January 5 heralds the start of our post-Christmas battle plan
Our money saving tips for the New Year
First of all check what you owe on credit cards, overdrafts, personal loans, mortgage or rent arrears, gas and electricity bills, council tax arrears and compare with what your borrowings were a year ago.
Nationally we’re getting further into debt so the chances are your personal borrowing will also look a little podgier than it did a year ago.
Borrowing is a bit like how much you weigh…
If you don’t keep an eye on things it tends to creep up year after year. Now is the time to take action if the situation is not going to be even worse in 12 months time. We know going through all that financial paperwork seems like hard work but it’s worth it. You don’t lose weight without dieting and you certainly don’t save money if you don’t keep a firm grip on your paperwork.
Interest rates on payday loans may have been capped this week (January 2) but they are still too expensive for someone struggling to pay what they already owe.
‘Cheap’ loans and headline rates
But it isn’t just the pay day sharks that need to be kept an eye on. Personal loans from apparently respectable sources are being advertised as being cheaper than ever before at 4.5% or thereabouts. But beware. The headline figure is a “representative” rate, which means if you really need the money it is likely that you will be offered a loan at a higher rate. Lenders only have to offer the advertised rate to 51% of applicants.
If you have a reasonable credit record and a fairly high credit card balance you may be able to transfer the balance to another card offering 0% interest on transferred balances. Remember you pay a fee. It may be as low as 1.9% but can be around 4%. Even so that is still a bargain so long as you do not buy anything on the interest-free card and clear the balance on the card before the interest-free period is over. New purchases will attract the full interest rate.
Cutting what you spend
Cutting what you spend is the only real way to get your finances in a better position. We know that is a heart-sinking thought but once you start you will get a warm glow from the savings you start to make. You don’t have to do it all at once.
First of all, if you have changed you gas or electricity company in the last five years are you sure that the company does not owe you money? Until recently the companies did not have to tell leavers if they were owed money.
Now when people change energy companies or move home, the company must pay back any money that has accumulated, but they do not have to go back to people who left some time ago. Some estimates are that £200 million is owed to us.
It is worth calling companies that you left in the last couple of years and finding out if any money is owed. It could start the year rather well.
Failing that, if you haven’t changed energy providers recently there could be savings to be had by doing so now. Check out fixed rate offers in particular, where the price you pay is fixed for a set amount of time. The standard tariffs have stayed stubbornly high even though oil prices have fallen but there are bargains to be had on fixed rate tariffs.
Cutting cold weather costs
If you have already compared and swapped companies there is still money to be saved by using gas and electricity efficiently. Check your meter regularly to help you track down what equipment costs most to use and make sure theseitems are only used when it is necessary. You can also get energy output monitors to help you do this.
Use the washer when it is full and where possible use a 30 deg C wash. Completely fill the machine before you put it on. You also save on washing powder and dishwasher tablets if you use these machines less often. Turn lights off when you leave a room. Do not heat empty rooms. Put on a cardigan. You will be surprised at the savings even small changes like these can make.
Food, glorious (but expensive) food
Before you go shopping for food check what you have in the cupboards, fridge and freezer. Use as much of the old stock as possible. Your shopping bills will be cheaper. And if you are buying less you have time to look around while you’re at the supermarket and so track down more bargains and spend longer comparing prices.
Check all the different sizes and formulations of things like washing liquid. There are often eight or ten different sizes for the same brand.
Remember the manufacturers pay to have their products prominently displayed on the aisle ends or at eye-height. These displayed products are the ones they make most money on. It’s on shelves near your feet that you’re more likely to find bargains.
If you take a couple of the ideas above and implement them you will have made a fighting fit start on the year. Steadily tackling them all over the next few weeks will make a big difference and as the months pass by we will give you regular tips on how to win the financial battle.
Do share your successes with us!