September, 2010

One of the main reasons people get into debt is because they have no idea about the true state of their finances, how much they are spending, or what bills need to be paid at what time.

If something unexpected should happen (like your car breaks down or your house floods) and you haven't got any extra cash stashed away, your finances simply won't be able to cope and you'll find yourself getting further into debt. These debt problems can escalate quickly too; as you take on more debt, with loans and credit cards, trying to pay off your initial creditors.

There's no way to guarantee that debt problems won't affect you in the future, but you can reduce the risk by taking control over your spending. The following tips should help:

• Get a clear picture of your finances. Sit down with a bank statement and try to understand how much you earn compared to how much you spend. Write down the dates and amounts of the bills you pay each month and keep a record of your spending using receipts and statements.
• Set a realistic budget and stick to it.
• Be strict with yourself on spending. Ask yourself \”do I really need this?" before splurging. It usually helps to leave a few days before buying something on impulse, as you may find that you don't really need it after all.
• Eat and be prepared before you go food shopping. Make a shopping list and have a snack before going out. The list will help you buy only what you need, and the snack will stop you buying on impulse because you're hungry. Alternatively, you could shop online and avoid the temptations that supermarkets try to tempt us with.
• Have a no-spend weekend. Every now and again, stay in or take advantage of free local activities and see how much you can save.
• Open a savings account for all the money you've saved from changing your spending habits.

As part of global attempts to reduce energy consumption and cut down on environmentally damaging CO2 emissions, manufacturers have started to produce numerous products to help everyone save energy in the home.

Depending on how committed you are to cutting your family's carbon footprint, you can choose from a wide range of eco-friendly devices specially designed to help you reduce electricity, gas and water consumption in your home.

However these devices not only save the environment, but they can also save you money. This benefit will be of particular interest to those who are struggling with debt management issues, who no doubt know the value of even the smallest everyday savings.

Saving money with eco-friendly devices

• Rechargeable batteries ‚Äö√Ñ√¨ You buy one set of batteries, charge them using a small battery charger plugged into a socket at home, and reuse them many times. If you think about how many things in your home run on batteries (remote controls, alarm clocks, children's toys etc), you'll see how much money you could be saving on buying new batteries, as well as helping the environment by sending fewer single-use batteries to landfill.
• Energy-saving light bulbs ‚Äö√Ñ√¨ energy-saving light bulbs¬¨‚Ć can save you money on both electricity bills and the cost of buying new bulbs, as they offer the same brightness as standard light bulbs but last between 8 to 15 times longer and use just 20% -33% of the power.
• Showersmart devices ‚Äö√Ñ√¨ Given away for free by the government (for a limited time) upon application, these small devices help to make your shower more energy efficient. This in turn helps to make your energy and water bills cheaper.

Attempting to repair or upgrade parts of your home yourself is a great way to save money, as you can enhance the appearance and even the functionality of your home without having to spend lots of money on expensive repairers, which could land you with huge debt problems.

Even DIY jobs can cost money however, as you may need to shell out on tools and equipment, materials and new parts. And for most people who are in debt, buying completely new furniture and accessories is out of the question.

One compromise is to find cheaper ways to complete DIY jobs and make small improvements to your home. Here are some top tips to start you off:

• Discount codes and sales ‚Äö√Ñ√¨ You can get some amazing deals on a whole range of DIY and home improvement products if you browse online for valid discount codes, or use websites such as Moneysupermarket to find details of sales and special offers. Places that often offer discounts include: Amazon, Woolworths, Homebase and Habitat.
• Loyalty cards in DIY stores ‚Äö√Ñ√¨ Ask at the till to see if you can join a loyalty club and get bigger discounts. For example, Ikea has the Ikea Family card where you can get 25 per cent off Family products. There's also the B&Q Diamond Card for over 60s, offering a 10 per cent discount on Wednesdays.
• Borrow tools and equipment from family, friends and neighbours. Why pay to hire an expensive floor sander when you can lend one from your next door neighbour?
• Look on eSpares, eBay and Curry's Partmaster for spare parts and other usable materials
• Download free DIY instruction manuals online, but make they come from a reputable source!

