The following is a guest post contributed by Liz Goldman for Wonga.com – the UK payday loans alternative.

If your finances were out of shape in 2011then this is the year to improve your financial health. Finally the time is here to reduce your credit card bills, slash your mortgage and make sure your savings are sweating interest.

Here is a 2012 personal finance health checklist to ensure your finances run smoothly.

1. Keep Your Vehicle in Good Condition

Taking good care of your car can mean savings of hundreds or even thousands of dollars from maintenance and insurance premiums. Regular servicing of your car’s key parts ensures fewer accidents which in turn leads to lower premiums. You will also save on costly repairs and potentially having to buy a new vehicle, too.

2. A Safe Home

There is an easy way to lower your home insurance costs that is not known to many – just install alarms, window bolts and secure locks and you will probably be offered better home insurance rates.

Do regular safety checks on smoke detectors, locks, wiring and plumbing to avoid costly accidents.

3. Buy Online

You can get some great deals online, so shop regularly at online stores to save money. Items such as books, DVDs, electronics and jewellery can all be bought for less. You will also save on gas and the temptation of eating out. Look for free shipping offers and use price comparison sites for the best possible deal.

4. Improve your Credit Score

Mortgages, credit cards, and personal loans are expensive financial products we all rely on, so improve your credit score and save money with lower rates of interest. Pay bills on time, ensure your credit file is correct and clear any debts. Checking your credit file regularly is a good idea to help remove any errors and get good deals.

5. Identify potential pinch points and plan ahead

It is important to plan ahead to those times in the year when you know finances are likely to be tight – for example birthdays, vacations, weddings and so on. A short-term solution to help improve your finances in these situations might be to use a payday loan provider or to ask a friend to help out.

6. Tax

Make sure you are paying the correct rate of tax and be sure to write off any tax deductible expenses. Contact a professional if you are unsure about any aspect or need assistance with paperwork. Maybe you are paying more taxes than needed and you don’t even know it!

7. Control your “Wants”

It is important to identify your “wants” (things you want to have like a new TV, holiday, Playstation 3) and your actual “needs” (essentials such as food, shelter and clothing). Embrace your finances with a clear and open mind, identify what you really need and budget for any “wants”. If you are finding it hard to be disciplined, open a savings account that can’t be easily accessed and transfer a small amount each month. Pick an expense that you don’t need like going out, and put that money into the account. You’d be amazed how fast it adds up.

8. Don’t Keep Up with the Joneses

Don’t bother trying to impress people by leasing a sports car or buying the latest gizmo. Few people will actually notice. Save the money instead and use what you already have. Remember to bear this Ethel Barrett quote in mind: “We would worry less about what others think of us if we realized how seldom they do.”

9. Savings

Regularly check your savings account against competitor’s interest rates to make sure you are getting the best deal. Research online and use financial product comparison sites to help you. Carefully check your saving account’s terms and conditions for any withdrawal penalties if you choose to switch or close it down.

Saving money can sometimes feel like an uphill battle. One minute you have a steady savings routine and then the next, life happens, bringing you back to empty pockets. This scenario can happen to the best of us, only building up frustration and anxiety.

Much like any chore, saving takes a lot of discipline and calls for some form of pattern in your day-to-day. Whether it is a New Years resolution or diet, we start off strong and eventually dwindle down into old habits and shopping sprees.

For some people, it appears adding money to the piggy bank is second nature. So while you’re struggling to set a saving precedent, your pals are free of debt and on the fast track to buying a new home, and you sit there asking yourself, “Where did I go wrong?”

Crash saving, much like crash dieting, can be hazardous to your health and your wallet, experts say. Whether you are cutting food or money, certain savers will cut back so much they are allowing themselves to live a life of misery.

“Monotony and boredom can easily niggle away at the best intentions of any extreme saver and drive them back to their old spending habits, in the same way that a fad dieter will go back to eating their favourite treats with a vengeance,” writes John Suter in a post for Life Optimizer.

Forcing yourself to eat the cheapest foods or calling it an early night in hopes of saving extra cash can be tiring, leading to a negative and exhausting approach to saving money.

According to Suter, one can find relief in financial balance by taking your monthly budget and cutting back on areas of high expenditure. For example, only going out a few nights a week, rather than every weekend, or replacing expensive dinners with something less stressful on your wallet.

