Credit Crunch: A Survivor’s Guide – Savings Accounts

Before you even think about savings you need to remove your debt. It’s highly unlikely you will be able to earn more interest on your savings than you are losing on your debt. Except for student loans and mortgages all debt is bad, it’s a drain on your resources and by resources I mean money.

Think of your money as little workers. Each pound is a little worker. Obviously some of your workers have to go out and never come back, these are the guys paying your bills, they keep you in light and warmth.  You really want your workers to do a good job and come back with some friends who want to join your team, this is what happens when you save money and invest money. Interest, dividend, growth.

The ideal is to live below your means. That’s what Warren Buffett does. Who’s he? My hero and at one time the richest man in the world. He still does pretty good!

Once you’ve sorted out your debts, and you have some money to save go to moneysupermarket.com and find out which savings account is best for you. You’ll need to decide whether to put away a lump-sum or regular payments. The easiest way to save is to set up a direct-debit that takes the money every month on the day you get paid, that way it’s gone before you even realise it. You can build a tidy sum over a couple of years.

Just make sure you pay off your debts first!

Credit Crunch: A Survivor’s Guide – Overuse

Do you wonder who recommends you change your toothbrush every three months? It’s the manufacturers. Those who would benefit most from you changing your toothbrush four times a year. Do you believe them? Until I see scientific evidence to the contrary I am happy to use my toothbrush for a year, or more if it’s still looking good. I use an electric toothbrush and I do take care of it, when you have a £150.00 top of the range Oral B, you look after it! It actually gets treated better than my girlfriend! (She didn’t cost so much!)

Water filters are another thing that can be used more than the manufacturers recommend. Of course they say four weeks will use up the goodness contained in their little filters. Well, that’s based on the filter being used by an average family of four. I’m certainly not average, and I’m definitely not a family of four. I’ll use those filters (instead of bottle water which is about twenty times as much!), for at least six weeks, depending on actual consumption.

Try to overuse things and squeeze the value from every product you use and save those pennies.

Credit Crunch: A Survivor’s Guide – Smaller Portions, Bigger Savings

Have you ever seen a Weight-Watchers microwave meal? Have you tipped it out and tried to spread it out on a plate? I’m not having a go at Weight-Watcher here (Please don’t sue me!), most supermarket ready meals actually have similar portion sizes. When I tip one out onto a plate I’m struck by the smallness of them. When I cook (ok, when my girlf cooks) I don’t want to see the plate for food. To me a decent portion size is when I struggle to squeeze in dessert, and I can always squeeze in dessert!

But the supermarkets (and Weight-Watchers) are doing you a favour! If you can get used to those three-quarter sized portions you can save yourself a nice lot of money. Don’t actually buy the ready-meals, as we said before the bigger the bag of frozen chips, or the larger the packet of chicken, the better value it is, in general. But if you can squeeze down your portion size just slightly (you don’t want to starve yourself, and you don’t want to be so hungry that you need snacks!), you can save pounds every day.

It’s not about will power, it’s about what you are used to. At the moment I’m used to three lots of dessert, but previously I was used to one. So I’ll work my way back to the good old days when I didn’t spend more than twenty pounds a month on snacks.

Having mentioned snacks I have to say, as delightful as they taste, snacks are bad for the pocket. They are not good value. Often you can get two packets of crisps or a couple of mars bars for the same price as a meal.

Eat meals (slightly smaller portions), and may be dessert (I couldn’t go without dessert, life just wouldn’t be worth living!). Continue to decrease your portion size until you hit a good level, three-quarters, two-thirds; you know how much food you need. Don’t try to go too far, we’re trimming here, not cutting.

Which leads me nicely to my next tip: cut your hair shorter. Again, just a trim, although for the boys a buzz-cut is a great look! I have one myself. Saves on shampoo and conditioner as you don’t need to use so much.

Smaller portions actually works best with items that you don’t notice how much you use. But think about it, do you really need a handful of shampoo to wash your stubbly head? Do you really need to use that much bubble bath, or that much shower gel? Cutting back just a little on these regularly used (I certainly hope they are!) items, can save you pounds over the course of a month. Next time you do the washing put in a little less powder or gel, next time you do the washing-up use a little less washing-up liquid. There are many ways where you can save by using smaller portions and if won’t even matter to the quality of what you are doing.

Don’t fill your mouth with mouthwash. Buy an electric toothbrush (there are loads for less than £20.00), and just use a pea-sized squeeze of toothpaste instead of filling the entire manual brush. Your new electric toothbrush will pay for itself in a couple of years!

Remember: smaller portions equal bigger savings!

Credit Crunch: A Survivor’s Guide – Debt: The Enemy

Most of us have some form of debt.

If you don’t think debt it bad then think about this: the whole entire world went into recession in 2008/9, the main cause of this was debt. Too many people owed too much money and couldn’t afford to pay it back. Debt is always, and will forever be, the enemy.

The list below is not comprehensive, but it gives you an idea of the vileness of the debt. Each one is another layer further into the rings of hell. We start off with the cheapest form of debt, only two of which can be considered acceptable. After that you’re on the rocky road to hell!

Student Loans – From the Student Loans Company or a similar body. The rates on these are based on the rate of inflation, so they cost very little. Unfortunately you are limited by the amount you can borrow per year and you have to be a studying full-time. You don’t have to pay these back until you have a certain monthly income, rather than having to start paying it back as soon as you finish your studies.

