Hardly the greatest way to start the New Year!

Itís that time of year again when Christmas cheer is gradually diminishing as the result of looming festive debts and over-seasonal spending.

As payday is still a few painful weeks away for many, thousands of cash-strapped Brits run the risk of falling into debt. This is hardly the greatest way to start the New Year!

According to research from a price comparison website, nearly four out of ten people will be financially worse off in 2012 compared to 2011. Only 27% of the nation will see their finances remain the same as they were in 2011.

Disposable incomes will fall, the cost of living will increase and many will find it hard to cope within what is an already tough economic climate.

Almost half of people will see their disposable income reduced in the next 12 months. A further one in ten will see it disappear completely in 2012, as a result of job loss. More than 75% of people are worried about the rising cost of living, while 63% are concerned about household bills. 50% of people feel less financially secure than this time last year.

Clearing debt is a big concern for people this year as 42% of them hope to do so and it has also taken high priority on the New Yearís resolutions list.

“With disposable income being squeezed, the New Year is a great time to get household finances in order to try to start the next year in the best financial shape possible,î said Michael Ossei, Personal Finance Expert at uSwitch.com.

ìTaking control of your budget, stripping down living costs and making sure you’re not paying too much for your household bills will free up more disposable income and potentially allow you to save for the future too,” added Ossei.

How to avoid debt

Nobody enjoys being in debt, and it can be a particularly difficult and stressful experience.

According to official Bank of England figures, people are taking on more debt, as £400 million of unsecured credit was taken out in November last year. On top of this, the Post Office has revealed that almost 40% of people are relying on credit cards this month just to get by.

Brits are now paying the price for their festivities and a massive 12 million people are expected to be in the red during January. It can be easy for debt to mount up, yet much harder to pay it off.

Here are some simple tips to avoid debt;

Firstly, donít take on more debt! If you already have, try not to take on anymore than you need. It could be worth questioning your spending habits to see you if you really need that extra cash.

Change your spending attitude

Tempted to treat yourself in the January sales or buy that holiday to beat the Christmas blues? Think again, if you donít need it, donít do it.

That dress which you are planning to slim down into may end up sitting in the back of the cupboard along with the others you purchased in last yearís sales before long. You may be tempted to buy some goods because they are cheap, but if they are not necessary right now then try to resist temptation.

If you are looking for some new goods and really canít resist the high street bargains, why not sell one of your items for every new one you want to bring into the house? Alternatively, swap clothes, DVDs, kitchen gadgets and other devices with friends and family.

You could holiday in the UK instead of going abroad and buy ëown brandí goods at the supermarket.

You could try and save money in the long run by shopping around for cheaper insurance such as car insurance, house insurance and life insurance.

Compare car insurance with Money Expert.

Mortgage and rent payments

Paying the rent or mortgage is unavoidable and whilst you may be able to cut back on other things, putting a roof over your head can usually be filed under ëessential spendingí for most people.

However, there are a few ways you could try and reduce your accommodation costs. One extreme way of reducing costs is by moving to a cheaper part of the country.

Looking for cheaper types of housing is another option. You could try and downgrade to a smaller property, search for a cheaper mortgage or rent spare rooms out for extra cash. 

If you are renting you could try and find a cheaper property or move in with other people to split the bills.

Alternatively, if you have the funds buy a property in one of the 47 towns where it is cheaper to own a home than to rent one, this could prove to be a shrewd investment. According to research from property website Zoopla, Milton Keynes is the most cost-effective location for buying a property compared to renting.

How to get help

Whilst there are several ways of reducing your spending, it could still take time to chip away at a large amount of debt. If you are concerned about how to pay off your debts or get help, you could contact a debt advice specialist.

Our dedicated team will be able to find a suitable debt management solution for your financial problems.

Compare debt management solutions with Money Expert.

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