Three Things To Do This January

If your New Year's resolution was to tackle those finances, don't procrastinate -- get started.

If you started this year with great intentions regarding your finances, you're probably keen to get going. After all, the New Year impetus tends not to last long! So, to strike while the iron is hot, here are three things to tackle this January:

1. Clear those Debts

A recent report from business advisory firm Grant Thornton has predicted that a whopping 30,000 of us will be forced to declare ourselves insolvent in the first quarter of 2007, of whom 10,000 will be as a result of overspending during the Christmas period. Greater borrowing and spending, higher interest rates and increased utility bills have been blamed, and it follows the news that personal insolvencies in 2006 will exceed 100,000 for the first time ever.

If you're seriously struggling with debt, the first thing to do is to seek help. You can find a simple, step by step approach right here, in our Get Out Of Debt centre, with details of organisations that can help such as Citizens Advice.

However, if your debts are more manageable, don't let them grow, tackle them head-on. Regular readers will know how fond we are of saying that there is no point concentrating on saving if we have expensive debts on our shoulders. After all, it doesn't take a mathematical genius to realise that the interest earned on £3,000 in a savings account paying 5% is far less than the interest accrued by £3,000 on a credit card charging 12%APR! If you have the money, use it to pay off expensive debts before saving.

0% Credit Card

However, if you do have an outstanding balance on an expensive credit card and no savings, you could give yourself some breathing space by moving that debt to a 0% card.

For example, shifting that balance to Moneyfacts' current table topper, the HSBC Bank credit card, would mean it would accrue no interest until 2 April 2008 (subject to a 2% fee, min. £5) giving you over a year to clear that debt. If you were to set up a monthly standing order for £250 to be paid into a high interest savings account (such as Landsbanki's Icesave, paying 5.45% AER) you could have saved enough to pay off that balance by next March, and have earned nearly £88 in interest (before tax), too.

2. Stash some cash

Once those debts have been dealt with, you can concentrate on saving some money:

Cash ISA

If you haven't yet used it, your cash ISA allowance is the place to start. Remember, you only have until April 5 to use your 2006/7 ISA allowance, or it's lost forever. And although you can't have joint cash ISAs, everyone over 16 can save up to £3k in one, so a couple could stash £6k away from the taxman's prying eyes, each year. In fact, IFA Promotion reckons that £170 million in tax could be avoided by sheltering more money in ISAs!

Right now, top instant access cash ISAs include the National Savings & Investments (NS&I) Direct ISA, paying 5.55%AER on deposits of £1k+, and Kent Reliance BS paying 5.46%AER on balances of £1+.

And if you don't mind giving notice to withdraw your cash, Portman BS's 15 Day notice ISA, and Saffron BS's 30 Day Notice ISA both currently pay 5.4%AER (5.8% gross), which includes a 0.8% bonus for 6 months. Beware though -- transfer your account from Saffron BS to another ISA provider and you'll be charged a £30 administration fee.

Savings Accounts

If you've filled your cash ISA, a high interest savings account will be your next point of call. And there are some good rates available here, too. The ICICI HiSAVE account currently pays 5.45%AER on balances of £1+, and the Icesave account offers the same rate for balances of £250+. And over fifties can benefit from earning 5.46%AER with the Northern Rock Silver Savings online account.

3. Make sure you have enough cover

This is one of the dullest jobs in the world, but nearly everyone I know has put it on their 2007 "To do" list. And what is it? Re-assessing those insurance needs and making sure you have enough cover.

If you have dependents, life insurance is usually a must. And although a joint policy may seem sensible, two separate policies can often work out to be better value. Alternatively, a Family Income Benefit (FIB) policy can provide your loved ones with an income, should something happen to you, and the premiums can often work out to be far cheaper, too.

Another good way to reduce the cost of life insurance used to be to take out Pension Term Assurance (PTA); cover that is tied into your pension, meaning that premiums are paid free of basic rate tax. Unfortunately, the pre budget report in December indicated that the government would remove tax relief from PTA arrangements as of 6 December 2006. However, the Revenue has since confirmed that people who submitted their applications before this date will still qualify for the tax break.

Critical illness insurance is another type of cover that can be worth having. This pays out a tax free lump sum should you become diagnosed with one of a number of illnesses, or have to undergo certain types of surgery. And Income protection insurance can provide you with an income should you be unable to work, which can be well worth having if you're self-employed.

And then there's car insurance, buildings and contents cover, pet and travel insurance to think about. Aarrgghh! But while re-assessing your cover is boring, you will have the peace of mind knowing that you and your family are properly protected, and by shopping around you could save a few quid, too. You can find out more about all types of cover in our Insurance Centre, and even apply for some quotes from the likes of Legal & General, Norwich Union and Standard Life through our comparison centre.

So go on, here are three things to be getting on with in January -- get these in shape and you'll be well on the way to sorting out those finances and fulfilling that New Year's resolution.

More: Play The Great Credit-Card Shuffle | 133 Savings Accounts To Avoid!