As much as we look forward to the Christmas break, after a few days of overeating and sitting in front of the box, it’s easy to become a little stir crazy.
So, if you’ve had your fill of Xmas grub and need to re-boot your grey cells, why not escape from the festive haze for an hour or two and set about kick starting your finances in 2025.
Many of us will make New Year’s resolutions about being better with our money, so why not use a bit of the spare holiday time to get a head start.
By taking control of all your money documents and knowing exactly what’s going in and out of your bank, you’ll be ready to make 2025 the year when you give your finances a reboot.
So, let’s get to it…..
Step 1 Ditch and de-clutter your paperwork
Many people don’t have any specific home for their bills, statements and key financial documents.
They may be spread throughout the home, stuffed in various drawers or under the bed, still unopened in some cases – out of sight and out of mind.
The problem is, if you know it’s going to take you forever to lay your hands on latest credit card statement, energy bill or insurance renewal notice, then there’s less chance you’re going to be bothered to dig it out to try and get a better deal.
By taking control and organising your paperwork, you’ve got more chance of paying out less and saving more.
Plus, if you don’t keep a close eye on your finances, you can easily lose track of your spending and end up paying unnecessary interest charges.
Also, if you’re ‘too busy ‘or disorganised and don’t check your statements you’re less likely to spot a fraud on your account until it’s too late.
That’s why your first step is to get rid of all the letters and financial paperwork you no longer need – so if you’ve got records going back to the year dot it’s a good time to de-clutter and shred what you don’t need and then put everything that’s left in a single pile.
Step 2 Organise and file
Once you’ve gathered all your key financial papers together, get yourself a box file (or two if needs be) so you’ve got all your financial paperwork in one place.
Your box should contain the following:
- Bank Statements (if not online)
- Credit Card Statements
- Loan agreements
- Mortgage statements
- Insurance policies (Life, Car, Home and Travel)
- Details of Gas and Electricity Tariffs
- Council Tax Annual Statement
- TV Licence information
- Water Bills
- Telephone and Broadband agreements
- Car Tax, Insurance and MOT information
The next step is to get a separate polythene folder for each of the above items – e.g. credit card statements, energy bills, insurance papers etc. – putting the most recent paperwork on top.
If you’ve got time, now you’ve got all your key info to hand, write down a quick list of all the payments that go in and out of your bank account each month, so you’ve got a clear idea of how much spare money you have over to save or to use to pay off debt.
Step 3 Make a note of important dates
On a separate piece of paper or on your laptop, make a list of important dates for your finances for the coming year, including:
- Insurance renewal dates (Car and Home)
- The date your Mortgage fixed or tracker rate ends
- When your fixed rate energy tariffs expire
- End of your mobile phone contract
- When your credit card 0% deal finishes
- Car MOT and next service dates
- One off expenses – e.g. birthdays, holidays, Christmas etc
This will help you plan properly over the next 12 months, allowing you time to shop around in plenty of time, rather than having to rush into a last minute decision which may not be the most cost effective.
Plus there’ll be no nasty unexpected expenses you’ve forgotten about that may put you into the red.
Step 4 Sign up for your free credit report and score
If you’re serious about making the most of your money in 2025, it’s important that you get hold of your up-to-date credit report and score – to ensure all the information recorded against you is accurate and up to date.
Your credit record and credit score are key sources of information which lenders check before they decide to lend to you, but it’s equally as important that you see what they see and understand your credit record too.
If there are errors on your repost it could prevent you getting credit at the best rates or even mean your applications are declined.
You may not be aware, but your credit record is checked in each of the following scenarios:
- Setting up Electricity or Gas direct debit payment
- Property rental
- Shop or store finance
- Overdraft extension
- Credit Cards and Store cards
- Car finance
- Mobile phone monthly contract
- Personal loan
- Mortgage application
Step 5 Switch your bank account and grab a cash handout in the process
If you’ve stuck with your same current account since you left school or started your first job, maybe it’s worth considering switching to something that may be a better fit.
Your loyalty to your existing bank counts for nothing and moving to a new current account can earn you between £100 to £175 with some of the switching incentives on offer.
Some bank accounts offer the chance to earn rewards or credit interest whereas others such as First Direct offer an interest free overdraft (up to a max £250).
The Current Account Switching Service (CASS) ensures your account is switched within 7 working days – you choose the date, and your new bank will manage the rest of the process for you.
Step 6 Make a New Year’s resolution to wipe out your credit card balance
If you are fed up seeing your credit card balance growing each month and your monthly repayments only just covering the interest charges, now’s the time to nip things in the bud.
It may feel like an impossible task, but just small changes to your payments each month can make a massive difference in the long term.
For example, if you’ve got £2500 of debt spread across your cards at an average interest rate of 24.9% APR, and paying back 2.5% of the balance each month, it’ll take you more than 39 years to clear the balance and cost you more than £7000 in interest charges.
Simply by switching it to a 0% balance transfer card offering 30 months interest free and paying off £100 per month, you’d be debt free in 2 years and 1 month and it won’t cost you a penny in interest – just a one off 3.5% balance transfer fee of £87.50.
If you don’t want to apply for another card or maybe your credit record won’t allow it, don’t stress as all is not lost.
Paying a little extra on your card each month will make a big difference – say you paid an extra £40 each month (£10 per week) on top of your minimum payment, you would be all clear in just under four and a half years and your interest paid would be just £1,184 instead of £7000, so saving you £5816.
If you’re able to stretch to an extra £60 each month then you’ll be debt free in 3 years and 2 months at a cost of just £853 in interest – an eye watering saving of £6147.
Step 7 Consider amalgamating your debts with a low-rate personal loan
If you find it tricky to keep track of your credit card balances, your overdraft and repayments on your store cards or car finance, maybe it’s time to consider combining all your borrowing with a single personal loan.
It will make things easier for you to manage – no more juggling accounts and cards and making multiple payments, instead you will just have the one standing order payment each month for your loan.
Interest rates are still low if your credit rating is in good nick. For example, a £3.000 loan over 3 years with M&S Bank is 9.90% APR representative with monthly repayments of £96.07.
If you need to borrow a larger sum the rates are lower, with Tesco Bank and Santander charging 7.20% APR representative for a £6,000 personal loan over 3 years, costing you £185.19 per month.
If you’re going to go down this route to put your money matters back in order, make sure that once you repay any card balances that you destroy the cards and close the accounts completely – it removes any temptation to use them again.
The last thing you want is to restructure your borrowing and then get back into bad habits by running up new debts on your plastic.