“By balancing your savings against your spending, you do not then deprive yourself completely, making it much easier to continue saving in the long-term,” Suter writes.

I for one am no master of savings, but I’ve managed to come across a few techniques of my own to make holding onto your money a little easier.

Here are a few quick tips on saving money:

Create a budget

Look at your bank statements and see where all your money is going. Once you’ve pinpointed your high expenses, moderately cut excess spending from your monthly budget.

Stay organized

Keep track of your daily debt and credit card use.

Out of sight out of mind

Open a completely different bank account for your savings to limit temptations and money transfers.
I know these three steps may sound like a broken record, but I find them to be positive lifestyle changes that can at times go unnoticed.
So chin up, it may be tough at first but once you have a routine going and find balance, your uphill battle will turn into a walk in the park.

About the Author: This is a guest post by Phil Wilcox who writes on behalf of ClearDebt.co.uk – they provide advice on personal insolvency and getting an IVA.

When you’re measuring your financial progress, most of you may think that you could just be richer if you could make more money per month. But have you ever though whether making more money is enough to make you richer?

One of the most controversial debates that are currently going on in the world of personal finances is what constitutes rich. Most people agree that the place they live at makes a big difference in whether or not you feel that you’re rich. Standard of living is the most important thing that determines your richness. Becoming debt free in a place where the standard of living is high is much more difficult than paying off debts in a low profile place.

Making more money does not translate into having the money to spend on whatever you want.

What are the expenses that drain off your wealth?

It is worth noting that there are some particular expenses that drain away wealth, no matter how much money you make each month. Staying educated on these spheres will help you avoid such expenses so that you can maintain a wealthy life.

1. Your house or car

Most people in America turn out to be house poor. They decide to get a big house and then terribly struggle to make both ends meet. If you have not been modest while purchasing your home and you had stupidly bought a home beyond your affordability, you must have been suffering lately. Since the financial crash, it has been surveyed that most homeowner’s monthly housing costs comprise of half of their monthly income. The same theory goes for a dear car for whose insurance you cannot arrange money.

2. Your unsecured debts

Your unsecured debts are a big expense for you. What can be more unfortunate than having unsecured debt obligations and paying interest rates to someone else instead of using that money to invest for your future? There are instances of people who make more than $150,000 per year but are saddled with unsecured credit card debt and feel themselves to be nothing but poor creatures who are failing to make both ends meet.

Monetary resolutions to set your foot on a wealthy life?

After some studies have been made among the affluent, it has been derives that planning, perseverance, dedication, hard work and self-discipline is what it takes to be a wealthy man. Here are some monetary resolutions that must be taken by every individual in order to build wealth and take a plunge into the life of a millionaire.

1. Live below your means

Don’t be fooled by the average lifestyle of a millionaire. The keyword to living a life of a true millionaire in the near future is ‘frugal’. Most financial experts believe that leading a frugal life is the secret of saving for your future. The typical Americans are known for working hard, making money and then spending it well. You must change this spending habit and make sure that you stop buying unnecessary things that you can do without.

2. Evaluate the importance of saving each dollar

When you put in your efforts in saving money, you can soon understand how spending $10 and $30 dollar makes a huge difference. You must always remember that money has the ability to work in your place and therefore, the more you employ it, the faster it will grow with time. Try to save money at every step of life and enjoy leading a frugal life so that you can soon get the results you desire.

3. Become proficient as an investor

In order to boost your savings and build wealth, you can try becoming a proficient investor. Investment is one of the best ways to make money and also boost your savings by controlling them. Get to know about the investment market so that you can understand the fluctuations and take good control over your investments. Also make sure that you manage a balanced portfolio that will help you gain maximum profits with minimum risks.

As you might think that there’s nothing wrong with spending money on things that seem to be important to you, you must reconsider your decision. The actual concept of being ‘rich’ is being able to spend money for what you need now, save money for your future and spend a little in purchasing things that you like. Lead a debt free life and boost your income so that you reach one step closer to becoming a millionaire.

