Make 20008 the year you fix your finances, ditch the diet!

January is a time of self flagellation, it would seem most of us would rather face the sales crush / starve ourselves / book a holiday, than sort out our finances. And after the festive binge, the last thing anyone wants to do is open their credit card statement. If you're self employed or what laughingly passes for higher paid then you have got the self assessment tax deadline of 31 January to worry about too!

So if your wallet has been the only thing that's got any exercise over the last few weeks then there are five very simple and fairly painless resolutions you can make to restore fiscal normality.

Resolution #1: Shape up!

Most people admit to spending too much, eating too much and drinking too much at Christmas. So don't make it worse by trying to spend your way out of your festive excess joining a gym or embarking on an expensive detox diet. Running, cycling and playing football are all great forms of exercise, and fun too. And they don't cost thousands of pounds a year. Plus you do them with friends rather than jogging on a soul-less and fun-free treadmill.

If you are going to join a gym try one without an annual contract so you are not tied in. Cannons offer one as do as do many local authority run-gyms. Prudential currently has a health insurance plan that offers you free gym membership, but you do have to pay for the health insurance.

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Of course being financially fit and healthy also means having financial goals. According to the Financial Services Authority 80% of us don't know where our money goes. Making a budget is the most empowering thing you can do.

You'll need to draw up a list of your monthly expenditure (excluding debt repayments) as well as making 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. Then subtract the total monthly expenditure from your monthly income to show how much you can afford each month to repay your debts. Ideally you should be paying no more than a quarter of your monthly income on debt repayments.

Resolution #2 Ditch your debt!

If you have got a good credit rating and want to bring your repayments down, consider applying for a zero credit card balance transfer and transferring any outstanding store or credit card debts to the interest-free card. But you need to pay it off before the zero interest offer expires.

Are you looking for 0% balance transfer cards?

It's also important to make sure you know how much interest you are paying on your debts. Check against what's out there at the moment to make sure you are getting the best deal. You can do this simply by shopping around. Be realistic about the amount of debt you can pay off.

If you have built up debt on credit cards and store cards and you are paying interest rates of 20%-plus, you could be paying a great deal less. Zero percent balance transfer deals can work well for those with expensive debt to switch over. The best thing to do, once you've transferred your balances, is to close the old credit card and loan accounts and also cut up your new card to stop you being tempted to use it for purchases. As with all 'free' deals there are catches to be aware of such as balance transfer fees. For some deals these can be up to 3% of the balance.

But if your sums don't add up, in that you're spending far more on repayments than you can afford - don't panic. You're not alone and expert help is available. Talk to the people you owe money to and use free advice services, such as Citizens Advice Bureau, National Debtline or the Consumer Credit Counselling Service.

Problem debts? Check out Moneyextras Debt Advice Centre

02 January 2008 © Moneyextra.com

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