5 steps to avoid debt in the New Year

New Year, new you! Why not kick start the New Year with a fresh approach to your finances and say no to new debt?

December may have caused you to rack up some sizeable credit card bills or overdraft facilities following a shopping splurge on gifts, but pretty soon it will be time to recover from your debt hangover.

Here are 5 tips to avoid debt in the New Year.

1. Cut back on spending

It’s an obvious one but with so many tempting January sales, it could be very hard to stop, especially if you are planning on buying the things you have put off for a while.

The average person will spend £500 on Christmas alone this year, according to M&S money. This doesn’t include all the Christmas drinks, parties and entertainment that you might indulge in.

2. Debt Management

If you have a growing amount of debt, which you are avoiding like the plague, it’s time to face up to it and find the cure. You could effectively manage your debts by taking the time to work out exactly what you owe and to whom, how much interest you’re paying and talking to a specialist debt management company.

Debt Advice Group offer a free downloadable self help pack to get you started.

3. Financial education

Many people may be unaware of what they’re actually buying when they purchase a financial product such as a credit card or loan. Make it your New Year’s resolution to arm your self with the financial know-how to avoid high interest rate cards, and find the best deals. Much of the jargon is explained in the self-help pack.

4. Set a budget & stick to it!

Set yourself a challenge to see if you could live off £10 a day to discover what essential items you do and don’t need.

5. Don’t take on any more debt

The last thing you want to do is take on more debt and increase the amount you owe, pushing you further into debt. Credit cards, personal loans, and overdrafts can be useful providing that you never miss a payment and replace the balance in full. However, they’re bad news for many who should avoid buying what they cannot afford.

Moneyextra.com recommends you take independent financial advice before acting on any article

2011-12-16 09:35:06 © Moneyextra.com