Mortgage – Likely to be the largest amount of debt you will ever have (hopefully!). Although it may actually cost you £300,000 to pay off a £150,000 house, mortgages are generally the cheapest form of debt available. But, by overpaying your mortgage you can save thousands. By changing your lender and getting the best deals you can save hundreds of pounds a month, which you can use to pay it off faster, hence saving you several years of debt.

Unsecured Loans – Loan agreements vary, depending on the length of time, the amount you want and the lender. 7-15% is normal for a high-street leader. You can get them for home improvements or buying a new car. Also popular is consolidating credit-card debt.

Credit Card – Get back hellbeast! With rates of 18 to 35% normal, you could be paying off an iPod for 20 years if you only pay the minimum payment. Credit cards are basically a way for banks and merchants to lull you into a false sense of security, and slowly and methodically rob you of all your hard-earned wages.

There is only one reason to use a credit card, and there is only one sensible way to deal with the debt: pay it all off every month. Use a card that has added benefits, such as cash back or airmiles, or BA miles, but always always always pay off the credit card balance every month.

If you already have credit card debt (and don’t worry, it happens to us all) this is the biggest obstacle to have to deal with, and you do that by transferring your balance to 0% interest card for the length of the 0% period and trying to pay off as much as possible, and then moving the balance again once the period is up, preferably to another 0% on balances card and continuing to pay it off. If it’s too large for you to ever be able to pay it off in 18 to 24 months then it would be worth looking at an unsecured loan.

Storecards – The actual devil! I kid you not! Rates for storecards have come down a little in recent times, but 20 to 50% is not unheard of. Some of them do nice introductory offers, which might be worth looking in to, but read the fine print and know what you are signing up for. It could well be your soul you’re signing away! The storecard is the ultimate enemy!

You have to try to work your way out of the debt. The way to do this is to work your way out of the hole. The less you pay to service the debt (overdraft fees, interest, etc), the better off you are.

Try to never get into debt. Having debt means your money is not your own. If you’ve budgeted and you have £400.00 left and you have a load of credit-card bills then that £400.00 won’t last long. Most of what you will be paying back will be interest, which just means you’ll be paying nearly the same amount next month and the month after and the month after that! Don’t fall into the debt trap, and if you do, try to escape as soon as possible.

If you have debt what you are basically doing it throwing your money at your bank manager, or credit card company, or loan company. Throwing it, picking up big piles of cash and throwing it away.

Don’t do it, it’s wrong.

Credit Crunch: Saving money without going without. The no pain savings plan.

You need to start thinking about how your money is spent and being aware of waste. Most of the things I’ll mention are just common sense. All of us waste money to a certain degree, and don’t think you don’t. If you are paying more than you should for something then that’s a waste. If you’re using something you don’t need to use then that’s a waste. If you can cut out as much waste as possible and live more efficiently then you will save money.

Get loyalty cards for everywhere that offers them for free, Sainsbury, Tesco, Iceland all offer loyalty cards. What better way of saving money than getting something for free, even if it is only one week’s worth a shopping a year, it all adds up!

Turn the light off when you leave a room (providing no one else is in there!). This can save you upwards of £5.00 a month.

Use Energy Saving light bulbs, good for the environment, good for your wallet! (can save you another £5.00 or more a month).

Reuse plastic bags, particularly in Sainsburys (where you can receive nectar points for using them) and Tesco (where you get clubcard points). (Can gain you £1.00 or more a year depending on how many shops you do a month).

Put on a jumper when it gets cold. Ok, so when it gets really cold you need to put on your heating, but only use your central heating to heat, then turn it off until the temperate gets low again, then turn it back on. Set your timer for the minimum time you need it and make sure you never have it on when nobody is home. (can save £20.00 or more).

Never put things on the radiator to dry! It will suck the into the wet towel and the room will not be as warm as it should be!

If there are rooms you don’t use, such at the hallway or spare room, shut those doors and turn off the radiators. Don’t heat rooms you don’t need to. It might also be worth turning it off in the kitchen, normally when you are in there (whilst cooking) it’s warm enough.

Go to bed early. Not only will you benefit from all that extra sleep, but you can turn off the lights and heating while you’re in bed.

You think that’s all a waste of time? That little lot could save you over £500.00 a year!

Credit Crunch: A Survivor’s Guide – Bills

The easiest way to save money is to look at your regular outgoings (bills) and see if any of these can be made smaller.

Rent is a difficult one unless you’re willing to move, but downsizing or moving further out-of-town can help. Remember to check to see if commuting costs will increase and whether the cost of moving and the hassle is really worth it. I wouldn’t want saving some rent money to be my prime motivation for moving. Although my sister moved back in with our parents when she was younger for a couple of years to sort out her finance and get herself into a position to buy a house.

Electricity and gas can be easily compared on websites like uswitch.co.uk and www.moneysupermarket.com. You may also be able to save money on your insurance, whether it be home insurance, contents insurance, car insurance, travel insurance, you get the idea… Basically with any kind of insurance you have the potential to save money just by shopping around.

Look at packages of insurance, home and contents together, or annual travel insurance instead of individual holiday insurance if you go away more than once. Never buy the travel-agents insurance as it will probably be the most expensive.

I saved nearly 50% on my annual worldwide travel insurance.

Look at your transport situation. If you travel on public transport, look at travel-cards, Oyster cards, or if you’re lucky enough you might be able to walk to work. I gave up my motorbike and a ten-minute journey to and from work, and instead walk for half an hour there and back. It not only saves me money but it keeps me fit! That’s what I tell myself as I trudge home on a Friday in the pouring rain in the dark on a winter’s evening!