The most important factor when choosing to manage your personal finances effectively is time. A greater time investment will almost always result in a greater financial return.

Therefore the sooner you start to manage your finances, the greater return and financial ease you will feel in the future. Many people fail to plan ahead, which results in struggling to juggle finances at a later point in life.

Money management should focus on four primary questions:

1.       What financial goals would you like to achieve?

2.       When can you expect to achieve them?

3.       What finances do you currently have?

4.       What level of risk would you make to achieve these targets?

Choosing somewhere to live is an essential in everybody’s lives, and therefore, buying a house will be the biggest financial purchase that people will make. The financial investment into a home will affect all your other finances.

Making big decisions on your lifestyle will affect your financial goals. If you consider a luxury holiday to be one of life’s essentials, you will have less money left over for savings and investments.

When do you want to retire? What expenses do you currently have? Deciding what your priorities are will help to determine what money you will have left.

It is worth assessing your current liabilities, as these expenditures and assets could be reduced or sold and free up money for the future.

Calculate how much spare money you have so that you can form an investment plan. Investments can vary dramatically. Some are high risk for higher reward or loss, and some are low risk for a steady growth on investment. It’s up to the individual to decide what level of risk you are prepared to make.

Once these considerations have been made and your plan is in places, it’s important to assess the decisions you’ve made and how they affect you on a day to day basis. You plan may be too restrictive, leaving you with not enough money to live on, or perhaps you could make greater short term sacrifices to benefit you in the long term.

A small amount of time spent on your current finances can be highly rewarding for your future.

Plans to split British bank Northen Rock in two which would allow for its partial sale has been granted by the European Union.

The divide would result in two separate banks forming and are already being described as the “good” and “bad” banks.

The “good” bank would offer new lending, retain some of the existing mortgages and hold its savers’ money.

The “bad” bank would be used to repay the existing government loans and hold the remaining loans.

 Decisions made by the EU to accept the move are seen by Northern Rock as “an important and positive step.”

Changes to the existing setup will be made towards the end of the year.

The EU revealed that the good portion of the bank would be expected to grow and then be sold to third party, with the bad bank allowing its assets to dissolve then becoming liquidated.

The good bank may be sold prior to the general election next year with potential buyers being speculated already, with Virgin and National Australia Bank, owner of Clydesdale and Yorkshire Bank, among the interested parties.

EU Competition Commissioner, Neelie Kroes, believes that the move would make the bank a good long-term option, revealing that “this decision demonstrates once again that the EU’s state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage.”

Whilst Jonathan Todd, European Commission spokesman, said caps would need to be applied for the duration that the good bank remains owned by the public.

Some of the caps include a balance sheet reduced to a quarter of its size prior to the crisis, not being the market leader for loan interest rates, a cap set to limit its lending to one-third of Northern Rock’s 2008 levels and also a cap on retail deposits to be slightly lower than the pre-crisis level.

An investigation was engaged by the EU into Northern Rock in April 2008, two months after its nationalisation.

The results from the investigation showed that the UK government was kept at a “necessary minimum”.

By 30 June, the bank had paid back approximately half the taxpayers’ £26.9bn loan and will gain a further £8bn from the government during the end of year restructuring.

The EU stated that the restructuring would reduce its market share to below half of its pre-crisis level and “correct the excessive expansion of Northern Rock pre-crisis.”

Northern Rock released a statement, saying “this approval is an essential requirement of the planned legal and capital restructure, which is central to the business plan for Northern Rock.”

“The restructure will strengthen the capital and liquidity position of Northern Rock significantly, and offers value for money to taxpayers” and it would be “business as usual” for its customers.

According to official figures, the UK experienced an unexpected contraction of 0.4% for the third quarter, showing that the UK is still stuck in the recession.

This quarterly contraction is the sixth consecutive contraction, the worst run of figures that UK gross domestic product (GDP) has experienced since records began 54 years ago.

The GDP of a country represents the value of goods and services produced by a country. The figures released may be altered at a later date, as this is just a first estimate.

