A step-by-step guide to cutting all your bills
How to slash the amount of cash you spend on everything from insurance to utilities. By Esther Shaw
Saturday 30 August 2008
As the outlook for the current economic climate shows little sign of improving, increasingly hard-pressed households will be looking for ways to tighten the financial belt as incomes continue to be ravaged by mounting food, fuel, mortgage and motoring costs.
New findings from consumer body Which? show that 46 per cent of people plan to reduce spending in the coming year in the face of these increased demands on their finances, with half planning to cut back on non-essential items, such as clothes, DVDs or books – while many are holding off on buying big-ticket items.
At the same time, there are no signs of the current inflationary pressures easing over the short term, so it's time to look at ways of trimming your monthly expenditure on the basics, in order to balance the books.
The good news is, there are some simple bill-busting steps you can take to economise and offset rising household costs.
The price of utilities such as gas and electricity have rocketed of late, and many of us have seen our bills go through the roof. Almost every household across the UK has been hit by the soaring cost of oil, and felt the pinch as gas and electricity providers have put up their prices.
In the latest round of hikes, Scottish and Southern Energy (SSE) and Eon both increased their gas and electricity prices; SSE introduced hikes of 19.2 per cent on electricity and 29.2 per cent on gas, while Eon introduced increases of 26 per cent to its gas and 16 per cent to its electricity prices.
"These hikes are a hammer blow to households," says Scott Byrom from the price comparison service Moneysupermarket.com. "They show that the energy giants are reeling from the rapid spike in wholesale gas prices."
Given that things only look set to get worse, now is the time to take steps to keep a lid on your bills, and one of the simplest ways of cutting costs is by switching supplier.
If you have never switched before you could save nearly £300 by moving to a better deal elsewhere, according to price comparison service Confused.com – although the amount will vary according to your supplier and tariff, and the size of your bill. The whole process is very straightforward, and most of the legwork – and paperwork – is done for you.
Consider switching to an online tariff, which tends to be cheaper than a standard tariff, and opt to pay by monthly direct debit, as providers tend to reward customers who do this with a discount. You may be able to make savings by buying your gas and electricity from the same provider – known as a "dual fuel" plan; these deals typically include discounts or reduced prices.
And, if you're worried about oil and gas prices climbing further, get peace of mind by opting for a capped rate tariff.
With these tariffs, now offered by most providers, you pay a set price for a set period of time – four years, say – and, although you may pay more initially, you could well make greater savings over the longer term if energy prices continue to rise. The risk, of course, is that prices fall – in which case you'll miss out on future savings. Check for any penalty clauses before signing up.
"Capping isn't the be-all-and-end-all, it's just a form of cost control," says David Kuo from personal finance website Fool.co.uk. "The golden rule is, as long as a cap is no more than 15 to 20 per cent more expensive than your current tariff, it's probably worth going for."
If you're already on the best tariff, then another way to pare down your bills is by being more energy efficient. Fit a new boiler, opt for energy-saving lightbulbs, switch the lights off when you leave a room, and don't leave your electrical devices on standby – all simple but effective ways of cutting your bills.
Contact the Energy Saving Trust (www.est.org.uk) to get a free and impartial personalised home energy report telling you how you can save money on your bills, and advising you of any grants that may be available to you.
You could also save money by installing a water meter; a single person living in a property with average rateable value could save around £100 a year by having a meter installed, according to the Consumer Council for Water.
Make use of the calculator at www.ccwater.org.uk to see if you would be better off making the switch.
For more information, go to www.which.co.uk; www.moneysupermarket.com; www.confused.com.
Broadband prices have fallen dramatically in the past few years, so if you signed up to your broadband provider more than a year ago, it's likely that you could be paying over the odds.
Many telephone and internet providers now offer several services "bundled" together at a discount price and these tend to offer the best value for money.
Which? calculates that if you switched from a BT landline with Anytime calls costing £15.45, and BT's Total Broadband Option 1, costing £15.99 (excluding initial promotion), to a Tiscali Anytime Talk landline and broadband bundle, you could shave £132 a year off your bill.
Similarly, if you are paying a hefty monthly fee for a premium television package, consider going for a bundled package. Sky (satellite) and VirginMedia (cable) both offer TV, broadband and home phone packages, which are much cheaper than buying all three separately. VirginMedia also allows you to include your mobile in the same package. If you opt for Sky, however, you'll need to be able to install a satellite dish on your building, while VirginMedia TV is not available in all areas of the country. Check its website to find out if you are in a cable area.