Last year has been both good and bad in respect to the financial status of the world and the people. But according to reports the economic condition of the United States of America and personal finance of the people are in bad shape. The debt is said to have increased to around $3 trillion. More and more people are applying for credit card debt relief programs. However, financial experts agree that the economy is starting to look up. Thus, it will be better if you try your best to solve your debt problems. In relation to this you will have to take some financial resolutions for this year.

Financial resolutions for 2011

Though the economy is said to be looking up, it has not yet recovered totally from the economic downturn. Moreover, the cost of living is getting higher day by day. According to market watchers 2011 may cost you more than the previous years. Thus, it is better to take some financial resolutions so that your finance stays in shape. Here are some of the financial resolutions for 2011:

1.  Maximize your savings

Savings is essential to your finances. Thus, it will be better if you take the resolution to increase your savings. In the process of saving more you will have to cut down on your expenses. This will help you to avoid getting into credit card debt. You may also practice frugal living to save more than usual.

2. Keep a check on your credit and debit card usage

You should also keep a check on your credit card and debit card usage. Maintain a list of the bills or better take a print out of the account balance after every usage. This will act as an eye-opener to your spending habits. You may even think of changing your expending habits thereby helping yourself to achieve credit card debt relief.

3. Reduce the cost of common things

You will have to first formulate a proper budget in order to do this. A well formed budget can help you to decide on the items which you require the most. Then you may also be able to decide how you can reduce the cost of that particular item or items. For example, if you are buying gasoline for your bike or car quite often, you can try to reduce the costs of buying it. One way through which you can save money on gasoline is by buying it early in the morning or in the evening.

4. Change your spending habits

The only real way to stop your debt problems is to change your spending habits. This makes you a financially strong person and thus your credit remains in good shape. One of the most critical things to stop is impulse buying.

5. Hold yourself accountable

Include accountability strategy in your finances – When you are accountable to someone, you tend to improve on your responsibility characteristics. So, you can try to find out a person with whom you can discuss your finances and also be accountable too. This will help you a lot to become more sensible on your purchases and money spending habits.

6. Stay informed

You should also stay informed on the changes in the financial market – the change in rates or popularity of credit cards, mortgages or even simple everyday items. There have been various changes in the mortgage and credit card rules too and there are some changes to come in 2011.

If you are able to take these resolutions and strictly follow them, you will be able to maintain a good financial status. Thus, you may not even need to go to any credit card debt relief companies for help. This can in fact save considerable amount of money.

Let’s face it: almost everyone goes through a financial crisis at some point or another, and finding ways to deal with such situations is essential if you want to come out unscathed. If you have ever wanted to know what to do in the event of a financial emergency – whether it is due to a sudden illness or car trouble requiring immediate and costly attention–you have come to the right place! Here are some ideas on how you can weather the worst of the financial storm and come out none the worse for wear in the end.

1. Evaluate Your Financial Situation

The first thing that you should to when faced with an impending financial crisis is to sit down and think about your situation. Failure to identify the problem and pinpoint areas that need to be worked on will likely result in a more stressful situation, and that is the last thing that you need when short on cash. Going head on into fixing your financial troubles without making a plan first can result in even more confusion and the eventual failure of your attempts to get yourself out of a financial mess.

2. Determine The Nature Of The Financial Emergency

Is your emergency caused by a sudden illness of a family member? Have you been rendered broke by a natural calamity? Or have you lost your job like so many other people in the country? All of these different scenarios require different approaches, and identifying them will better enable you to formulate a clear plan of action.

Whatever problems you have – there is probably someone in the world who has already gone through the same thing. Use the internet to find these people and ask them what they did to survive.

3. Prioritize Your Spending

While you will ideally want to make sure that all of your outstanding debts and monthly bills are paid up, you do have a bit of leeway in terms of prioritizing your payments.

Top on your list of priorities should of course be food and shelter, with utilities coming in a close second. You will also ideally want to set aside some money for medical emergencies. Such expenses are the first things you have to take care of when budgeting for your expenses, and you may have to sacrifice less essential expenditures such as cable TV and broadband Internet in order to be able to pay the more essential bills.

4. Negotiate a better deal with your creditors

This piece of advice may go against every grain of your being, but the first person you should get in touch with in the event of a financial emergency is your lender. Lending companies only stand to gain from you paying your debts, so they will be surprisingly willing to help you find a solution, whether it entails lowering your interest rates or extending your terms of payment. Waiting too long before you get in touch with your lender is definitely not a good idea, since the company may be far less likely to help you out than if you had approached them early on.

