Maybe it was the January sales that proved to be your undoing. Either way, you may now be at last over the alcoholic hangovers of the festive season only to find yourself facing a financial hangover that could prove to give you just as nasty a headache that could last an awful lot longer.
Perhaps you began the New Year with a resolution to get fit; to turn that wobbling party seven into a rippling six pack. Did you sign up for a gym? The turn of the year is the traditional boom time for the fitness end of the leisure industry when porked-out, post- Christmas, guilt-laden and straining at our shirt buttons and waist-belts we sign up for gym membership.
Did you? Are you still going? The average Brit attends a gym precisely twice after signing up for it and then continues to pay monthly membership out of a mix of angst and forgetfulness before cancelling six months later. May I suggest, that before you try the expensive way to get fit take a look at the cheaper way.
Mind you, there’s a sound argument put forward that says you’ll have a longer and happier life if you don’t pound that treadmill at all. ‘The Joy of Laziness: How To Slow Down And Live Longer’ by Dr Peter Axt, retired professor of health science at Fulda University near Frankfurt, and his daughter, Dr Michaela Axt-Gadermann, a GP, suggests that we have a limited amount of ‘life energy’ and that the speed with which it is used up determines how long we live.
They argue that high-energy activities accelerate the ageing process and make the body more susceptible to illness. My own, cheaper recipe for keeping trim involves striding firmly past the gym entrance, allowing you to concentrate on getting your wallet fit.
Not only won’t this cost you anything, it could put thousands of pounds back in your pocket! You don’t need to be in millionaires’ row to make a massive saving. Anybody with a credit card, |
personal loan or many other financial services could be better off with a more competitive product.
Recent research shows an average of more than £3,800 a year being wasted by people taking out uncompetitive loans or putting their savings into poorly performing accounts. That’s the equivalent in your wallet of almost 23% of the average annual income: according to National Statistics, average annual earnings in 2003 were £25,170. The total potential savings of £3,842.09 represent the net (after tax) equivalent of 23% of this figure.
You have a simple choice: either ask the boss for a pay rise of more than a fifth or arrange one for yourself by making your money work more efficiently. It makes sense to manage your debt as efficiently and cheaply as possible. You won’t pay your debts off any more quickly by paying more interest than you need to!
The biggest savings we could make come, not surprisingly, from better management of our biggest debt. Analysis of the difference between near worst and near best mortgage deals currently available shows potential savings of £2,387 a year on a £110,000 mortgage. These savings are based on the difference between normal monthly payments and exclude any related fees.
Shuffling the cards to get the right credit card deal pays real dividends. On the same near worst (Citi Classic Plus Visa) to near best (Lloyds TSB Advance) basis, the savings available |
on a £3,000 balance carried for one year amount to £525, equivalent to 17.5% of the outstanding debt.
And it’s not just a matter of making the right decisions about debt. Make your savings work harder and you could be hundreds of pounds better off just by choosing the right account. A near best savings account (Bradford & Bingley Direct ESavings) would put £244 more into your hands over 12 months than a near worst (Northern Rock Instant Access).
If you’ve reached the point where you are having trouble juggling various different debts as the bills land during the month then maybe you should consider debt consolidation. But be very careful about taking on more debt. You should be wary of many firms that do nothing else but debt consolidation. They may charge high interest rates and require extra fees on top.
Many companies advertising special consolidation loans for ‘restructuring’ your debt may also offer to lend you an extra amount on top of your current debts, so you have a lump sum with which you could buy a car, or improve your home. This is not generosity on their part: the more they lend you, the more you have to pay back, and the more money they make.
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