Alistair Darling has lowered value added tax to the lowest level that the EU law allows. Value added tax is now 15 per cent, which is 2.5 per cent lower than what it was. This alone could help the average British family save £10 a week, though the saving might be offset by the increase in alcohol, tobacco and fuel duty. However, this should equal a £12.5 billion injection into the economy.

This cut is a temporary one: it will last until the end of 2009 only.

Mr Darling announced the cut in his pre-Budget report on 24 November. The report has already angered Conservatives: they are calling Mr Darling a gambler who doesn’t want to give up. However, Chancellor Alistair Darling believes the cut should encourage consumer spending: it could mean consumers receive 12.5 billion pounds back in their pockets.

The government wants retailers to pass on the saving to consumers by offering price reductions. Retailers such as Currys, PC World and Dixons, as well as Marks and Spencer are planning to cut their prices and increase consumer confidence. However, basic groceries are not liable to VAT so the average Christmas dinner will not be any cheaper this year.

The government is planning to cut VAT, boost tax allowances and offer more cash to parents and pensioners.

What the pre-Budget means for you:

• VAT is reduced from 17.5 to 15 per cent until the end of 2009.
• Those earning more than £150 000 a year will be taxed at 45 per cent from 2011.
• Motorways, social housing and schools receive £3 billion.
• The rise in corporation tax has been postponed.
• National Insurance rates increase by 0.5 per cent from 2011.
• Pensioners’ credits are increased and they also get a £60 bonus this Christmas.
• Air passenger duty will be replaced by new system and long-haul passengers pay more.
• Child benefit credits increase in January, which is three months earlier than expected.
• Taxpayers receive a £145 rebate as compensation for scrapping 10p tax band from April 2009.

Our selection of podcasts relies much on the list of ten top personal finance podcasts JD Roth compiled.

1. Ask Brian Preston, the Money Guy, for advice on money that ranges from the most basic to a bit more complex.
2. We owe much to the Quick and Dirty Tips empire that started with Grammar Girl some years ago. And Money Girl, one of the most popular personal finance podcasts, now dishes out advice on money and personal finance.
3. I fell in love with MSN Money months ago but only recently discovered On The Money. They have fewer podcasts than other sites, but have a fabulous UK flavour.
4. The Dave Ramsey Show is one of the most authoritative podcasts out there. If you don’t mind paying a couple of dollars a month you can get the full show. But the free one hour long show is as good.
5. The Feed the Pig podcast teaches better household budgeting, how to fix bad credit scores and much more. It has been running since March 2007 and has already gained authority; JD Roth included it in his podcast roundup.
6. A new Kiplinger’s Personal Finance podcast is available every second Tuesday. The episodes are short – only around 3-5 minutes and the site features an extensive archive.
7. The Plain Talk on Investing podcast has a new episode once every two weeks and uses plain language to discuss personal finance.
8. Financial Aid Podcast was featured on Top 100 Personal Finance Blogs and has a wide audience: students who want to find out about scholarships, parents who need information on personal finance and financial aid professionals who get the latest industry news.
9. I am a bit biased towards The Economist, it’s true. But in a good way. Their personal finance podcast has discussions with experts and are just long enough to pique our interest.
10. Can the Financial Times do anything wrong? Matthew Vincent presents the weekly FT Money Show and discusses questions such as ‘Can it still be cheaper to buy than rent?’

There are numerous reasons why people file for bankruptcy, and while some are pretty straight forward, others are less obvious. Bankruptcy does not only have to be seen as a black mark on your credit record. It also has some advantages. Here is a list of why people file for bankruptcy, and how bankruptcy might help you financially.

1. No legal obligation to pay many of your debts

The process of wiping your name off all debt is called discharge of debt. The reason for this is to reduce your debt and give you a fresh, new financial start. Whether you are filing for Chapter 7 Bankruptcy (straight bankruptcy) or Chapter 13 Bankruptcy (through an organisation), most, or all your debts will usually be cleared.

