Best Ways To Save Money – Reduce Your Debt With These Money Saving Ideas

There are lots of things you can do to reduce the amount you spend, and the following suggestions are some of the best ways to save money, because they can have the biggest impact on your spending. The more you can save on what you spend, the more you have available to pay off your debts.

Save Money - Examine Your Mortgage Deal

This is likely to be your single biggest cost, and therefore has the potential for the biggest saving. The large amounts involved mean that even a small difference in interest rates can have a significant impact on what you pay. The fact that you are going to be paying it for so long is another reason to examine it closely and regularly. A relatively modest change per month could save you thousands over the term of your mortgage.

Start by asking your existing lender for a better deal – that would be less hassle than changing to a new lender, so it is well worth a try. Some lenders are less desperate to keep your business than they used to be before the credit crunch, but many would still be happy to improve your deal rather than lose your business.

If you do consider changing to a new lender, you will need to know if there are any penalty charges for leaving your current mortgage early, as this will need to be allowed for when you are calculating what you might save. Ask your lender to confirm the total costs involved in closing the mortgage. You must also consider legal costs and any fees for setting up the new mortgage.

Save Money – Pay Off Debts First Instead of Saving

This feels counter-intuitive when we are always told we need to save more money, but it does not make financial sense to put money in the bank if you have debts that are costing you money in interest. Pay off your debts first.

The rationale behind this is very simple – the interest you pay for borrowing money is ALWAYS more than the interest you will get from having money in the bank (with the odd exception such as special short term offers on some credit cards). This has to be the case – it is the basic operating system for banking. They give you a bit of interest for the money you deposit with them, so that they can lend it out to someone else and charge more money. The difference between the two rates is their profit.

When you are planning to pay off your debts, always tackle the most expensive ones first. Look at the interest you are paying and use this to work out a priority order for paying them off.

Save Money - Review Your Energy Suppliers

You really do have to keep a close eye on your gas and electricity supplier these days. This is a constantly shifting field and you need to compare the rates about every six months or so. Try to leave it until just after there has been a big price change. Once one supplier changes their prices, the others usually follow in a few weeks, then it should be fairly stable for a while and that is the time to change.

The easiest way to compare prices is on one of the comparison websites. They make it very easy to swap now, and you can often get incentives for changing through them, such as cash back or vouchers.

It is usually cheaper to pay by direct debit, but you should always check your actual meter reading every month rather than rely on the company’s estimates. They seem to go for ages without bothering to read meters at the moment, and their estimates can be wildly out, so to avoid being lumbered with an unexpected bill a year down the line, check what you are actually using, give them your meter readings, and pay the correct amount.

Save Money - Credit Cards

This is a huge area and I could write many articles on credit cards alone, but for our purposes here, the main point is that you should not sit back and just make the minimum payment each month. Ideally, you need to try to pay your cards off in full each month. If you can’t do that, you are storing up problems for the future.

Assuming you do have some debts on credit cards and can’t afford to pay it all off in one go, you should at least set up a direct debit to make a fixed payment each month, based on the very most that you can afford. The credit card companies want you to just make the minimum payments, because then you pay them interest for a very long time, which is how they make their money.

The extra cost to you in just making the minimum payments is huge – the less you pay each month, the longer you take to pay them off and the more interest you pay. The other advantage of setting up a direct debit to pay your cards is that you make sure you don’t miss any payments by accident and incur any needless penalty charges.

Save Money - Shopping for food

The fact that you go shopping so regularly means that it is a very substantial cost when you look at it over the course of a year. We all have our favourite brands and reasons for choosing one make over another, but with the advent of supermarket own brands and now economy brands, there is a huge price difference available on what are often very similar (if not identical) products.

Research shows that if you can drop one brand level on all your shopping, you will save about one third on your shopping bill! I think that is a stunning statistic, which will have a massive impact on your pocket. You don’t have to change to the economy version of everything, just experiment with dropping one level. If you normally get luxury, get standard, if you normally get own brand, try economy.

In my experience, the difference between products will vary from quite noticeable to non-existent. Just make sure you are judging objectively, and not making your mind up before you taste it because of your expectation. Blind tasting is preferable if you want to do it properly.

Depending on your current situation, following the above advice could potentially save you a very sizeable amount of money over the course of a year. For people who are getting into some debt, this sort of expenditure management is well worth the effort as it can be enough to put a hold on the level of debt and help you climb back out. Debt has a habit of increasing and spiralling to crisis level if not tackled early.