The Office for National Statistics (ONS), had been expected to show quarterly growth of 0.2%. However, no growth in retail sales for September and a 2.5% fall in industrial output for August had dented people’s positive expectations.

Experts have revealed that one of the main causes of the contraction was an unexpected drop in the services sector, with distribution, catering and hotels generating some of the worst figures.

Nearby countries France and Germany exited the recession earlier this year, and it is generally considered that the UK’s reliance upon the services sector, and more specifically, the finances sector being the main reason.

The UK economy has now experienced a 5.9% contraction since its high point prior to the recession.

The Bank of England is set to re-think its quantitative easing plan after seeing such a poor result in GDP figures. Quantitative easing involves the Bank of England printing money to buy bonds from companies and banks in an effort to encourage positive activity in the economy.

HSBC’s Bronwyn Curtis spoke with the BBC, revealing that “back in August we had a worse-than-expected second-quarter GDP number and that is the reason that the Bank of England extended the quantitative easing programme,”

ING’s James Knightly felt that the data was “awful with no positive news” and “clearly suggests that the likelihood of an expansion in quantitative easing by £50bn or so over the next quarter is rising, although [it] is not a foregone conclusion.”

It is considered by many experts to be disturbing that measures taken by the government and the Bank of England have failed to make a positive impact. However, David Kern, the chief economist with the British Chamers of Commerce believes that “continued intervention – including help for businesses to access finance, and incentives to promote investment – is still needed.”

“Above all else, business confidence must be nurtured, to ensure that recovery is not further delayed.”

Alistair Darling has announced that the government must borrow its way to recovery and believes that it’s the best avenue for the UK economy in the long run.

The Chancellor of the Exchequer confessed that further national borrowing “may feel counter-intuitive,” but “will mean the bills we face as a country are lower” in the long run.

However, many believe that the levels of government debt are already too high, with cuts in public spending and tax rises required. The government has already raised borrowing during the recession by high amounts.

Following Mr Darling’s speech, a question-and-answer session was held, with the chancellor finding agreement with Mervyn King, the Bank of England Governor, stating that there were “no simple answers” when it came to the reform of big banks.

According to Mervyn King, their core business may need to be divided into other practices to prevent them from becoming so big that they aren’t allowed to fail.

Mr Darling was concerned that “we cannot have a regulatory regime that excludes the possibility of failure.”

He went on to state that the banking sector needed more competition, and when the government came to selling its bank stakes that were bought during the financial crisis, it would be hoping to develop greater competition.

Many are calling for a reduction to the borrowing and spending that has caused so much debt, but Mr Darling believes that withdrawing government support would be “wrong and dangerous,” and the country would have to make a big decision.

At a speech in London, Mr Darling declared that “we can resign ourselves to a decade of austerity, low growth and low employment, or we can embrace change, turn it to our advantage and seize the huge opportunities a global recovery will bring.”

He continued by warning that withdrawing government support to the economy “would put the recovery at risk and abandon people facing unemployment.”

In a bid to encourage demand during the recession, the government has pushed billions of pounds into the economy through its £175bn quantitative easing plan, cut the VAT rate and helping ailing banks.

According to Mr Darling, a great deal of work was still required to steer the country out of the recession, including three big steps.

“First, we must support the economy until we’re sure the recession is over. Some are tempted to think the crisis is over. It’s not. Banks all over the world are still dependent on government support.”

The second step would involve raising taxes to regain financial strength and taking “tough choices on public spending for the years ahead”.

He added, that it “will mean cutting costs, cutting waste and cutting lower priority budgets, while continuing to invest in our priorities and our future.”

His third step would involve a government plan of growth.

“We need growth, because when we grow, the economy becomes bigger, we all become richer as a country, and it gets easier to pay back debt.”

The Royal Bank of Scotland guarantees that it will not repossess properties belonging to owners who have fallen behind on their payments for at least six months.

RBS are currently the fifth biggest mortgage lender in the UK, with a 7% market share. Therefore, their decision could put pressure on HBOS, who are currently the biggest mortgage lender.

