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A richer 2004

Charlotte Beugge, Daily Mail
31 December 2003

GIVING up smoking will benefit your health - and kicking the habit will also save you money. If you smoke 20 cigarettes a day, during a year your habit is costing you £1,640 - assuming there is no increase in next year's Budget.

Give up now, and over the next year you will see the dividends. The cost of insuring your life will fall: Virgin Money charges £15.69 a month for £100,000 life cover for a male smoker aged 35 next birthday.

For a non-smoking 35-year-old man, the same level of cover would cost £9.09 a month.

If you put the £136 a month you will save by not smoking into Intelligent Finance's cash mini Isa (which guarantees to pay 0.3% over base rate until April) then, if interest rates don't change, in a year's time you will have £1,667.25, including £35.25 interest.

Hopefully, you will manage to sustain your abstinence beyond a year, in which case a longer-term investment might be a good idea.

According to figures from data researcher Standard & Poor's, if you had invested £136 each month during the past year in Invesco Perpetual Income, your £136 a month over a year would now be worth £1,910.

If your resolution is to get fit in the New Year, then membership of a private gym could cost you £50 a month - £600 a year. If you go once a week, that means each visit costs about £11.

Instead of signing up for the gym, start walking, or visit your local public swimming pool.

And rather than paying out £50 a month to a gym you won't use, put the money into a Nationwide cash mini Isa paying 4%. After a year you will have £600, plus £13 interest.

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• CHARLOTTE BARBER gave up her gym membership - and has saved nearly £400. Charlotte, 30, used to pay £200 a year plus £8 each time she went to the local gym.The problem was that she went only twice a month, making it an expensive way to keep fit.

Instead, Charlotte, who works for a design company, now goes jogging in her local park. 'I'm pretty fit anyway - I'm always running around the office,' she adds. Charlotte has put the money into an Egg savings account and plans on using the money to fund a trip to Canada to see friends and relatives. 'I thought I could put the money to better use than on something I seldom used,' says Charlotte, from Southgate, North London.

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You might decide that 2004 is the year to give up gambling, but you don't need to give up the thrill of winning.

National Savings & Investments Premium Bonds can be bought in tranches of £100 or more.

While your chance of winning the £1million jackpot is unlikely, at least you can always get your stake back. And there's the chance of the odd £50 payout as well.

Giving up your satellite television dish, costing £500 a year, might be a prudent move for the New Year. Instead, use the money to overpay on your mortgage.

Assume you have a £100,000 offset repayment mortgage with Woolwich (current rate 4.6%).

If you overpaid by £42 a month, at the end of the year you would have saved £71.70 interest and knocked one month off the life of your mortgage.

If you continue overpaying at the same rate of £42 a month, you will save £9,431 in interest and cut three years and one month off the life of your loan.

EATING AND DRINKING
A POPULAR New Year's resolution is to cut back on drinking. If you buy, say, two pints in the pub after work twice a week, then that comes in at £400 a year (or perhaps closer to £480 - or £40 a month - in big cities such as London).

If you had a mortgage of £70,000 on a home worth £120,000, then using your drinking money could help you repay your home loan faster. Using a current account mortgage such as the One Account, a £40 a month overpayment would cut £11,699 off the mortgage repayment and four years, five months off the term - assuming your salary was £35,000.

And finally, if you stop getting takeaway meals, you'll not only lose weight, but make money. However tasty those takeaway curries are, if you spend £20 a week on feeding your frenzy for jalfrezi, then you are shelling out more than £1,000 a year.

Add your lunchtime sandwich (say £3 a day) and you've spent £1,820 on food you could easily prepare for less yourself. Use the money instead to pay off your £1,000 credit card debt.

If you moved this balance to internet bank Egg, you'd get the first six months without interest - after that the rate is 13.9%. If you then pay off £150 a month, you'll clear the balance in seven months.