Brace yourself guys – this article is an absolute monster! But, by being here, you’re telling me that you are looking for ways to save money on household bills, and we are going to give them to you! 111 ways to save money on household bills to be precise. Each with a detailed explanation of what to do, and how to do it.

They may not all be applicable for everyone, but I promise you that you’ll be able to apply at least half of these to save money on household bills.

How Should I Use This Article To Best Cut My Household Bills?

The first thing you should do, if you haven’t already is to create a detailed budget. I would recommend using the Moneystepper Savings Challenge Budget Spreadsheet. Not only is this free, but hundreds of people are now using it to record their budget (and net worth) each month and accelerate their journey towards financial freedom. You can download it for free by clicking the link below:

Related Resource: Moneystepper Excel Budget (Free Download)

Note – this is our latest draft document for the 2016 savings challenge and is therefore still a work in progress. I will update this link each time a new version is released.

So, I would recommend bookmarking this page and going to complete your detailed budget before you continue (you may need to bookmark it anyway given that it’s almost 30,000 words (more than most novels) and there are 111 ways to save money on household bills to get through!

Once you have completed your budget, I would recommend that you list all of your expenses in descending order, with your largest household bills at the top and your smallest household bills at the bottom.

The sections in the 111 ways to save money on household bills below are designed to be in this same order, but obviously this will vary for each person and household.

Reduce Your Household Bills – Do I Need It & Can I Reduce It?

The next step is to attack each household bill in this descending order of amount. For each and every household expense, you should follow this flowchart:

If you are unsure what the “30 day test” is, it’s a simple concept whereby you write a single item that you want, but don’t need, on a piece of paper. If, after 30 days (or any other time frame of your choosing, but I would recommend a MINIMUM of 30 days), that is still the one thing that you want (but don’t need), then you can go and look to buy it.

However, once you replace that item with a different “want” that then stays on the paper for 30 days. This stops you buying things on a whim!

So, take every major expense in descending order of cost, and put it against the flowchart. Here goes. If you wish, you can jump to a specific section by clicking the links below:

Ways To Save Money On Household Bills – Housing Costs

Housing costs (whether it’s a mortgage or rent) will be the biggest cost in most peoples’ budgets. I won’t do this for every single section, but when you look at the flowchart, you will look at the following:

Do I need it? That is, could I survive without it? The answer for a roof over your head is clearly “Yes, I need it”!

Again, it’s a pretty clear one that we do need it now? Having no accommodation for the next 3 months isn’t going to help us much…



Now, this is where the big decision usually comes in. Yes, we may be able to get it cheaper. Therefore, it’s time to explore how we can save money on housing costs:

#01 – Housing Costs – Remortgage

If you are a homeowner, the likelihood is that you are paying a mortgage. If you are not currently in a fixed rate period (or even if you are and you’re in a very bad one!), you could save hundreds every week by remortgaging.

For instance, the Chelsea Building Society have some cracking fixed rates. But when these end, the standard variable rate goes to 5.45%.

However, there is currently a 2 year fixed rate at Bank of England Base Rate (currently 0.5%) plus 0.48%, with a £1,545 product fee.

According to Rightmove, the average semi-detached property in London last year fetched £560k. Say you have a 65% mortgage on that amount, totaling £364,000. On a 25 year mortgage on the standard variable rate (SVR), you’ll be paying around £1,580 per month in interest alone, with your total monthly repayment being around £2,242 per month.

However, if you jumped over to the 0.98% rate, the interest payment would fall dramatically to £280 per month, with the total repayment falling to £2,069 per month (with a much larger proportion going to capital repayments and therefore reducing the interest in future periods as well).

Your “cost” – the mortgage interest – has fallen in this example by £1,300 per month. So, whilst it may seem a lot to pay that £1,545 product fee upfront, it pays itself back within the first two months!

We do not endorse this product, and there may be cheaper products available – it is simply for illustration purposes of how much you could save by remortgaging if you are currently on a standard variable rate with your lender.

ACTION POINT: CALCULATE HOW MUCH YOU COULD SAVE BY COMPARING THE BEST MORTGAGE DEALS ON THE MARKET.

#02 – Housing Costs – Change Your Mortgage Payment Date

It may be obvious that remortgaging to a lower rate could save you money on your housing costs, but a lesser known tip is changing the date which you pay your mortgage.

Interest on the vast majority of mortgages is calculated daily and then charged to the account at the end of the month. Therefore, if you move your payment from the last day of the month to the first, you could reduce your interest charge quite significantly.

The best thing about this trick is that you can actually do it whilst you’re still in your “fixed” mortgage period, although terms and conditions may apply.