You can save more money than you think by practicing smart shopping tactics on a regular basis, such as avoiding impulse purchases and sticking to a shopping list. Did you also know that you can save money by exercising your consumer rights?

If you aren't satisfied with a product or service, you have the right to make a complaint and receive your money back. Of course, all shops have different returns policies, but they can't just dismiss your complaint out of hand. By knowing your rights and fighting for them, you could be reclaiming money that's rightfully yours. Even if this is only a few pounds, it can make all the difference, especially if you are currently experiencing debt problems.

What is a ‘satisfactory product'?

All products – whether you buy them at full price or in a sale – are legally required to be of a certain standard. They should be:

• Fit for purpose
• Of satisfactory quality, as described by the shop or manufacturer
• Able to last a reasonable length of time

Tips for getting your money back

The most important thing to remember when exercising your consumer rights is attitude. You need to be persistent, polite and to-the-point, rather than confrontational, rude or aggressive – this sort of attitude won't help your case.

Other things to remember:

• Return goods as soon as possible ‚Äö√Ñ√¨ within four weeks is preferable, within six months makes it seem like you've ‚Äö√Ñ√≤accepted' the goods
• Return goods to the store, rather than the manufacturer
• Check suitability (size, compatibility etc.) before buying in the first place

Debt problems can creep up on you surprisingly quickly, often leading to panic, confusion and a certain degree of denial. Some people in debt have no idea where their financial problems came from, and facing up to the true cause of debt can be difficult. If you don't know why you are in debt, fixing the problem becomes even more difficult.

Identifying the spending habits that caused your debt problems can help you to solve them. Take a good look at your spending behaviour and ask yourself:

1.       Do I spend more than I earn?

You might think that it isn't actually possible to spend more money than you bring in; the funds just aren't available. This isn't true, as there are methods of securing extra money – overdrafts, borrowing from friends, dipping into your savings – but using these to get by each month means that you will slowly be going further into the red. These always end by catching up with you.

2.       Do I spend money I don't have?

This relates to credit, as using loans and credit cards equates to spending money that isn't yours. This may be useful in certain situations, like spreading the cost of an unexpected car repair bill, but using this borrowed money to pay off other debts or household bills is dangerous and can start off a spiral of debt.

3.       Do I use credit for everyday purchases?

Credit cards and their ‘buy now, pay later' appeal mean that you may often use them to buy everyday items such as groceries and clothes. This is creating more debt in the form of a daunting monthly credit card bill, so always use cash for these purchases if you have it. If you do use your credit card, be sure to pay it off each month in full and never pay just the minimum amount.

4.       Do I use debt to pay off debt?

Using a loan to pay off another loan is never a good idea; it creates a debt spiral that can be difficult to get out of.

Many people miss out on potential money savings or ways to make their income stretch further because of the time and effort involved. But what if there were simple ways of saving money that you could do without even really thinking about it?

When it comes to debt problems and money matters, every little bit of money saved all helps. So, whilst you may not make as much with these simple tips as with more drastic measures (such as renting out a room or getting a second job); it all adds up over time. After all, everyone needs to put a bit of cash aside for a rainy day – even those people who aren’t suffering with debt management issues.

Simple tips to try around the home:

• Switch off lights and appliances when not in use. Turning off lights and making sure electrical appliances are switched off and not left on standby will help you cut down on energy bills.
• Wash your clothes on a lower temperature setting, as it uses less energy to heat the water. 40 degrees should be enough to get most clothes clean, although lightly soiled ones could be washed at 30 or lower, but you can also use a pre-wash treatment spray for tougher stains.
• Only fill the kettle up with as much water as you need. This uses less energy than needlessly boiling a full kettle of water.
• Use the kettle to boil water when cooking rather than heating it up on the hob. The kettle is often more efficient and quicker at boiling water – so uses less energy.
• Don't use the tumble dryer; hang your clothes on a maiden or on a washing line instead.
• Buy “own-brand” cleaning products; they're much cheaper than heavily advertised branded products and they often work just as well.
• Stop before you throw an ‚Äö√Ñ√≤empty' tube or bottle away (i.e. toothpaste, shampoo, washing up liquid). There may be a few day’s worth of product left if you cut the packaging open and look inside.

