How to stay out of debt in 2010

So now the fun and festivities are over for another year, and we have all made our new year´s resolutions, it may be time to tighten your belts and stay out of debt in 2010.

If you are struggling to make ends meet after Christmas, and need to seriously reassess the amount of money you are spending each month, there are several ways you can be wealthier by this time next year. With some forward planning, you can make your money last each month without running out of cash a week after payday. With a little know-how and a little effort, you can make your money stretch until the end of January without resorting to any drastic measures such as payday loans.

•    Budget to make the most of your money

The first step to budgeting until payday is to work out the actual amount of money you have, and how much available cash you have after paying the bills. Look at your bank balance in January and don´t bury your head in the sand. Ignoring debts will only make matters worse – work out a strict budget and stick to it each month, saving any excess cash you have at the end of the month.

•    Use cash not plastic

To keep on top of your finances, withdraw a set amount of cash each week and don´t spend more than your allowance. If you use a credit card or debit card you can easily lose track of how much you are spending, but if you are handing over hard cash, it is easier to see how much is left after each trip to the shops. Once you have taken out a set amount of money from the bank each week, keep your cash cards at home, which will make it more difficult to ´nip to the cashpoint´.

•    Free options for new year cheer

January can be a miserable month for many people –particularly if they have overspent during the festive season. If you continue to spend more after Christmas to cheer yourself up, you could end up with massive debts in 2010. Instead of spending, look for free options to cheer yourself up, such as a night in with a good DVD and a bottle of ´vino´ rather than splashing cash on the high street you can ill-afford. Retail therapy really is a quick fix, but when you get your bank statement or credit card bill at the beginning of February, you will find yourself with more financial problems than you started with, and find yourself in more debt. And remember, don´t be tempted during the January sales to spend, spend, spend. Even if items are reduced, it is false economy to buy something you don´t need, particularly after you have overspent at Christmas.

•    Cut back and save

If you are looking to explore savings opportunities and find ways to make the most of your money, you need to start cutting back on luxury items now. Take your time in January to really see where you can save money. For example, compare your household and car insurance with cheaper options, shop around for a cheaper mobile phone contract and check out prices from utility providers for the best options. Making small changes such as these can mean huge savings over 12 months, and once you have the mindset that you want to save money, you will start to view things differently, and cut out the luxuries without having to think too hard about it.

•    Sell your clutter

January is one of the best months to get rid of your clutter, including unwanted Christmas presents, plus clothes, shoes and toys that are surplus to requirement. Sell your stuff on E-bay or consider doing a car boot sale or a Sunday market. Local magazines, including the Friday Ad also publish free adverts to sell products, and by getting rid of your clutter you can make extra cash for things you no longer want.

•    Beware easy debt options

However tempting it may be to apply for easy debt options when you are struggling with your finances, beware the companies who advertise debt help options that are too good to be true. There is no such thing as a ´free lunch´, and easy options such as payday loans can leave you owing money for years to come if you default on payments. The interest rates are astronomical, and if you start applying for payday loans each month, you are unlikely to ever get out of the vicious circle. If you default on these loans, the amount will be rolled over and the debt will increase by a huge amount. Store cards and credit cards can also result in more debt, and if you insist on using a card, make sure it is one with a 0% interest on purchases card.