2. Stop foreclosure on your house

Chapter 13 Bankruptcy will be able to help you in the event of your home facing foreclosure. Please bear in mind that filing for bankruptcy in this respect does not eliminate mortgage payments on your property, instead it will structure a reasonable plan in order to repay your mortgage arrears.

3. Prevent your car or other property from being repossessed

Filing for bankruptcy can force your creditor to return any repossessed goods, including your car. This can only happen, however, if bankruptcy is filed quickly enough. Any past payments you have missed on your mortgage will be consolidated into your bankruptcy plan. Once you have filed for bankruptcy you will no longer have to pay the finance company. Instead, you will make monthly payments to the trustee of your bankruptcy plan, who will then make sure the finance company is paid.

4. Reduce/eliminate high medical bills

There are unfortunate incidences when an untimely accident or unforeseen illness can wreak havoc on a family’s financial circumstances because of skyrocketing medical bills. Filing for a Chapter 7 Bankruptcy will help reduce the amount of medical bills.

5. Recent loss of employment

According to studies, losing a job is one of the main reasons for filing for bankruptcy. No one should dismiss the possibility of losing ones job, no matter how indispensable you may be at your company. Job loss can happen to anyone, and at the most inconvenient of times. If a family is living off of 2 salaries, and suddenly one of those salaries disappears, their living conditions will change drastically.

6. Stop harassing behaviour and demands from creditors

Sometimes creditors will take drastic steps to get their money from you. Creditors have been known to become abusive and threatening if their financial needs is not met. They will continuously phone you demanding that you pay them their money back. Not only is this behaviour unprofessional and unethical, it could reach a point of becoming illegal. If you file for bankruptcy, your creditors are forced to stop their harassing phone calls and other inappropriate behaviour.

7. Restore or prevent your utilities from being terminated

If your home faces foreclosure, your utility bill may also risk being terminated. Filing for bankruptcy can prevent the utility company from leaving you in the dark.

8. Helps repay student loan debt

Although bankruptcy will not eliminate a student loan, it can consolidate your student loan debt. This will allow the debtor to make monthly payments through Chapter 13 Bankruptcy that they are able to reasonably afford.

9. Puts a stop to wage garnishments

Chapter 7 Bankruptcy will put a stop on wage garnishment, which takes away from your weekly earnings. Filing for bankruptcy allows you to still have enough money to purchase necessities for you and your family.

10. Challenge certain claims of fraudulent creditors

Filing for bankruptcy allows you to challenge any claims from creditors that you owe more money than you do. An attorney will be able to support you in this situation. Filing for bankruptcy with an attorney can stop fraudulent reporting by a creditor.

Being new to blogging in the finance niche, we’ve spent a lot of time looking at the top blogs to “follow” in terms of popularity and interesting content. After a lot of research we thought, ‘Why not make a blog post about some of the sites we have found to be the best in the niche?’

Instead of just being a basic list of links, we wanted to take things a step further and really rank these websites.

Therefore, we have looked at the following criteria; Google Pagerank, Alexa Rank, Feed subscribers and Technorati score and give each site a score out of 10 for the ratings and present you with the following results.

We have given each category’s results a score out of 10 e.g. if you have a low Alexa rating, which is a good thing, you will get a higher score on a scale of 1-10.

Blogs by Alexa

Blogs by Feed Subscribers

Blogs by Google Pagerank

Blogs by Technorati

Blogs by Total

Of course, we think all the finance blogs are fantastic so congratulations to all who made the list and congratulations go to Get Rich Slowly!

The Credit Show conducted a poll on Britons’ money habits. The research revealed some surprising facts such as that more than 71% of Brits borrow money from friends or family members.

What is not surprising is that this may lead to a clash between borrower and lender, and that nearly sixty per cent of those polled fell into this trap.