When you are experiencing debt problems, you often have to make changes to your lifestyle and cut back a bit. This, of course, depends on the seriousness of your financial situation. Some people make massive changes like selling their car or getting a second job, whilst others find smaller ways to save money.

An example of this is with your home landline and mobile phones, and how much you use them.

Mobile phones

Some people consider mobile phones to be a luxury when you are in debt, but there are situations – i.e. work, travel or emergency circumstances – when this mode of communication is useful and sometimes essential. If you are going to own a mobile phone, follow these tips to get the most cost-efficient deal:

• Stick to the basics. Don't be tempted by the latest gadgets and features; if you only need a phone to ring and text, then a basic handset will be the cheapest and most practical option.
• Opt for pay-as-you-go, as you won't be able to run up more debt with a contract. This option allows you to keep track of your spending on calls and text messages, especially if you don't need to use your phone very often.
• Avoid sending picture messages. These will generally be at an extra (and greater) cost than a normal text message. Email any images you want instead as it's free.
• Avoid using your phone abroad. This applies to making and receiving calls too, as you'll be charged per minute for incoming calls. It's best to just switch your phone off before you travel and only switch it back on when you return home ‚Äö√Ñ√¨ as you'll often also be charged for receiving texts.

Home phones

Most people have a home phone as standard, but this doesn't mean you should spend a fortune making necessary calls. The following advice could help you save money:

• Be familiar with peak and off-peak calling times and call when it's cheapest (or free) to do so
• Compare tariffs when taking out a landline to get the best deal
• Opt for paperless billing and pay your phone bills by direct debit for any available discount

One of the most effective ways to save money and alleviate debt problems is to reduce how much you spend on your energy and water consumption in the home. You can do this via a number of large and small ways – from switching off lights and electrical devices to getting water leaks fixed and having showers rather than baths.

Even if you do try all of these methods, however, you could still be missing out on potential savings if your home isn't fitted with a water meter. Unlike electricity and gas, you can't switch providers for your water supply to get a more competitive rate. However, you can control how you are billed.

So, could getting a water meter installed really save you money in the long run?

Benefits

The difference between a water meter and the standard ‘water bill' system is that the latter means you are charged a fixed price depending on something called the ‘rateable value' of your home. How much water you use isn't taken into account.

With a water meter, you can record exactly how much water you use (possibly plus extra charges such as waste water), meaning that all of your efforts to use less water will really pay off, as you’ll only be billed for the water you use.

Is it worth it?

According to some experts, the average yearly water bill for properties with a water meter is £305. The annual bill for un-metered homes is £361, although the cost varies quite a lot from region to region.

To find out if getting a water meter is financially worthwhile for your home, you can either use a comparision service such as Uswitch or Comparethemarket, or contact your water provider directly.

If you're trying to save money or work your way out of debt problems, you may find yourself frustrated at the amount of money you spend on food and groceries every month.

 In a way, these costs are unavoidable, as you need to feed your family. But what if there ways for you to save money on food by changing your cooking habits slightly? Just by making a few changes to your day-to-day routine, you can cut waste, plan ahead and ultimately save money.

Follow these top money-saving cooking tips:

Cook from scratch

Not everyone has the cooking skills to make everything from scratch, but things like packed lunches, sandwiches and salads can be cheaper if made yourself. Besides, the processed ‘convenient' ready meals you buy – as well as being bad for you – are often a huge waste of money.

If you're feeling more confident, why not try making your own pasta sauces, doing some baking or even trying out completely new recipes? Even buying a pasta sauce and fresh pasta can work out better value than buying a similar ready meal.

Prepare meals in advance

 A great way to save money on food, and especially family favourite meals that you eat often, is to make a few days worth all at once. Things like soup only use a few inexpensive ingredients and can feed the whole family for two days, whilst a big batch of lasagne or shepherd's pie equates to several meals in a week if frozen and then reheated.

If you have a lot of meals prepared in advance, you won't feel tempted to splurge on an expensive sandwich or ready meal when out and about.