1. Take Out as Much Loans as You Can

Never lose an opportunity to borrow money. If a relative just got a hefty inheritance – be sure to borrow some money! If the bank is having a special deal with interests next to nothing – borrow some money! You will never know when you’ll need more money. Borrow as much as possible – that way you will always have it when you need it!
Better safe than sorry!

2. Buy Your Kids Everything They Want

The neighbor’s 5-year old kid Johnny just got a new Iphone with a 2 year contract so that he could better keep in touch with his family! Your son Michael is already 6 and wants to change his Iphone 3G for the newest 3GS.
Of course it will cost $2000 to end the old contract prematurely but anything to make the kids happy, right?
Children are the future!

3. Lend Your Friends Some money

Your friend Frank just came to talk to you with another great business idea? Super! Loan him all the money you can! You don’t want to miss the opportunity of lifetime, do you?
In fact – Frank seems like such a great bloke – why not borrow some money from your parents to help him get started? You can always pay them back next year! Oh boy, oh boy – just imagine how happy they will be when they find out that you got 10 times more back than you invested!
Your wife says that you are a “down on your feet kind of guy”, so you also consider what the worst that can happen is.
Well, when things don’t play out as planned Frank will just give you your money back! At least the two of you will be better friends than ever, right?

4. Get as Many Credit Cards as You Can

Remember your friend Cindy? She has 13 different credit cards and all your girlfriends just adore her! She used to be a nobody but after getting as many credit cards as possible she is able to buy anything!
Neither she, nor her husband has a job but Cindy has a different Gucci bag every week – surely she must know what she is doing!

5. Go to a Casino

Casino is the best place to quickly make more money. Enter with 1000 dollars and leave an hour later with $5000. You are not stupid, so you know that there are some dangers associated with casinos – it is best to consult your horoscope or a fortune teller before visiting!

6. Borrow Money To Buy Stocks

Did you hear about this new company and their product MakeMoneyFast2000? This is going to be a clear winner! There is no way it will flop like their previous product UltraMoneyMaker1000 did!
Just take all your retirement money and invest it into their stock. This will be the best decision you have ever made! Time to start planning for retirement!

7. Buy A New Car

Noticed the Mercedes-Benz your neighbor John bought last week? What a beauty!
In a few months time your BMW X5 will already be 2 years old! This means you should better start shopping for a new car! Always remember what your wife told you – when your car is older than a few years your friends will stop liking you and tell bad things about you behind your back!
Don’t want that to happen, do you?

8. Never Skip a Sale

Wow, this lawn mower is 50% off! We’d better get it since it is just too good to be true!
What about the 2 lawn mowers you already have? Don’t worry! Just sell them on eBay! They were too expensive anyway…

9. Never Save Any Money

You have a job, right? And you get your pay check every week, right?
Then what’s the point of saving money? However much you will spend you will get more money next week, so there really is no point of saving! You will have more money whether you save or not!
Live life to the fullest!

10. Pay Your Debt with New Debt

Having too much debt to deal with? No problem! Just take out a new loan to pay for your old ones.
This is a fool proof system – since you will always get a new and a better loan you will be able to pay back your previous loans.
Teach your friends how to do this as well! After all – this is how millionaires get to be billionaires.

For most people it is difficult to put themselves in someone else’s shoes but for some reason I have always found it quite easy. They say that trying to look things as other people see them is a common characteristic for Libras!

I have to confess though that sometimes it is difficult for me to understand why other’s don’t realize the obvious! If I take something for granted I tend to forget that this might not be the case with someone else.

Some time ago I had a chance to play the famous Cashflow board game by Robert Kiyosaki. It was my first time!

While I was surprised how easy the game was (I was waiting for more of a challenge) – I was also surprised to see smart men and women doing very stupid choices! For them the game was very difficult – they couldn’t understand why they didn’t make any progress.

The main reason seemed to be that they did not understand the difference between good debt and bad debt.

The difference between good debt and bad debt?

Debt can be used in 2 ways:

1. To purchase something that you want or need. For example a big plasma screen TV.
2. To purchase something that helps you make more money. For example an apartment to rent out.