I’ll use the same example. If you stayed on the 5.45% standard variable rate for the entire 25 years, and you made your repayment on the last day of every month, then you would incur interest of £294,794 over the course of the 25 years.

However, if you made your repayment at the beginning of every month, and you paid the same amount as you would anyway, you would actually end up paying off your mortgage 3 months early and, more importantly, your total interest paid over the 25 years would drop to £288,766.

This is a saving of over £6,000 in this example, which is a nice chunk when you consider that all you did was change your payment date.

ACTION POINT: CONTACT YOUR MORTGAGE PROVIDER TO SEE IF YOU ARE PERMITTED TO CHANGE THE MORTGAGE PAYMENT DATE WITHOUT INCURRING ANY FEES OR CHARGES.

#03 – Housing Costs – Renegotiate Your Rent

Renting doesn’t mean you have to be a slave to your landlord and always accept those annual rent increases that they keep trying to throw your way. In fact, it’s quite the opposite. If you are a “good” tenant, you will often hold much more power than you think.

Say you are paying £700 per month rent to your landlord for the past 11 months and you’ve been an exemplary tenant. You have a look at the rental market in your area and you conclude that rents have generally stayed the same over the past year (which would make sense due to the near 0% inflationary environment we are currently in).

Now, most landlords will try to increase your rent, maybe to £725 per month. What do most tenants do? “Ah, that’s annoying but it’s only £25 per month and it’ll be a right hassle to move”.

But, why do landlords increase their rents even when the local market stays stagnant? Because they know that this will be your response.

Instead, be proactive. If 11 months have gone on your 12 month rental contract, approach your landlord and say “I can see that rents in the local market are stagnant, and I’ve been a perfect tenant for the past year. I’d like to sign up for another year, but I’m only willing to pay £675 per month.”

If you can throw in examples of how you’ve looked after the property and saved them hassle (even if it’s only changing your own lightbulbs, etc), then this will help as well.

This sounds incredibly cheeky, doesn’t it? But, put yourself in your landlord’s shoes for a second. They have two options. They can either accept your terms – in which case they will get £8,100 income on the property from a tenant that they already know and trust.

Or, they can kick you out and find a new tenant at £700 – not only is this harder than it sounds, the tenant has to consider the other related costs. They’ll pay AT LEAST half of one month’s rent to find a new tenant. So, that is £350 spent. And what would their annual income be if they rented out at £700 per month for that year? £8,400.

So, by the time they take their income and take off the £350 finder’s fee, they’d make more money by sticking with you. Combine that with the possibility that the landlord may not find someone straight away (voids are VERY expensive for landlords), and the fact that the new tenant would be an “unknown” and suddenly your suggestion doesn’t seem all that crazy. In fact, maybe you should only offer £650 per month for the next year if you are sure that the market rate is still £700.

Don’t be afraid to have these conversations will your landlord, and feel free to quote these types of figures to make it clear that (even if you are paying less per month), they aren’t necessarily losing out compared to the alternatives.

ACTION POINT: DON’T BE SCARED TO CONTACT YOUR LANDLORD PRIOR TO THE END OF YOUR RENTAL PERIOD.

#04 – Housing Costs – Sign A Longer (Or Shorter) Lease

Another way to reduce your monthly rent may be by signing up to a shorter or longer lease in line with your landlord’s desires.

Maybe your landlord is unsure what they are doing with the house, and so would give you a reduced rate if you went on to a 3-month rolling rental contract?

Alternatively, maybe they want the stability and, if you are sure that you’ll be in that place for a while (maybe you are paying down debt and are a fair while away from getting your deposit together to buy a house), then signing up to a 2 or 3 year deal instead of a 1 year deal may entice your landlord into accepting lower rent.

Landlord’s tend to like stability and consistency. If you can guarantee them the rental income which makes their property profitable to them for the next three years (even if it may be below market rate) many will bite your hand off for such a guaranteed stream of income.

ACTION POINT: SPEAK TO YOUR LANDLORD ABOUT HOW LONG THEY WOULD LIKE YOU TO STAY IN THE PROPERTY AND TRY TO NEGOTIATE LOWER RENTS (OR RENT FREEZES) IF YOU SIGN SHORTER OR LONGER THAN STANDARD CONTRACT TERMS.

#05 – Housing Costs – Do You Need Such A Big Place?

If you are renting a property and you are looking to make savings to your monthly budget, it may be worth considering if you really need everything that you are paying for. Have a think about where you are living? Can you really justify having two bedrooms when you only use one as a “spare room”? Do you really need to be paying extra just to have a huge kitchen? What about the area you are in? Do you really need to live in the city center because you’ve got “everything on your doorstep” – even though you only use them once every few months?

