Wednesday, 8 July 2009

Top twenty tips to overcome debt

posted by debts.org at 04:41

With credit card holders in the UK now owing an average of £2,200 each on their plastic, and with a massive downturn in consumer spending on the high street, shoppers are reining in their spending and attempting to reduce their debts. Most credit card debt problems arise when people continue to only pay the minimum possible each month, which typically for a debt of £2,200 would take two years. You can avoid serious debt, and make significant savings by taking note of the following money-saving tips.

1. Remortgage

Make sure the mortgage arrangement you have is the best one available on the market to suit your needs. If, for example you are paying your lender´s full standard variable rate, you are probably paying much more than you need to. Thousands of re-mortgaging deals are available to choose form and always check the small print for hidden costs. Remember the only person who benefits from loyalty to your bank is your bank, so don´t be afraid to look around for the best remortgage options available to you. If you can afford to make overpayments then do so.

2. Deal with credit card debt problems

If you are trying to manage your debts better, the first rule of thumb is: clear your most expensive debts first. Unless your house is at risk, and you can no longer afford to pay your mortgage, try to pay off your credit cards. If you are struggling to pay your credit card debt every month, consider a low interest loan to pay-off the whole amount. Typically, a credit card debt with APR of 15% will cost you a lot more than a loan with interest of 6%. You could save hundreds of pounds this way.

3. Avoid debt by cutting the cost of fuel bills

Fuel bills are rising all the time, as the demand for power could one day outstrip supply. Remember the domestic market for fuel is a competitive one, and you can easily change supplier these days. A new supplier will arrange the formalities with your previous company, and will usually be glad of your business, and ensure lower payments will be pay less.

4. Install a water meter to save money

Debt management is not rocket science. By reducing the cost of your water, by changing suppliers, you can save hundreds of pounds a year. Water companies exist to make a profit. In return you have water flowing from your taps, but if less rain falls, the price of water can increase. If you have a big house with few occupants, by installing a water meter you are likely to save the most money.

5. Reduce your home phone bills and avoid debt

There are scores of cheaper alternatives in the UK today than British Telecom, which is not a monopoly. Packages can include your landline telephone, television and broadband internet access, and even low cost services which give you access to your existing BT line. Cheap call options and even free local call options are available from most telephone companies now in the UK, so call around to save hundreds of pounds a year, and to find the best option for you.

6. Make mobile pay-as-you-go

Until relatively recently, mobile phones were unheard of. Now it seems everyone has a mobile stuck to their ear for the most part of the day. If you over-use your contract mobile and run up huge bills, shop around for a pay-as-you-go phone with special packages and programmes, which mean you pay very little for your calls. This can literally save you hundreds of pounds a year.

7. Make a shopping list to avoid overspending in the supermarket

Food shopping makes up a major part of our monthly outgoings. Make a list of the items you need and stick to it. Supermarkets even employ experts to tempt us to buy more by means of clever marketing, positioning of goods and even music and smells. Also you will spend more than you intend to if you are hungry when you go shopping. Eat before you go! And remember, avoid food wastage when making pies, stews and curries, by cooking more than you require and freezing what´s left over.

8. Take a trip to the market to save money on food shopping

Buy fresh fruit and vegetables from the market, and you will not only be eating healthier, but you will also save money into the bargain. Lower overheads at the markets usually result in lower prices, which can save you hundreds of pounds a year.

9. Buy own-brand goods in the supermarketsFar too many of us are brand-snobs, who would never consider buying own-brand goods in the supermarket. Try it and you will be pleasantly surprised. Thousands of own-brand goods can now be bought for up to 50% cheaper than major brand names, and the quality is very high.

10. Use e-bay to sell your unwanted goods

There is no better time than now to sell your unwanted goods either at a flea market or online with e-bay. Quick and easy, you can earn hundreds of pounds from selling unwanted clothes, books, white goods, electrical goods or shoes on e-bay. This online auction house makes online selling and buying easy, and you can make a note that the buyer has to collect the goods. Remember one man´s trash is another man´s treasure, and you have nothing to lose by advertising it on e-bay. You can sell anything for the cost of a small commission. Have a look round the site and get a feel for it before bidding or selling. You can also pick up some great bargains on e-bay for presents.

11. Reduce your insurance payments

Shop around for car insurance, life insurance and household insurance. Insurance comparison sites on the internet now offer you hundreds of insurance options at the press of a button. Shop around to find the best deals to suit your requirements.

12. Book early holiday flights

Low-cost airlines offer cheaper prices when you book early. Book up to 6-9 months before your preferred departure date to a number of European resorts, and you can save hundreds of pounds. The lowest prices are advertised when they first go on sale, and they rise steadily the nearer they get to departure date. Take a look around some budget airlines sites (or go to www.skyscanner.net) which will search for you at the click of a button.

13. Stop smoking to save money

In addition to the health implications, and the fact that you are treated like a leper if you want to smoke inside these days, you can save more than £2,000 a year if you stop your smelly habit of 20 a day. Give yourself an incentive, and save the cash you would have spent on cigarettes, and buy something you have always wanted with the cash. Alternatively, use the extra money to clear your credit card bills.

14. Visit the library more often

If you are an avid reader, books can cost a fortune. Visit your local library where you can also take out CDs and DVDs which are expensive in the shops. Free internet access is also available in many libraries.

15. Use your ISA allowances

You can save up to £3,000 a year in a tax-free savings account called an ISA. No tax is payable on the interest accrued, so if you have spare cash in your current account, put it into an ISA and earn up to £150.00 per year in interest.

16. Claim benefits and tax credits

Benefits worth billions of pounds a year go unclaimed. Know your rights and find out exactly what you are entitled to. You could be suffering debt problems because you are unaware of the benefits you are legally entitled to.

17. Pay your car insurance annually

Too many car owners fall into the trap of paying their car insurance monthly or quarterly. Many car insurance companies charge premiums of up to £120 per year for you to pay in this way. Wherever possible, pay your car insurance annually to avoid any extra charges.

18. How many TV channels do you really need?

Once Britain changes to digital-only TV, there will be a range of packages to choose from. You can have the whole lot, including movie channels, sports channels, news channels, cartoon channels etc., from around £50.00 per month. Alternatively, and think how many times you actually watch all of the channels, you can keep the basic BBC, ITV, Channel 4 and 5 options for free. The latter will save you hundreds of pounds a year.

19. Get rid of the ready-meals and cook fresh food

Preparing your own food will save you money and is usually a healthier option. Cooking does not have to be time consuming, and there are a range of books in the library that will give you good cookery tips and also save you time. If you plan your menus in advance, you can cook just once a week and freeze batches of food for the following week.

20. The Citizen´s Advice Bureau will help you for free

The trusted organisation, The Citizen´s Advice Bureau, (CAB) will help you to discuss debts and debt management, at no cost to you. The CAB´s professional and trained staff will help you work out a sensible strategy if you have debt problems, to help get you back on your feet. They can also help with all sorts of advice regarding housing, tenancy agreements and debt management.

Labels: bills, insurance, ISA, money, tax

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