Happy New Year everyone! I hope your festive period was full of pleasantries, good food, great family and consisted entirely of recharging, relaxing times? (Who am I kidding… let’s be honest, we’re all glad it’s over for another 12 months!).

Every month there are themes to personal finance. March/April time is the period of tax panic, ISA renewals/hunts and other ‘end of the financial year’ matters. But what of January? There is little changing in the UK world beyond the calendar, but it’s the perfect mental incentive time to do some financial ‘spring cleaning’.

1. Review/Amend/Create Household Budget

In the spirit of New Year’s Resolutions, now is the perfect time to be giving the once-over to your finances. What are you paying for that you can cut, reduce, or review? Even if you’re not in debt any money you don’t spend is money that you can save instead. Does your household budget reflect reality, or is it a pipe dream that is summarily ignored 3 days after payday?

2. Haggle With Providers

Paying £50 for Sky when you only watch 5 channels? Do you need the Sports package they enticed you with 3 months ago with the half price offer? Give them a call, route yourself to “If you’re thinking of leaving Sky…” and plead poverty. Get them to remove unnecessary package(s) you may have, and then beg for a reduction in price. You’ll probably get it and save a fortune over the year. If you really watch that little TV, would you do with FreeView? Click here for 5 specific tips to reduce your TV costs.

Do the same with any recurring contract you have. Landline phone, mobile phones, internet access, gym memberships, and so on. Click here for loads of tips on how to haggle!

3. Shop Around

One of the biggest household expenses after rent/mortgage is food. Supermarkets are at war for our custom as they realise the recession is not abating any time soon, and every foot through the door is an important one. Loss leaders are a dime a dozen, and special offers are all over the store.

If you always shop in Waitrose, try Sainsbury’s. Drop down from the ‘Premium’ brand to store’s-own, and stick to your food budget. Shamefully I have gone from spending £600/month on food down to £150-200 just by a little forward planning and spending 5-10 minutes hunting out bargains. Click here for loads more tips on cutting your grocery spending!

4. Check Your Rate – Savings

Are you getting the best your bank or the finance world in general has to offer on your savings account? Barclays lowest rate of interest on their savings accounts is 0.1% when online you can grab a (still pitiful) 1.5% by shopping around. Check your ISA allowance is full for this year (You have until the end of March), and make sure it is paying a decent rate as well.

5. Check Your Rate – Credit

After Christmas is the ‘guilty moment’. If you have overdone the Christmas spending on presents, travel and gastronomy, see if you can’t get a better interest rate or balance transfer deal than you have right now. Many providers at the moment are offering 0% deals that can be yours for the taking, potentially saving you hundreds.

6. Council Tax Money

For the majority of the country, for the next 2 months there won’t be any council tax to pay. Use this money wisely and put it towards your emergency fund rather than spending it on incidentals. It is money that should be in the monthly budget anyway, so won’t be missed.

7. Sell Your Clutter

Has a new 55″ OLED TV replaced your 40″ Plasma? Sell sell sell, on eBay, Friday Ad or any other method. De-clutter your home, your life, and release extra money for debt reduction, savings or other plans!

Good luck, and here’s to your dreams for 2013

As I wrote several months ago in my Financial Meltdown series, I took out a consolidation loan in January 2009 to pay off 2 higher-rated loans, and get in return one, cheaper, lower rate loan. The two old loans were with Barclays (my banking provider of choice), and so was the new loan.

I made an appointment with a Personal Banker in January, and proceeded to spend over an hour with her. I was open and honest, and she really spent time with me. I discussed my goals, where I was financially, and she talked through the options open to me. I left feeling very, very happy. I had finally taken steps to securing my financial future for the first time in my adult life and left with an even more positive view of my bank of choice.

The first of the two higher-rate loans was settled without complication. The other – due to the loan being created on the ‘old’ system but settled using the ‘new’ – refused to close in its entirety.  I was advised to “not worry about it” and it would resolve itself eventually.

The account remained attached to my online banking with a balance showing. I phoned every few months to check all was in order, and each time I was assured: all was in order. During each call, the balance remaining was described as simply the PPI refund that I had not had to pay during settlement. The ‘new system’ would get bored with it eventually and close it off.

On the 3rd July 2009 I received a ‘Loan Account Statement’ covering the 1st October 2008 to 2nd July 2009 listing a ‘Closing Balance’ at the end. No further correspondence was received and I took this to mean that the settled loan was in the final throes of being removed from my account. A little cheer was given, and the letter filed.