Phone and broadband providers such as BT and Tiscali are also beginning to offer TV packages via the internet . Comparison site Simplify Digital (www.simplifydigital.co.uk) can help you find a package that is suitable for you. But watch out for hidden costs and restrictions with any bundle – and make sure you know what you're getting.
Mobile phone costs can take a hefty chunk out of your monthly budget, and in the latest round of hikes, costs are set to rise by a third for Vodafone pay-as-you-go users from September – with seven million pre-pay and 11 million contract customers affected, just weeks after similar hikes by O2 and T-Mobile.
"The European Commission's move to cut the cost of using mobile phones abroad, by placing a cap on roaming charges, has pushed up prices for millions of customers who never use their phones outside the UK," says Fool.co.uk's Kuo.
He recommends looking through your old mobile phone bills to see if you regularly exceed your monthly allowance. "If you do, then switch to a better package with your current provider," he says. "Ask your provider for your Porting Authorisation Code (PAC) and shop around for competitive deals with other providers."
Ditch your mobile phone insurance, as paying £60 in premiums for a phone that is only worth £100 is pointless, and also make use of the built-in counters on your phone to monitor your monthly usage.
Or you could consider opting for a Sim-only mobile phone, as this could save you £15 a month on equivalent contract deals, according to Which?, and, if you don't use your phone that much, consider moving to a far cheaper pay-as-you-go tariff.
Also remember that you can make free landline calls over Skype or another voice over internet protocol (Voip) service when calling abroad.
If you're heading overseas, beware of using mobile internet abroad, as the cost of connecting via a handset or wireless broadband "dongle" could cost significantly more than when using them at home.
Buying a cheap local Sim can be a cheaper option; alternatively, switch your phone off until you are back here in the UK.
For more information, go to www.uswitch.com and www.fool.co.uk.
For most of us, the mortgage is our biggest monthly outgoing, so switching to get a better rate should be a priority.
To avoid paying your lender's high standard variable rate (SVR), start sorting out a new mortgage around three months before your current deal is due to end, and make sure that you look at the total cost of the mortgage over the period of the deal, including both the interest and the lender's fees.
Take the time to check which council tax band you are in, as the band you've been placed in depends on your home's "drive-by" value in 1991.
Given that there has been little revaluing carried out since then, it's worth challenging your band and applying to have your home rebanded; for more information, go to www. moneysavingexpert.com.
Insurance is a key area where you can make savings as deals change all the time, which means that the deal you got last time you renewed your annual policy is unlikely to have remained the most competitive option.
"The insurance market is very competitive at the market, and particularly for motor and home insurance," says Peter Gerrard from price comparison service Moneysupermarket.com. "There are lots of new entrants vying for business, so make sure you regularly switch providers for all your insurance policies."
Figures from Confused. com suggest that you could, for example, save an average of £186 by shopping around for home insurance, and as much as £208 by getting the best deal on your car insurance.
You can also make savings on your premiums by paying for your policies annually, rather than monthly, increasing your voluntary excess, and by making the most of discounts for buying online.
For more information go to www.moneyfacts.co.uk; www.moneyexpert.com; www.gocompare.com.
Trolley economics: cut the cost of shopping
You may love shopping at Waitrose and Marks & Spencer, but if you're feeling the pinch, then you need to think about shopping at a cheaper store, such as Aldi or Lidl, buying own-label brands, and shopping after 4pm when supermarkets tend to slap discounts on food close to its sell-by date.
Make use of price comparison site www.mysupermarket.com, which will help you work out the best value supermarket for you, and "send" your trolley of goods to the cheapest online checkout.
"Take a serious look at your food shopping, as this is a major expense for many families," says Andrew Hagger from financial comparison service Moneynet. "If you plan your meals for the next seven days and visit the supermarket just once a week, you'll be surprised at how much money you'll save."
Check out the specialist websites such as www.sendmediscounts.co.uk and www. myvouchercodes.co.uk, which offer discount vouchers and promotional codes for all manner of purchases, and also look into registering with cashback sites such as Quidco.com, Rpoints.com, and Cashbackkings.com, where you essentially get "paid" to shop.
Finally, take heed of figures from the Waste & Resources Action Programme (WRAP), which show that UK households throw away around a third of what we buy each year.
If we stopped throwing away food that is still edible – half this amount – each household could save £400 on average each year.
For more information, go to www.money savingexpert.com, www.moneynet.co.uk.
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
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