Borrowing among friends or family is something that is not properly documented. This is once again highlighted by this research. How many people lend money to a friend who is in a financial quandary? Not even financial professionals are immune to the British debt culture. Nearly eight out of every ten professionals would be forced to ask family or friends for help at some stage. Of this total, 38% would borrow up to £500 and another 25% would borrow well over £1,000.

What this poll shows is that many Britons have to borrow money to fund their lifestyles or pay off debts. Interest rates are currently at a high level and with the credit crunch starting, we might see more of this trend. Twenty-five per cent of people admitted they have been borrowing £1,000 within the last year and nearly 60% of this group had a tiff with a friend or family member over this. This poll does a good job at highlighting the seriousness of this matter.

These same respondents were asked what they would do when they need money again. Would they borrow from friends or family again, or would they consider other options? Over 65% agreed that they might.

Because we trust our family and friends, we tend to be more relaxed about repayments. The poll revealed that over 58% of people had no legal agreements in place concerning repayment. Failing to repay a friend or family member may cost them money in the short-term, but sadly, you could lose their friendship and support, which is worth far more than the sum borrowed.

Over a third of Britons (36%) admit that appearances matter greatly and judge people based on what they wear, leading many of us to feel under pressure to overindulge in expensive purchases. We want our friends to think that we have a comfortable lifestyle, and the UK credit crisis does not seem to be a deterrent to be a deterrent to living beyond your means.

Recent research shows that when we meet new people, we judge their financial worth based on certain factors such as their jewellery or choice of clothing. According to the study, 34% of Britons spend more money in order to impress someone whom they perceive to be wealthy.

According to the study, there are five wealth indicators:

• Clothing - More than a third (34%) of Britons think this reveals much about your bank balance.
• Jewellery –20% of Britons will take the type of jewellery you wear as an indication of how wealthy you are.
• Watches– 15% of Britons believe that having a certain type of watch indicates wealth.
• Shoes– 14% of Britons believe that the person’s shoes reveals a lot about their financial status.
• Haircut– 11% of Britons (1 in 10), will think more highly of you if you have a good haircut.

This research tries to understand how we finance our lifestyles, and made the startling discovery that the desire to own the latest gadgets will result with 1 in 10 (11%) of us overspending. Looking good in front of friends is cited as one of the other big motivators, with dining at expensive restaurants and owning tailored suits adding to debt levels.

Having wealthy peers may not be that beneficial for the third of Britons who admit to jealousy when among them. A smaller number, 5% of Britons, are ‘jealous’ or ‘nervous’ in front of people whom appear to be wealthier. These Britons may exaggerate their own experiences to impress others.

How age and gender affects us

Men may be more eager to spend vast sums of money to appear ‘well-off’ to their peers. Many of these men – about 18% - are tempted to get into debt for their cars.

Many women feel ‘self-conscious’ in front of wealthier peers (15%), more so than men and they may feel more tempted to spend money on a haircut that will help them to appear wealthy.

Young people in the 18- to 24-year-old category (66%) are more likely to judge people based on what they wear. Over a quarter of 55- to 64-year-olds (28%) do the same.

Age seems to bring financial wisdom, as younger people are more prone to splurging on fancy goods to ‘keep up’ with their wealthier friends or family members. However, there is a vast difference between the 18- to 24-year-old group and the 65+ age group. Only 36% of the 65+ group admit to spending more to impress others, while 66% of the former group overspends.

Immoral lending practices are getting the blame for the current mortgage crisis that is affecting the international financial system. The Archbishop of Wales spoke at a celebration that led up the Easter weekend, and he noted, “What’s immoral is encouraging people to borrow more money than they can reasonably afford. They are the first people to go to the wall. There is something wrong about a system that allows that to happen.”

The ‘credit crunch’ gives particular resonance to his words, as there are rising levels of defaults around the globe. The US sub-prime mortgage sector got a knock after too many borrowers received mortgages that they can’t afford. This sub-prime scandal is affecting the global economy, and a prime example of this is the Northern Rock banking problems. The UK got its own batch of problems in the form of the mortgage crisis with lenders who are tightening up their lending criteria. They are also demanding a bigger deposit from first-time borrowers.

