expensive insurance to go with it.

The New Year will undoubtedly pick up where 2007 left off, with some 0% credit card balance transfer deals and low rate personal loans available for those with a spotless credit history. The problem is that, because of the credit crunch and increased levels of bad debt suffered by lenders, consumers with a less than perfect credit history will find it more expensive to borrow money on credit cards and personal loans.