Fast forward to this month, and a Direct Debit for £7.83 bounced from my current account (as the instruction had been canceled by the branch when the old loan was settled). Curious as to what this amount was for, I phoned my branch. The lady I spoke to advised – after considerable digging – it was an attempt to take payment for the old loan still showing on my account. Due to limited information available to counter staff, she could not offer any further information.

Perplexed, I phoned the Barclays Loan line and spoke to a lending specialist, who could not answer why the payment attempt was made. Nor could she answer why it had taken over 10 months to attempt it. All she could tell me was I now owed Barclays £8.29 – courtesy of daily interest. I paid this with her by Fund Transfer, but she could not guarantee me that it would not be registered with the Credit Reference Agencies as a Late Payment.

In a letter to Barclays Customer Relations I penned:

“I find this incomprehensible and indefensible. Not only have I wasted most of this evening reviewing correspondence, bank and loan statements, and telephone records, but now fear negative reporting to my credit rating. Ostensibly, the payment is some 10 months late, but not due to any action or inaction on my part. When you settle a loan and receive repeated reassurances that everything is in order, is it unreasonable to believe that this is the case?

Currently, the loan account is registered as Satisfactory with no late payment markers. I want to ensure that this loan account is now marked as Settled without detriment to my credit history – for what is either a Personal Banker error; a computer error; or a combination of the two. I would also like to discuss the matter of compensating my time for having to be writing this letter in the first place.“

I love Barclays. But a relationship where they have treated me very well over the last 14 years is in danger of falling apart from a silly error on their part. The outcome of this complaint will very much determine where the remainder of my adult banking is conducted.

Tread carefully, Barclays. Very carefully indeed.

Have you ever been in conflict with your bank?

If you caught the first post in my ‘Dig Yourself Out of Debt‘ series last week, you will  know how important I think it is to know exactly where you stand in terms of your total immediate unsecured liabilities, and any cash reserves you may have. Now, before the uber-observant amongst us say anything – yes I realise that ideally if you have cash reserves you would pay down debt! Afterall, the interest you are probably earning on any positive balance from cash is likely to be dwarfed by the loan or credit card APR.

All that said however, you may like me be stuck with a front-loaded loan that offers no benefit of repaying early (other than to see the back of the loan) and no option of making over-payments. The only option in that scenario is to save up the lump sum necessary to pay off the balance (plus the penalty of one month’s worth of interest) if you want rid of it early – which I do.

At the end of my own ‘Know What You Owe’ fact-finding mission, I did some simple math and came up with my ‘net worth’ (net worth literally just means how wealthy you are), and it’s really easy to figure out.

Add up everything you owe (liabilities), and subtract that amount from any cash and savings you have. Whatever you are left with is your net worth. Simple!

I wanted to know how I was getting on with meeting my own debt freedom target (no later than New Years Day 2010) so I dug out copies of my loan account payments, credit card and bank statements, payslips and my budget spreadsheet, and made myself another spreadsheet with a few simple formulas thrown in to make things easier. Nothing too crazy required, just a couple of simple =SUM() calculations in certain cells to make the laborious leg work a little less laborious…:

The current month is highlighted in bold. Taking my other liabilities into account (the last £203 on my Barclaycard credit card), you can see my total liabilities at the moment are £9,156. But, I have £4,204.51 in cash in a combination of my current and savings accounts. Subtracting total liability from total liquidity, my networth is currently -£4,951.49. Basically, I owe almost five thousand pounds more than I have.

Scroll down a few months into the future however, and things improve. By November I’m only £220 shy of breaking even. In other words, I am currently set to become debt free by 20th December (A full 12 days ahead of target). If I make up that small shortfall, that could drop back to 20th November, 6 weeks earlier than planned. Assuming I don’t get made redundant between now and then and my overtime plans come off, I could knock a couple more weeks off that.

One word of caution though: remember that any entries beyond the present are projections. If you are projecting your own, remember that things often conspire against you; If my car blew up tomorrow, I would have to use some of my cash to fix it, pushing me away from the projected freedom date. Use it as a ready reckoner however and we can see that if all goes well using current known-good data (e.g. the data up until the highlighted line), I won’t be any later than my target, and that was the whole point of this exercise.

Are you currently in negative networth? Do you even know with any certainty? Kudos if you do. You’re not in the minority if you don’t though. Take the first step to digging yourself out of debt and know what you owe. Once you know, you can work out your own net worth and project a date to get into positive growth (or be incredibly unscientific about it and just make up a date like I did!).

If you’re already digging, how is your own target prediction holding up?Leave a reply in the comments below.