Experts are worrying over a possible recession in the United States. This would spell disaster here. The International Monetary Fund’s World Economic Outlook reports that the US economy is nearing a possible recession. This document is still in draft stage, but it is an influential report.

The Archbishop reckons that this economic uncertainty may prompt people to ask ‘eternal questions’. He said, “It’s like when people sometimes are faced with the prospect of dying through a fatal disease and you just realise you’ve been worrying about 1,001 things. We put our trust in all kinds of things except the things that matter.”

Another strong voice echoed the Archbishop’s concerns. David Rosser, who is the director of CBI (Confederation of British Industry) Wales, says that lenders should make sure they only help people who can repay the debt.

“The Archbishop deals with this in terms of morals. To my perspective this is good business sense, but it seems many lenders have forgotten that. I rather suspect that we will be seeing a return to these sound principles in the future.”

Mr. Rosser made a good observation: people should be more responsible with their finances, and not borrow more than they can afford. He tries to use his three credit cards responsibly. “…if I used them to the limit it would be a shocking debt, but I don’t. Individuals have a duty as well.”

His views may seem severe, and this is not the first time he brands one of modern life’s facets as ‘immoral’. His 2007 Christmas message condemned today’s workplace for the pressures it places on family life.

There are many ways one can reduce a grocery bill: you could stay away from the grocery store when you’re hallucinating with hunger; you could use coupons on double coupons day and you could decide you will only buy those items you really need.

These are all excellent tips and we should really use them more often. But there are other ways to make sure you do not receive a slight shock when you reach the checkout point.

It’s so easy to say one should always have a grocery list, but just how often do we sit down to compile one? Shopping for food sometimes becomes a race against time, shoving anything (and everything) into the trolley. Take some time to list what you need before you go to the supermarket. That should give you an estimate of what your bill would be. Make sure you have listed everything you need until your next shopping expedition and then draw enough money for it. Leave the rest at home, or in your bank account and do not be tempted to use more. This should cut down on frivolous shopping because you will not have credit cards or extra cash with you.

There might even be a supermarket nearby you with a rack that is set aside for day-old bread, or that has an “about to expire” meat section. Be careful when buying such produce, but you should be able to tell whether you could still safely use the items. To be sure it does not go off, use it right away and do not let it sit in your refrigerator for too long.

Think of the time of day, time of week and even time of month that you do your shopping. You may find that it is best to shop early in the morning so that you get all the fresh goods and when it is not too busy. You’ll be able to do a better shop and not rush into buying anything you do not need. Try to avoid the first day or two of the month. Some stores increase their prices because they know this is the time when people receive their welfare cheques.

Buying in bulk could make sense at times but you should still do your comparisons with other stores. What is surprising is that your local grocery store could be as inexpensive as the bulk store. Sometimes they might even be cheaper. Also factor in the distance you need to travel to get to a store selling in bulk. If you need to spend more petrol just to save a couple of pounds, it may very well not be worth it.

Search everywhere for savings. Grocery stores might put the higher priced merchandise at eye level and insist on placing the lower priced generic and store brands at a higher – or lower – level. While it is true that generic brands or store brands might not always be less expensive, you could sometimes get a substantial saving on your weekly shop by using those brands.

Some stores have also begun listing the cost per item or ounce. This is a far more reliable way of comparing items when shopping. You won’t be duped into thinking the 600g packet is cheaper than the 800g when you realize the latter is ₤5 more expensive per kilo!

If you have children, you may want to find another parent who is willing to trade shopping times with you. It’s much easier doing your weekly or monthly shop without children, as you won’t be tempted to buy extra items just to keep the quiet. This would also guarantee you have more time to do that valuable comparison shopping and you might even have a moderately enjoyable shopping experience!