The government have recently also bought out a 58% stake in the Royal Bank of Scotland recently after shareholders held a meeting and decided to take the government money, and therefore bought out a tiny percentage of the shares offered to them.

RBS have said that it wants to make sure customers are given an opportunity to seek help and independent advice before starting legal action against them.

Craig Donaldson, the RBS’ managing director of retail banking has said: “we fully understand that one of the biggest worries facing homeowners in financial difficulty is the thought of losing their home, and this is especially true given the current economic climate.”

Citizens Advice and charity Crisis, who represent homeowners struggling to keep up with arrears, have welcomed the news.

Just last week, Ian Pearson, Treasury minister, said that he would hold banks’ “feet to the fire” in order to assure that customers were treated properly.

Shortly after the RBS made this announcement, the Bank of England released figures that showed mortgage approvals had dropped again in October of this year by around 1,000 approvals less than in September.

BBC business editor, Robert Peston has said:” Here’s the positive side of what Royal Bank has done : it gives those who lose their jobs in the looming wave of redundancies a better chance of getting a new source of income in time to prevent the bank seizing the family property.

“But there is a cost, which will fall on estate agents and – possibly – anyone interested in seeing an end to savage deflation of house prices.”

Initial assumptions were that the delay in repossessions was due to the government take over, but it may not be entirely down to that.

Jonathan Charley, from EDS consultants, has said: “At a time when house prices are falling, banks don’t really want to do repossessions because all they end up with is no money coming from the mortgage loan and they end up with a stock of houses, which they probably can’t sell.

“So, for most banks they’d rather avoid having repossessions and actually just get some form of money coming in from people.”

The delay in bank repossessions for people who are struggling to keep up with their mortgage repayments is just one of many new changes being enforced by the bank. Others include an agreement to return to “normal” lending practices and guaranteeing overdraft rates and contracts for its business customers for at least a year.

The Bank of England has shockingly revealed today that it is to cut its interest rates in the UK to 3%, their lowest level since 1955. This follows an emergency cut just last month, from 5% to 4.5%.

It was expected that they would be cut again by the end of the year, but economists predicted this would be by the same amount again, which would leave us with 4% interest rates.

The BBCs economics editor has said that the size of the cut, which is the biggest since 1981, shows the Bank’s concern that the UK is headed for a long recession.

Banks are however, expected to take some time deciding whether to extend this cut to mortgage holders and savers.

Shortly after these cuts were announced the European Central Bank also announced further cuts on its eurozone interest rates to 3.25%.

In reference to the Bank of England’s statements regarding the cuts and the general state of the economy, BBC economics editor Hugh Pym has said: “It is clearly very concerned about the possibility of a prolonged recession in the UK.
“The risks of high inflation have now evaporated, and because the bank is worried that inflation will now fall well below its target, it has felt the need to come up with this cut, which is much bigger than expected.”

This cut should help those with tracker mortgage deals, which is estimated to be about 40% of mortgage holders, by roughly £134 on around £150,000 mortgages.

Prime Minister Gordon Brown was asked about the problem on Wednesday in the House of Commons. His reply was: “We want the banks and building societies to pass on the interest rate cuts to their mortgage holders.
“What we’ve been trying to do over the last few weeks is get the liquidity into the system, recapitalise our banks and then get them to resume the lending that is necessary.”

As the level of the cut was so much higher than expected, mortgage lenders are expected to take some time to decide whether they will pass on the cuts to variable rate mortgages which, according to the Council of Mortgage Lenders, account for 10% of total home loans.

Lloyds has promised it will honour the 1.5% interest rate cut, but other major lenders are still undecided.

Customers who have fixed-rate mortgages however, will see no change to their repayments until they come to re-mortgage.

In general, business bodies and trade unions have welcomed the change, saying that it is bold, but should ease conditions in the credit market and allow banks to pass on their benefits to their customers.

The Institute of Directors (IoD) have said that rates could reach as low as 2% or less by this time next year. Chief economist Graeme Leah said: “the sooner we get interest rates down, the less is the risk of a long and deep recession.”