If you are looking to save up for a house deposit, or just generally looking for ways to save money on household bills, then temporarily “moving down” in property might be a good choice for you financially. This could be moving back in with your parents for a while, finding a flat share rather than having your own place, or simply just finding a smaller place.

A quick random look on Rightmove will give us a good example! Say as an example, you’re renting on the River side of Kings’ Cross (WC1H 8BB). A standard two bedroom flat is £1,950 per month.

If you are willing to downsize to a one-bedroom flat and move a mile and a half further out, then a similar quality flat in a similar standard area is only £950. For anyone not living in London, paying £950 for a 1 bedroom flat in London may seem crazy, but it’s a huge saving of £1,000 a month if you are willing to give up a bit of space and compromise on location.

Even better, you could get a room in an existing house, with bills included in the same area for only £110 per week, which would equate to around £500 per month. Yes, you only get one single room to yourself and you’ll have to share other areas of the house, but for a difference of almost £1,500 a month, just think how much quicker you’ll be able to save up for your own deposit. Anyway, you might find out you love living with other people!!

ACTION POINT: ASK YOURSELF BRUTALLY IF YOU REALLY NEED TO BE SPENDING AS MUCH AS YOU ARE. HAVE A LOOK ON RIGHTMOVE AND SPAREROOM AND SEE HOW MUCH YOU COULD BE SAVING BY CHANGING YOUR LIVING ARRANGEMENTS.

#06 – Housing Costs – Have You Considered Being A Property Guardian?

This is an extension of point 5 above, but will be something that I’m guessing you’ve not come across before. The concept is a little bit of a strange one. Effectively, you are paid by a property management company to live in (and look after) an unused property. The idea is that by you living there you will defer squatters, keep the property safe and it means the owners can make some income whilst the property is empty.

It’s basically legal squatting, where you pay a highly reduced rent, but if you are the adventurous type, there’s some awesome opportunities out there. The two biggest vacant property specialists are Camelot Europe and Ad Hoc Properties

A quick search in my local area shows a 5-bedroom vicarage 25 minutes from Newcastle-upon-Tyne, with a garage, patio doors, new carpets, freshly painted, new boiler, electric shower and new furniture.

And here’s the best bit – including Council Tax and Water bills – its £170 per….MONTH! So, as long as you are willing to be super flexible, you are employed and you are willing to give up some of your renters’ rights (for example, they could ask you to move out at a weeks’ notice) this could be an option for you.

To compare a property to the rental examples we were looking above, there is accommodation available in Blackfriars (5 minute walk from The Thames) for £110 per week. What’s the catch? It’s in a vacant office block – but one with bedrooms, kitchens and bathrooms.

ACTION POINT: IF YOU ARE REALLY FLEXIBLE, WILLING TO SHARE WITH OTHERS AND “ROUGH IT A LITTLE” THIS CAN BE A MASSIVE CASH SAVER. WARNING: IT’S NOT FOR THE FAINT HEARTED!

#07 – Housing Costs – Could You Rent Out A Room In Your House?

In tips 5 & 6, we’ve looked at how you can save money on housing costs by moving into a smaller home, or to a different area. However, for homeowners (and renters with permission of their landlords), you could cut your costs by renting out a room in your home.

Using sites such as the aforementioned Spareroom or EasyRoommate, or even just through Gumtree, you can probably quite easily find a new tenant to rent out a bedroom in your house. This will give you a nice monthly income which you can use to pay down extra on your mortgage, or to reduce the amount that you are actually paying in rent or mortgage payments.

Related Article: Renting A Room In Your Home To Earn Extra Income (Moneystepper)

In this article, we’ve explored the process in detail (including legal issues, taxes, safety concerns and much more). People might argue that having someone rent a room in your house can cause a significant disruption to your living arrangement. Well, yes, it could. But, if it is well managed, it will have an even more significant reduction on your household bills.

For example, the average double bedroom let out on EasyRoommate in London is £650 per month. Imagine you are willing to do this long-term. This money alone (invested at 10% per annum) for 30 years would make you a millionaire!!

ACTION POINT: THINK ABOUT WHETHER YOUR SPARE ROOM IS REALLY WORTH AS MUCH AS THE INCOME YOU COULD BE EARNING IF YOU RENT IT OUT. IF YOU WANT TO RENT OUT A ROOM IN YOUR HOME, READ THE LINKED ARTICLE ABOVE CAREFULLY!

#08 – Housing Costs – Could You Rent Out Your Driveway?