If you buy a new TV with your credit card, you will need to pay for the amount of the TV plus the monthly interest but at the same time you can not use your TV to make any money. Therefore the debt used to buy the TV is bad debt – it only takes money out of your pocket.

If you take a loan to purchase an apartment and rent it out – you will get an additional income stream. That way the debt is not used to make your life easier or for your entertainment (think TV) but as a means to make you more money. This is good debt.

For me it is difficult to grasp that a lot of people are unable to make that distinction and keep using their money in a way that makes them spend even more by having to pay interest or buying something that means additional expenditures!

Good debt

Good debt is often also referred to as leverage – it means that you are taking a loan in order to make more money in the future. Leveraging your money is a great way for people with little money to make big things happen. For example when you start a business that is funded 10% by your money and 90% by the banks money – your own dollars will be making a lot more money than when you fund the entire company yourself. This is basically because with the 90% of the banks money you are able to start a company on a larger scale and therefore make more money.

Here are some things that can be considered as good debt:

• Taking a loan to buy a house or an apartment for renting it out
• Buying a car in order to start a taxi service
• Buying a car to start a moving business
• Buying a computer to set up your home office for your newly started company – the computer must be essential for the business to function!
• Buying a stake in a company that regularly pays you dividends.

The difference between good and bad debt can sometimes be tricky! The exact same things bought by different people can be considered both good or bad debt – depending on what they are used for.

Bad debt

It is my experience that a lot of people have trouble recognizing some forms of bad debt. Consequently they make some bad investments that seem like good ideas but actually aren’t.

Here are a few things that are  sometimes incorrectly considered as good debt:

Taking a loan to buy a house

For some reason a lot of people think that since they need to buy a house anyway it should be considered as good debt. They feel that because the price of the house can go up (instead of down which seems to be the case lately) it is an investment.

Wrong! Your house does not generate any extra income. In fact – by buying a house you will instantly get several extra expenditures that must be taken care of. By buying a house you also buy a lot of regular expenses! Getting a house can only be considered as good debt when you rent it out or use it for something that makes you money. Financially speaking it actually makes sense to get the cheapest house possible.

Leasing a car

The same thinking goes here as well – “I need a car anyway”. A car can only be considered as an investment and therefore as good debt when it is bought in order to make you more money. Most people say that “Without my car I wouldn’t be able to go to work and therefore my car is essential for my income – thus it’s an investment”.

Wrong! However uncomfortable – most people could probably use a form of public transport to get to work. If you buy a car to drive to work you do not need a new and a fancy one – the cheapest one that drive’s will do. Anything more expensive than that is a bad investment and when bought on credit – considered as bad debt.

Buying collectibles

The prices of collectibles usually go up with time. That makes some people believe that if they use their credit cards to buy a rare coin or a comic book  or etc – it can be considered as good debt.

Wrong! Although it can turn out to be a profitable investment it is still bad debt! The only way that buying a coin on credit can turn out to be a case of good debt is when you start showing the coin for money and therefore get a new income stream!

If you still don’t understand

If you read this article but have trouble distinguishing bad debt from good debt you only need to remember the following:

Good debt – Gives you an extra source of income that you did not have before.

Bad debt – Gives you something that can be useful but does not give you an extra source of income. It only takes money from your pocket.

Related article:

• Understanding different debts

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I’ve gone over more than 10 “How to calculate your net worth” guides, only to realize that none of them really give what people want – a good real-life example.

Here is a tutorial on how to calculate your net worth based on my current real life situation. Yes all the “money numbers” in this post are real – they are not made up.

What is Net Worth?

Your Net Worth is basically a sum of money that you will have when you sell all your worldly possessions and pay off all your debts. The bigger the number that you get, the better.

Calculating your net worth can be a good way to bring you down to earth – it only takes into account the things you have already done in your life and doesn’t take into account the fact that in the future your knowledge and education can be major source of wealth.

This keeps things in perspective.

When first calculating their net worth most people are startled to find that they are worth a lot less than they thought. The first time I calculated my net worth I was very surprised to find it negative – I had more debt than valuable assets that I could sell. It was a blow to my ego – I had always thought better of myself.