The 1.5% decrease in interest rates came after figures released this week provide further evidence that the UK economy is slipping into recession.

Such figures include those from the Halifax, showing a 2.2% fall in house prices since October, which now pushes the drop to 13.7% overall in the last year.

Activity in one of the UK’s major industries, the service sector, shrank in October for the sixth consecutive month. According to an index, the output from this service is its lowest since the poll began in 1996.

The manufacturing output fell for the seventh month in September according to the Office for National Statistics, its longest run of consecutive monthly declines since 1980.

In recent years, arranging a loan has become very popular in UK as it has now become easier to borrow money. Consumer finance has become very popular, aided by variety of loans available with low interest rates. Secured loans are widely accepted as they suit the needs of the people who own property. Secured finance provides excellent value for the money and also affordability by all classes of people. A variety of lenders offer secured loans to consumers providing wide choice in selecting secure loans and applying for them.

The amount to be borrowed with the help of secured loans is based on the value of equity which is available on the property. In other words, market value minus outstanding mortgage or any loan is the amount available. Secured loan provide plenty of benefits. They are the best available cost effective options to arrange for finance. Unlike other unsecured and standard loans, secured loans carry lower interest rate as the risk involved and borne by the lender is less as the loan is arranged against a security or asset.

Compared to unsecured loans, secured loans have high borrowing levels though the amount to be borrowed depends on equity. Thousand of pounds or even much larger amount of finance can be borrowed with the help of secured loans to meet any purpose or need. Under the secured loan the repayment period is very lengthy as compared to unsecured loans, resulting in low monthly repayments.

Secured loans are easily accessible even for the people with bad or poor credit unlike unsecured standard loan. Lenders face less risk with secured loans as the loans are arranged against a security or asset. Lenders do not mind bad credit for sanctioning finance. People with even tarnished credit history can still manage to enjoy lower rate of repayment as bad credit loans are easily available at reasonable rates.

Most people choose secured loans for consolidation of their loans and credit. Usually, for most people, large amounts of pay outs go for high credit loans and credit cards. Secured loans convert all expensive credit loans into single convenient consolidated loan, making it easier to repay in one single repayment ever month and just pay settle for a single interest rate. Bad credit secured loans can be used to pay off debts and thereby repair and improve the credit score.

All the major lending companies provide secure loans easily available through online. Just by booking through the internet and browsing the loan information a best deal can be clinched at competitive and affordable rates of interest. It is always wise to read the terms and conditions as well as interest rates by comparing between various available loan deals in the market to get a cheap and best deal of secured loan and an affordable rate of interest.

Secured loans make the life more comfortable by making available finance for funding or purchasing or to consolidate loans and credit. The loan repayments are on the lower side with reduce rate of interest. By harnessing the internet power it is very easy to find, compare and apply secured loans in a simple and straight forward manner, speedily at total ease and convenience. Competitive deals of loans are possible over internet giving better choice for greater value of borrowed finance.

As we move towards a decline in worldwide business activity, a time when interest rates around the world will fall, many are starting to ask when they should consider re-financing their debts.  Is it time to do it now, or wait as long as possible?

While it may be tempting to take advantage of the recent reduction in interest rates in some areas of the world, those who can may well benefit from waiting a few months longer.  The UK for one is expected to see interest rates start to decline very soon, with recent indications by the Bank of England seemingly confirming this.  We are also in a situation where finance is still more expensive in real terms than it was 6 months ago, because there is less liquidity in markets, which has pushed money market lending rates higher.

If you are looking for a fixed rate refinancing of your debt, and you are able to hold on for a little longer without impacting upon your credit rating, it may well be beneficial to hold off any action for a little while.  We could see UK rates fall by more than one percentage point over the next 12 to 18 months, depending upon the performance f the economy.  Even this relatively small fall will offer many consumers, who have built up substantial debts, the chance to reduce their future debt repayments.

Each person’s situation will be different and there is no simple answer to the question, but it seems inevitable that the UK, US and other major countries around the world will be seeing lower interest rates in the not too distant future.