If you’re worrying about money pouring through your fingers right now, then it’s time to pull out your statements and financial information. You have the power right now to put a stop to the free flow of cash. Chances are there are plenty of forgotten expenses that don’t realise you can get out of today. You’ll need a couple of hours or so to find all the information you need and to collate it. Once you’ve got it all there in one easy-to-read spreadsheet, you’ll know what your life costs you and when you can put the brakes on excess spend.
Start with all those loans you’ve got. You might be paying off the new bathroom. Perhaps you’re hiring a musical instrument for the kids? Got a mortgage? What about your student loan? Don’t forget your credit card if it has an outstanding balance. Did you hire purchase the car? Get them all listed in a spreadsheet. Pop the APR you’re paying into a second column. This is where you can start to save money.
If you have exceeded the minimum term for any of those agreements (sometimes called a fixed rate term), then you could be within your rights to cancel them. Start with your student loan. Many UK student loans are charged compound interest. This means you are charged interest on the interest they’ve already added to your loan amount over the years. No wonder so many of us end up with double the debt we originally borrowed. The good thing is you can settle at any time. If you can clear that debt with a lower rate APR or with savings, consider the benefits and cost savings.
Shop around for cheaper rate credit cards that allow you to transfer your balance with no cost. You can pay off a loan or mortgage using a new agreement with someone else too. Things to watch out for:
Make sure you understand how long your new agreement is.
New agreements should not exceed the old one, or you may find your total amount repayable is higher than the original loan.
Check the promotional APR lasts long enough to clear the loan.
Did you know that most lenders offering 0% will usually accept early repayment without any penalty? This could be a handy way to reduce your monthly outgoings and clear your credit.
It’s not just lenders that offer cheaper rates for a short period. Almost all service providers use this kind of promotion to attract new customers. Go through all your provider contracts. Energy providers, mobile phone contracts, internet services, and even your boiler service company should be checked. If the initial term has passed, it’s time to shop around for a better value deal elsewhere.
You can find UK broadband deals, energy price comparisons, and boiler care packages online. If you detail what you have in a spreadsheet, you’ll be able to double check the deal you’re looking at compares. The last thing you want is to get a lesser service unless you don’t need anything more than a basic provision. As a new customer, you may be tied into a minimum term contract again. Be sure you’re happy to do this before you hit the buy it now button. Sometimes changing providers takes a few weeks to complete. You may also need to settle the outstanding amount with your existing provider as well as paying a month up front with the new one. Check you have enough in your bank account to cover all this.
None of us intends to be wasteful, but if we looked closely enough, we would find that we are at times. How much food went in the bin this week? Did you pay someone to do a job you could have done yourself (like washing the car?) Perhaps you took the car on a short journey you could have walked if you weren’t so tired or in a hurry? Once you become more aware of wastage, you’ll find it easier to organise things to avoid it.
Sometimes shortcuts and convenience cost us more money than the time is worth. Could bringing a thermos to work save you a few pounds on coffee shop runs? What about your lunch? Yes, it takes a few minutes to prepare a soup or a sandwich at home, but how many pounds are those few minutes saving you per day? Add these things to your spreadsheet. As you start to make savings and reduce your outgoings, you can tally up your totals – very rewarding and a good motivator to do more!