But, why just stop at your spare room? If you are not using some space outside your front door, you could be earning more income, which you could be netting off against your monthly expenses in order to save money on your household bills.

Related Article: Make Money Renting A Driveway (Moneystepper)

Again, if you are living in central London, parking spaces are going on Rightmove for anywhere up to £75 per week. However, if you live anywhere near a place of employment (city centre, hospital, schools, etc), you’ll be surprised how much value you might be leaving in your empty driveway.

You could reasonably be making up to £2,000 a year with little to no effort by allowing someone to park at your property.

ACTION POINT: EITHER LIST YOUR DRIVEWAY ON RIGHTMOVE, OR WORK WITH A SPECIALIST WEBSITE SUCH AS PARKATMYHOUSE.COM OR PARKINGPANDA.COM. THESE SITES CHARGE A FEE, BUT WILL SAVE YOU THE HASSLE OF HAVING TO FIND A “TENANT” FOR YOUR DRIVEWAY.

Ways To Save Money On Household Bills – Taxes

Taxes may not seem like a “household bill”, but they are one of the largest expenditures that households will incur every month and year. Therefore, you need to make sure that you aren’t paying more than you should be.

#09 – Taxes – Check Your Council Tax Band

Council Tax is just something you’ve always paid, right? Well, according to some estimates, almost half a million homes in the UK could be in the wrong council tax band, which could mean that you could be paying more than you should be.

Council tax bands are generally set by the value of your property in 1991. For instance, if your property was worth between £40,001 and £52,000, you would be in Band B. £52,001 to £68,000 puts you in band C. And so on.

There’s an easy way to check this and to determine if you could save money on household bills by slashing your council tax costs:

Go to this government website and enter your postcode. This will tell you the band for you and your neighbours (people in the same postcode). Therefore, if everyone else on your street is band B and you are band C, then you might well be in the wrong category. Find a neighbour’s property from a different band and compare your houses. The closest comparison you can find which is in a different band, the better chance you have of getting compensation. Now, you need to try to value your property as per 1991. The best way is to head to the house prices section on Zoopla and put in your postcode. That will then show you previous sales prices – take the price the closest to 1991. The closer you are to 1991, the better your estimate will be and the more likely you are to have a claim upheld. Finally, head to the Nationwide House Price Calculator. Put Valuation year 1 as 1991 Q1, and the Valuation 2 year as the date you found in step 3 above. Then, a little bit of trial and error with the “property value” will pop out a Valuation Date 2 amount equal to the sales price from step 3 above. Finally, if after this you believe that you are in the wrong band and should be moved into a cheaper band, you can click on your property in the link in step 1 and you’ll see another link to “Do you think this Council Tax band is wrong?” where you can contact the Valuation Office Agency (VOA) to discuss your case and make a formal challenge if necessary. You can contact them on 0300 0501501 (Mon – Fri 8:30am to 5pm). Also, you can visit the Council Tax Appeals gov.uk site where you can download an application to challenge your Council Tax band.

That mind sound like a lot of work, but the rewards can be monumental. Imagine that you lived in the country’s most expensive area for council tax: Weymouth & Portland. The difference between Band D and Band E is a whopping £390 a year.

The amazing thing is that not only can you change your band going forward, but you’ll be entitled to compensation for every single year going back to when you bought the property, or 1993, whichever is earlier.

There are reports online of people getting thousands of pounds back in compensation – maybe you could be next.

ACTION POINT: CHECK THAT YOU ARE IN THE CORRECT COUNCIL TAX BAND BY FOLLOWING OUR 5-STEP GUIDE. IF YOU DON’T THINK YOU ARE, MAKE A FORMAL APPEAL TO THE VALUATION OFFICE AGENCY (VOA).

#10 – Taxes – Check Your Tax Code / Self-Assessment Returns

And it’s not just your council tax that the taxman might have got wrong. In the UK, income tax is paid via “Pay As You Earn” (PAYE) and the amount of income tax you pay on this scheme is automatically calculated using many variables, one of the most important of which is your tax code. The taxman calculates your tax code, and it is used by your employer to determine how much tax to take out of your wages each month and hand over to the government.

However, it’s estimated that thousands of people may have the incorrect tax code and could be overpaying their tax. If that is the case, you could be due a healthy tax refund.

Your tax code is shown on your payslips or on your P45. It is made up of numbers (either three or four) and one letter. The number shows how much you can earn in a tax year before your employer needs to deduct tax, divided by ten. So for 2015/16, the majority of people will have the number 1060 (being the annual income tax allowance of £10,600 divided by 10).

