Fix your festive finances
MONEY-SAVING TIPS:
ALMOST eight million of us have started 2018 in the red after spending way too much over Christmas.
Around 2.5 million more of us will be suffering from a festive financial hangover than last year, according to the Money Advice Trust’s National Debtline.
Personal Finance Editor Tricia Phillips has a 10-step plan to help keep debts at bay. 1 How bad is it? Do a simple budget list of what comes in against what you have to pay out. Write it in a notebook and keep going back to update it as your situation improves.
You’ll be able to sleep easier as you see the amount of debt you owe reduce and your budget begin to balance. 2 Trim your overdraft If your bank balance is in the red, whether it’s a planned or unauthorised overdraft, it can be one of the most expensive ways to borrow.
Overdrafts should only be a temporary measure as banks can call them in any time. You could use a money transfer card, which lets you transfer cash straight into your account, to clear an overdraft.
There’s a one-off fee, usually between 2% and 4% of the amount you transfer, but that will still end up a lot cheaper than constant overdraft charges. 3 Tighten your belt A few small savings here and there will add up, without having to give up all treats. Get savvy with your supermarket shop. Plan meals, write a list (and stick to it) and switch some big-brand items for own labels and you could easily chop £10 to £20 a week off the bill.
Save another packet by making healthier homemade lunches a few days a week, instead of buying expensive sandwiches.
Stop buying endless plastic bottles of water and get a reusable bottle instead. It is better for the environment, too. 4 Ditch the direct debits It’s easy to end up signing up to lots of subscriptions and forgetting to review them, especially with the raft of free trials on offer. Go through your bank statement and cancel all services you never actually use; the magazines that pile up unread, music you never get round to downloading and TV channels you simply don’t like or haven’t the time to watch. 5. Don’t auto-renew Car, home and other insurances are not a contract, so don’t simply let them automatically renew.
Loyalty doesn’t pay, and those who remain with the same firms for years on end get slapped with price hikes each year, while new customers get the best rates.
Use comparison websites such as moneysupermarket.com, uswitch.com and gocompare.com.
6.
Get card smart If you have a credit card balance and are just paying the minimum each month, you’ll get hit with way over the odds in interest and be stuck in debt for years.
A £2,000 balance on a card charging a typical 18.9% will cost £31.50 per month in interest. Pay the minimum each month and it will take 17 years and cost £1,968 in interest.
Pay an extra £10 a month and you’ll have it cleared in seven years and six months and pay £1,090 interest. Push it to an extra £50 a month and you’ll be debt-free in two years and seven months and pay £425
interest. 7 Build a financial buffer A bit of time spent going through your finances could pay back big time. Compare everything you have, from your mortgage and energy bill to mobile phone contract, to see if you can get it cheaper. Check you are getting all the financial help you are entitled to, such as benefits and pension credit. Billions in benefits goes unclaimed each year. Check the calculator at turn2us.org.uk. Use savings or extra income to start a fund and build up a financial cushion for peace of mind. 8 Keep your purse zipped Have a no-spend day each week, where you don’t spend any cash. And have fun finding free entertainment. Put a fiver in your money box each time you achieve this to help pay for next Christmas. 9 Lose lbs and save £££s A gym membership will set you back around £50 a month – £600 a year. If you use it regularly, at least three times a week, great. But millions of us have a quick burst of enthusiasm in early January and by the end of February have given up. Walking is one of the best ways to get fit and stay healthy and it doesn’t cost a penny. Get out in the fresh air and clear your head and your cash-flow problems. 10 Boost your pension pot We spend £124 a month on little luxuries, such as taxis, takeaways, ready meals and clothes we never wear, according to research from investment firm Scottish Widows. It reckons if we saved that amount into a pension pot, instead of frittering it away, it could net us an extra £10,000 a year in retirement income. But you need to get saving quickly as the figure is based on saving from the age of 22 to 68.