Basics of Calculating Your Net Worth

Calculating your Net Worth consists of 3 main parts:

1. Adding together the value of everything you own
2. Adding together all your debt
3. Subtracting all your debt from everything you own

Your Net Worth is positive when you can pay off all your debts after selling everything you own.

Your Net Worth is negative when your total amount of debt is greater than the total value of the things you own.

Why Calculate Personal Net Worth?

It is safe to assume that most people calculating their net worth for the first time will find it negative – this is not necessary a bad thing. The goal of calculating your net worth is that it enables you to improve your financial situation.

My Net Worth

Assets

Ownership in companies – $ 1 076
Pension funds – $ 940
Real estate – 0 $
Cars – 0 $
Stocks – $ 571
Cash on hand at the moment – $ 2 179

Things I own

• Mobile phone – $ 395
• Camcorder – $ 148
• Digital camera – $ 30
• Laptop – $ 592

All assets combined – $ 5 931

Liabilities

Student loan – $ 4 685

Credit card – $ 66

Laptop payment – $ 316

All liabilities combined – $ 5 067

Net Worth = Assets – Debts
My Net Worth = $ 5 931 – $ 5 067 = 864 dollars

As of June 5th 2008 my net worth is 864 dollars!

Why is my Net Worth like it is?

As you can see above I don’t like buying expensive stuff and I don’t like borrowing. I only take a loan when there is absolutely no other way.

That being said I am not satisfied with my current net value because I feel I should be worth a lot more. But that’s just the emotions talking, not the facts.

The facts are that I own very little and at the same time I owe very little. My assets and liabilities pretty much cancel each other out.

I am more than certain that there are people reading all this that have a lot more assets but at the same time their total net worth is lower than mine (this means that they also have a lot more debt than I have).

Tips on getting started

Different people calculate their net worth differently. As you can see I have included the things I own all the way down to my digital camera that I estimate to be worth only about 30 dollars. Some people don’t include things that are worth less than 500 or 1000 dollars. It would just end up being too complicated and take too much time to complete.

Of course I have things that are more expensive than the things on the list, but I did not include them because they are very difficult to sell.

Two week rule

Coming up with the values of your assets can be tricky. I usually take an educated guess – For how much could I sell this in two weeks? Whatever time frame you choose – stick to it with all your assets. You should only consider doing an exception to costly assets like a house or maybe a car. Expensive things take a little longer to sell.

Check the prices of similar things

If you are not sure about your “educated guess” you should check the local classified ad magazines or the internet for prices of similar things. If you live in the US a good place to start is Craigslist or Ebay.

Don’t exaggerate

Take care to list everything you own with the prices you could really sell them for. While inflating the price of your house on paper can make your net worth look bigger, there is really no benefit in doing so. It might give you a false sense of security and thus do you more harm when you are suddenly in need of selling your assets. If anything it’s a good idea to list your assets as little cheaper than they really are – that way you can be absolutely sure that you can sell them for the price that you have listed.

Should you include the money in your pension plan or a 401K?

Yes you should. While this money might not be accessible to you at the moment it is still YOUR money and on some occasions you can use this money to secure a loan.

I have a house and a mortgage. Do I need to put both of them on my net worth?

Yes. List the price that your house would sell for under assets and the mortgage you still need to pay under liabilities.

If the price of your house is less than the mortgage then it means that after selling it you would need to come up with extra money to pay for your home loan.

If you take a close look of my net worth above you will see that I did exactly the same thing with my laptop that I recommended you do with a house.

I still need to make 316 dollars worth of payments for my laptop (as seen under debt) and I estimate it to be worth about 592 dollars when I would need to sell it right away. That means that after selling my laptop and paying back the debt I would end up with 276 dollars.

Why Everyone Should Calculate Their Net Worth?

A good reason to start calculating your net worth is to increase your financial situation. By calculating it regularly you will have an overview whether your decisions during the last month made you financially better or worse off. Learning from your own mistakes is the surest way to success.

I recommend making the calculating of your net worth a monthly habit. It does magic on making you think about your finances.

If you start thinking about your net worth your chances of multiplying what you already have grow exponentially

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If you have questions regarding how to calculate your net worth, leave them in the comments and I am more than happy to answer them and update this article accordingly.