The letter is related to your circumstance. The most frequently noted code will be “L”, which means that you have a standard personal allowance, but you can find all the letter codes on the gov.uk website.

The most common situation for incorrect tax codes is where you are placed as the standard 1060L, but in fact you have some circumstances that suggest you should be otherwise.

Some other common examples of non-standard codes would be if you have multiple jobs, you’ve been living out of the UK, you’re retired, you receive tax credits or you have significant employee benefits (company car, healthcare, paid for accommodation, etc).

Also, for the self-employed (and other people who need to fill out self-assessment), make sure that you avoid mistakes on your returns. It’s usually a good idea to pay a professional to take a look at your return to make sure you aren’t paying more tax than you should be.

ACTION POINT: WITH THE HELP OF THE .GOV.UK WEBSITE, TRY TO WORK OUT WHAT YOUR TAX CODE SHOULD BE. CHECK THIS AGAINST YOUR PAYSLIPS, AND IF THERE IS A DISCREPANCY, SPEAK WITH THE HMRC TO GET IT RESOLVED.

#11 – Taxes – Make Sure You’ve “Tax Wrapped” Your Investments

One of the biggest things I’ve learned from writing Moneystepper is that you shouldn’t pay tax twice. This is so important that it actually made it into one of my top 10 learning lessons from Moneystepper – a PDF that you can get free by signing up to the mailing list in the sidebar of at the top of this page.

If you plan your investments badly, you could find that you pay tax when you earn the money, pay tax again on that money when you invest it, and pay it again when you die through inheritance tax.

However, for the majority of people, you should be able to “tax-wrap” your investments to make sure that the tax man doesn’t get paid twice or more at your expense.

The two most common tax-wrappers for your investments are pensions and ISAs. For a more detailed explanation for your exact situation, check out our comparison of ISAs vs pensions.

As a very quick summary, we recommend you follow this order of your long term investing to maximize your returns and minimize your tax:

Make pension contributions up to your employer’s matched pension limit

Maximise your ISA contributions up to the annual maximum limits (currently £15,240)

Maximise your pension contributions up to the total annual maximum limit (currently £40,000)

Most people won’t get beyond these amounts (£55,240 per annum in long-term investments). Even if you do, then there are other options available to investors who still don’t want to pay tax on their investment returns, such as investing in VCTs or EISs. In fact, did you know that you can even write off an income tax liability of up to 30% of the amount of your VCT investments, so not only do you not pay tax on your investments, you can save tax on your income!

ACTION POINT: NEVER PAY TAX ON YOUR INVESTMENTS BY INVESTING VIA PENSIONS AND ISAS. DETERMINE YOUR SPLIT BETWEEN ISA AND PENSION INVESTING BY READING OUR COMPARISON GUIDE LINKED ABOVE.

#12 – Taxes – Plan Your Investments Against Future Taxes

Not only should you protect your current investments against tax, but also your future self. For example, we often receive questions from people who are about to sell investment property and are suddenly surprised that they are going to face a substantial capital gains bill.

Equally, people who don’t plan properly could end up with inheritance tax bills, but if your estate is planned well enough (and your heirs understand the inheritance tax rules), the majority of people can avoid this tax.

ACTION POINT: TAKE A LOOK AT YOUR OVERALL INVESTMENT STRATEGY AND MAKE SURE YOU UNDERSTAND WHAT TAX WILL BE DUE IN THE FUTURE.

#13 – Taxes – Make Sure You Never Miss Your Deadlines

This is a criminal mistake – in every sense of the word. For people submitting self-assessment tax returns (and for small businesses), not submitting your tax return will hit you with a late filing penalty of £100, and then you’ll start to pay interest after that.

ACTION POINT: MAKE SURE YOU KNOW YOUR TAX SUMBISSION DEADLINES AND PUT REMINDERS IN YOUR DIARY TO ENSURE THAT YOU DON’T MISS THEM.

#14 – Taxes – Junior ISAs

It’s not only you who should be avoiding tax, but your babies and children as well! J

Many new parents want to invest for their children. Firstly, you should be considering whether you want to save for your children in your own tax-wrapped accounts or one’s in their own names. There are many reasons to choose your own accounts to save for your children (we’ve made a full article on How You Should Save For Your Children.

But, if you do decide to save and invest for your children in their own accounts, then you should definitely make sure that you aren’t paying taxes on this either. Junior ISAs allow £4,080 in the 2015/16 tax year to be invested without incurring any capital gains taxes on future gains, or income tax on interest or dividend income.

ACTION POINT: EVEN IF YOU ARE SAVING FOR YOUR CHILDREN IN THEIR OWN NAMES, MAKE SURE YOU ARE AVOIDING UNNECESSARY TAXES.