For more detailed information on debt assistance visit DebtAssistanceSite.com

Debt Consolidation Loans – Advice on When To Use Them and When To Avoid Them

There are several options available to you when you feel your personal debts spiralling out of control, though debt consolidation loans tend to be one of the first things people consider. When you are deep in debt with a long list of separate creditors to deal with, the idea of having only one payment to think about can seem very attractive. Indeed, the simplification that debt consolidation brings is one of the main benefits of such loans.

It is important to look beyond this basic benefit and consider carefully whether taking on another loan is really going to help you to manage your debts. Generally speaking, the best solutions to debt problems should not involve spending more money or getting deeper into debt.

The reason your monthly payments can be lower with a debt consolidation loan is usually that you are spreading your debt over a longer period of time. When you add up what you are paying over that period, you will often find that it is more than you would have spent with all your separate debts.

There are certain circumstances in which debt consolidation loans can be a good thing, and others when there are better options. You need to consider these carefully before committing yourself.

When Debt Consolidation Loans May Be The Best Option:

• When the debts you currently have are at very high interest rates

• When interest rates have dropped and you may get better terms now than when you took on your other debts

• When you have properly considered your financial situation and know that you can afford to make the new payments

When Debt Consolidation Loans Should Be Avoided:

• When you have taken out a debt consolidation loan before and you have not kept up with payments

• When you want to use the loan to pay off another debt consolidation loan

• When you plan to use the loan to pay off credit cards or store cards so that you can use them again

If you have consolidated your debts before and it has not worked, do not do it again. You need to break the cycle of borrowing more money and deepening your debt. There are other ways of tackling your debt without involving loan companies or anyone else with an interest in selling you something.

Preparing a financial statement will help you to identify what you can actually afford to pay each month. It is vital that you have an accurate picture of your finances, so that you do not agree to anything that is beyond what you can afford.

If you are going to take out a debt consolidation loan, make sure you shop around because interest rates vary enormously.

Find out more about how to negotiate debt here.

Debt Assistance And Advice – A Step by Step Guide to Getting Out of Debt

When you find yourself in serious debt, it is not unusual to feel like you are the only person in this situation. You may look around and think that no-one else appears to be having your problems, but you are not alone! Over 2 million others are in exactly the same situation, and usually through no fault of their own. People get into debt for all sorts of reasons, including marriage break-ups, job loss or illness.

Once you get into the situation where you owe more than you can afford to pay back, it can seem impossible to find a way out, but there are ways to get your head above water once more and take back control of your life. There are various sources of debt assistance open to you, and the best route to take will depend on your particular circumstances.

Do NOT borrow more money to pay debts off unless you have seriously considered the alternatives available and decided that is the best course of action. With some assistance and advice you can assess your situation for yourself and perhaps put a plan in place that will not involve increasing your costs above what you already owe. Make sure any debt advice you get is unbiased and comes from someone who is not trying to sell you something!

Before you consider bankruptcy, Individual Voluntary Arrangements, Consolidation Loans or Debt Management Plans (all of which will cost you money), you should go through the following process yourself, which will help you get to grips with exactly the position you are in and what you may be able to do about it.

Step One – Contact Your Creditors

You can’t expect sympathy or understanding from the people you owe money to if they don’t know you are having difficulties. Write to all your creditors, explain why you are having problems and get them to confirm the details of exactly what you owe them. Template letters are available online for guidance.

Step Two – Prioritise Your Creditors

This is VERY important. When you receive replies from your creditors, you must place them into one of two categories, Priority Creditors, or Secondary Creditors. The priority you give to them is about the consequences of not paying them. It is nothing to do with how snotty their letters are or how loud they shout, it is about what will happen to you if you don’t pay them first. These will include mortgages, secured loans and anything where not paying could result in the loss of your home, essential services or goods.

Step Three – Create a Financial Statement

In order to work out what you can afford to pay your creditors, you need to create a Financial Statement. This will not only tell you what you have left to pay people, but it will help to show your creditors, why you are not in a position to pay them at the usual rate. It is very important that you do NOT include your Secondary Creditors in this calculation, only your Priority ones. You must list all your income and all your expenditure for each month, which will show you what you have left to make repayments with.

Step Four – Make Offers To Your Creditors

Now that you know how much you have left after making payments to your Priority Creditors, you need to work out what you are going to offer to your Secondary Creditors. The only way to be fair and consistent about this is to divide up your surplus income in proportion to the debts you owe. For example, imagine that your total debt is £10,000 and you owe Creditor A £5,000. This is 50% of your total debt, so Creditor A should be offered 50% of your available income each month. Write to each of your creditors and explain how much you can offer them. Ask them to accept this and waive any penalty charges.

Follow this step by step Debt Assistance Guide and you should be well on the way to understanding the extent to which you are able to manage your debt without looking at alternative, more costly methods.