Clear debts for a financially happy New Year

Reducing and paying off debts is the top financial goal for people in the New Year, a new study reveals.

According to Alliance and Leicester 49 per cent of respondents said debt reduction was their key financial ambition for 2005. Second was increasing savings, the ambition of 43 per cent of people.

To reduce their debts more than half (61 per cent) of people said they would budget and try to spend less and a third said they would try and earn more or take on a second job.

However, one in ten said they would consider debt consolidation as a solution to reducing their debts in the New Year.

Commenting on the findings, Andy Bayes, of Alliance & Leicester, said: "People are beginning to see that by budgeting better, personal debt can be reduced considerably. This doesn't just mean spending less, but also paying less interest on your debts.

"Consolidating your existing debts onto one loan will not only save money, but offer a disciplined approach to repayment which can help bring down overall monthly expenditure," he explained.