#15 – Taxes – Gift Aid

Finally, by understanding your tax benefits, you can actually save money in your monthly budget by taking advantage of Gift Aid.

Essentially, using Gift Aid means that the taxman will add 25p to every £1 you give to charity. Therefore, say you’ve decided that you want to give someone £40, then you could actually reduce your charitable donation to £32 with Gift Aid making the rest up to the £40 total that you want to invest.

That effectively saves you that £8 in your monthly budget and the person you are sponsoring still gets their £40. Win-win!!

Gift Aid is available to everyone, limited up to a maximum of 4 times what you have paid in tax in that year. For most people, this limit won’t come into play and so the vast majority of people can receive gift aid on their donations.

However, this is often not done automatically, so you’ll have to select a box if you are making your investment through JustGiving or something similar, or you may have to provide your details if you are making a direct donation so that the person raising money for charity can top-up that 25% through Gift Aid on your behalf.

ACTION POINT: MAKE SURE THAT YOU USE GIFT AID WHEN MAKING YOUR CHARITABLE DONATIONS SAVING YOU 25% ON YOUR GIVING.

Ways To Save Money On Household Bills – Car Expenses

I have no idea why this is the case, but it’s deeply ingrained in the British psyche that car expenditure is just something we have to deal with. Whether it be petrol, repairs, MOTs, insurance or the car purchase and related financing, people seem to be more willing to spend money on their car than almost anything else.

Well, not on our plan. The car is just another line in the budget. And, as such, we will ask the same questions? Do we need it? Do we really need it? Can we get it cheaper? For most areas of car expenditure, the answer will usually (but not always) be “Yes” to question one and two, but it’s almost always “Yes” for whether you can cut those expenses down.

#16 – Car Expenses – Downsize Your Car

The first way to save money on car expenses is to work out whether you need your car at all. The biggest “downsize” possible is to get rid of your car completely! Most people will baulk at this idea, but for many (especially those who live in the city centre or have two vehicles) it is a real possibility. With a combination of public transport, pedal power, home deliveries and car hire when you really need it, you might be able to get rid of your car altogether and save yourself from a multitude of related car expenditure.

For example, we lived in Marseille for two years without a car, and after a month or two this became the norm. Once or twice, this was an inconvenience, but for the huge amount of cash we saved, we simply paid for car hire (which can be surprisingly cheap when booked in advance – as low as £15 for a day) or taxis in those situations. Trust me, you have to take a lot of taxis, bus rides and train journeys in a month to spend as much as you would running a car.

Related Article: Save Money On Car Hire

If you can’t drop your car, then you might want to consider downsizing. Smaller cars will cost less in ongoing costs such as repairs, use less petrol and will cost less in the first place. Just like with your home, ask yourself: “do I really need all that car?”

ACTION POINT: CONSIDER IF YOU CAN LIVE WITHOUT A CAR. IF NOT, AND YOU NEED TO SAVE MONEY ON YOUR HOUSEHOLD BILLS, CONSIDER DOWNSIZING YOUR VEHICLE IN ORDER TO SLASH YOUR CAR EXPENSES.

#17 – Car Expenses – Going Green

Going green – i.e. choosing a car with low emissions – is obviously good for the environment. However, it could also be good for your wallet. Low emission vehicles have many areas where they could be cheaper. Firstly, they are more fuel efficient and so you will slash your petrol expenses.

You will also receive huge discounts on your road tax. At the extremes, Band M road tax (many large 4x4s and convertibles) is £505 per year, whereas Band A road tax (many hybrids and smart vehicles) is £0 – that’s right, it’s absolutely free!

The savings don’t end there either. Most councils will offer reductions on parking permits for low emission vehicles. For instance, in Newcastle-upon-Tyne, for bands A-C (under 120 g/km), you’ll receive a 50% discount on your parking permit. The same is true for hundreds of councils nationwide.

This is also extended to businesses. For example, the purchase of a low emission vehicle allows the business to place 100% of the purchase cost against profits in the year to reduce their corporation tax bill.

ACTION POINT: WORK OUT THE FINANCIAL BENEFITS OF GETTING A LOWER EMISSIONS VEHICLE. THESE CAN OFTEN COST A LITTLE MORE UP FRONT, BUT THIS CAN QUICKLY BE PAID BACK VIA THE MONTHLY REDUCTION IN THE EXPENSES.

#18 – Car Expenses – Buy Second Hand

This is one of the most debated subjects in the world of personal finance. Buying new vs buying second hand.

The argument for buying new cars is that you know what you are getting, and that you’ll save a significant amount of money on the repairs and maintenance which an older car would require.

In my opinion, this is rubbish! The most significant factor in this debate is the value that a new car loses the minute it is driven off the forecourt. The best demonstration is probably via an example.

The pictures above show a Vauxhall Corsa 1.0 Sting 3-door. The first image is the price of buying new from Bristol Street Motors if you pay cash: £12,995. The second image below is the price of buying second hand through a private seller – the same car but with 3,400 miles on the clock and only 9 months old – only £4,100:

To those who argue to go new due to repairs, you can get a hell of a lot of repair work done for the £8,800 difference in the cost of these two vehicles. Very easy choice as far as I’m concerned.

This will shock people (especially those who think buying new is the norm), but Dave Ramsey (US personal finance guru) recommends that you don’t buy a new car unless you have a $1 million net worth. To be honest, I couldn’t agree more. A more detailed explanation of why can be found in our prior article about buying new vs second hand cars. Tip: watch the TED talk video for a real shock about car financing!

ACTION POINT: DON’T BUY A NEW CAR (ESPECIALLY ON FINANCE OR PCP – SEE #20), BUT INSTEAD SHOP AROUND FOR A GOOD CONDITION RELIABLE SECOND HAND CAR WHICH FITS IN WITH YOUR BUDGET.

#19 – Car Expenses – Find A Good, Trustworthy Local Mechanic

When it comes to car expenses, getting repairs done at your manufacturers’ or dealers’ garage is the equivalent of shopping at the Hugo Boss store. Yes, the waiting seats are comfortable and everything looks flashy, but you are basically paying a hell of a lot of cash for very little.

According to recent research, franchised dealers’ quotes are generally up to 20% more expensive than independent garages. It also showed that the average timing belt replacement quote was over 60% more expensive with the franchised dealer than the smaller independent outfits – for exactly the same job!

However, people often go with the franchised dealer because they feel more comfortable with them and are worried about getting ripped off by an independent garage or mechanic.

How do you get over this? By working down the following four steps:

Speak to people you know and online reviews in order to find 2-3 cheaper, but reliable independent garages in your area. Next time you have a minor problem with your car, take it to the franchised dealership and these independent garages to get a quote from each for your work. Also, ask each to estimate how long they think it will take to complete the job (independent garages can be slower than franchised dealers if you don’t agree a timetable up front). Go with the cheapest quote and see how the experience is compared to your usual option.

I use an independent garage for our MOT and all repairs and I now have such a good relationship with them that I am confident that they will provide the cheapest and reliable service I can find. Once you build that relationship, you’ll find that the garage will even do smaller jobs for free because they know that if they do, you are likely to come back for more significant work.

If you followed our advice in #18 and bought second hand, you may find that you have a few more things that rattle and shake on your car and you need to visit the garage slightly more often. If that’s the case, then finding the best value (and most reliable) mechanic in your area is a must to save money on your car expenses!

ACTION POINT: GET ADVICE FROM FRIENDS AND FAMILY (AND ON THE INTERNET) REGARDING LOCAL INDEPENDENT GARGAGES. FOR A SMALL JOB, GET QUOTES FROM EACH AND TRY OUT THE CHEAPEST – YOU’LL SOON KNOW IF THEY ARE A GOOD FIT FOR YOU!

#20 – Car Expenses – Refinance Your Car Payment (inc. PCP)

As we said in #18, you shouldn’t buy a brand new car unless you have a monumental net worth. If you’ve already bought one, then you can still take some action today in order to reduce your monthly expenses.

Many people who buy new cars do so through financing. It seems a lot more appealing buying a new car when it only costs £399 a month instead of £12,000 upfront. However, the average person who finances cars will end up paying over £100,000 in interest alone over their lifetime.

If you’ve signed up to car financing at anything other than 0% interest (including those horrible PCP deals), and you are wanting to cut back on your monthly costs, it will probably be worth investigating how much it will cost you to dig yourself out of your hole.

Again, you can do this by following this 4-step guide:

Work out how much your current car is actually worth if you sold it today. You can do this by looking at the sales values of very similar cars on sites like autotrader. Calculate how much you “owe” on your car today (usually this will be a loan balance). Work out how much you will end up paying on the vehicle over its life if you carry on doing nothing. Identify a second hand car you would buy to replace your vehicle.

Let’s use an example. Imagine that we had purchased a VW Golf Match 1.4 Tsi 3Dr one year ago on a PCP deal. We were sucked into the “48 monthly payments of £199” sales pitch. In reality, we signed up to paying £2,499 deposit, fees of £185 and then payments over 48 months at 7.2% APR. D’oh!!

But, that is all sunk costs. Learn from our mistakes and put this behind us. Instead, we need to work through the steps.

A quick search on Autotrader shows us that a similar vehicle with 4,000 miles on the clock which is only one year old sells for around £15,000. The easiest way to do this would be to phone the dealer or PCP provider. Based on my maths, after 12 months, you would have £13,904 still to pay on the finance, plus fees of £185. There may be some clauses in the PCP contract, but we’ll assume that you can get out of the deal by repaying the remaining debt plus the fees for a total of £14,089. If you carried on repaying on the PCP deal, the total repayments would be £22,019. Therefore, you’ve saved yourself almost £8,000 by getting out of this deal. Then, you can use the £1,000 that you have gained from selling your car second hand compared to what you paid to get out of the PCP to buy an older second hand car. You now have a second hand car instead of a new car, but your monthly payments have disappeared and you have saved £199 a month on your household bills!

Alternatively in this example, if you wanted a nicer car, you could put £3,000 capital towards buying the car in #18 above. Then, you have the same aged car, with the same miles, but still you won’t have any monthly payments.

Finally, if you haven’t got that £3,000 to put towards your replacement car, you might want to consider 0% balance transfer (or money transfers) so that you’ll be paying the equivalent of less than 1% APR instead of the typical 7-15% that comes with car financing!

ACTION POINT: BUYING NEW CARS (ESPECIALLY WITH FINANCE) IS SIMPLY NOT CONDUCIVE TO BUILDING LONG TERM WEALTH. THEREFORE, THE NEXT TIME YOU ARE BUYING, GO SECOND HAND. AND IF YOU’VE ALREADY BOUGHT NEW, WORK THROUGH OUR GUIDE TO DETERMINE WHETHER IT’S WORTHWHILE SELLING YOUR NEW CAR AND REPLACING IT WITH AN OLDER SECOND HAND VEHICLE.

#21 – Car Expenses – Buy Tyres Online

This is a nice sneaky tip to reduce those household bills when you need a new set of tyres for your car. You can buy tyres for your car through ASDA tyres, and not only do you get the best tyres for much cheaper, you can also get them delivered to a local garage who will then fit them free of charge, sort valves, balance and dispose of your old tyres.

ACTION POINT: GO TO ASDATYRES.CO.UK, ENTER YOUR REGISTRATION AND THEY’LL COMPARE THE COST OF DIFFERENT TYRES FOR YOUR VEHICLE, AND GUIDE YOU TO WHERE YOU CAN GET THEM FITTED FOR FREE.

#22 – Car Expenses – Learn Simple Car Maintenance

I’m not recommending that you get your overalls on and head under your car to replace the key components. More often than not, it’s safer, quicker and cheaper (when you think in terms of “hourly value”) to let your new trusted local garage that you found in tip #19 do that for you.

However, it’s a good idea to get clued up about basic car maintenance. I’m talking about the easy stuff – keeping the oil topped up, keeping your tyres pumped to the proper temperature, making sure the water levels are right, etc.

You can learn all this in under an hour with the help of a friend with some knowledge of cars, or from youtube video tutorials. It may not save you every single month, but it will certainly save you on big one off costs when you avoid a large repair that was caused by simple negligence to the basics.

ACTION POINT: LEARN THE BASICS OF CAR MAINTENANCE TO AVOID BIG COSTS LATER ON – A STITCH IN TIME SAVES NINE, AND ALL THAT…

#23 – Car Expenses – Shop Around For Your Petrol

Petrol prices go up and down like no-ones business in the UK. Dependent on the commodity prices, forward contracts, delivery costs and all other manner of things, it’s impossible to guess how much a gallon of petrol will cost you next month.

However, one thing you can do, is work out where to get the cheapest petrol. Just as you might shop around to get the cheapest deals on groceries, electronics or clothes, petrol prices can vary hugely within only a few miles.

A first obvious one is to avoid motorway petrol stations wherever possible. For example, a search around Durham, UK, shows that petrol at a local supermarket petrol station is 108.9p per litre, whereas the A1(M) services is 117.9p, over 8% more expensive.

The less obvious tip is that you can find the cheapest petrol in your area by signing up to the free website: petrolprices.com. A quick search for a 5 mile radius of Leeds for instance, shows me straight away three places where I can get unleaded petrol for 107.7p per litre, whereas the average price in the city is 111.2p and the highest price is 114.9p.

If you use £150 of petrol a month (not unusual for a regular city commuter), you could be saving over £10 every month by going to the cheaper stations to refill.

ACTION POINT: SEARCH YOUR LOCAL AREA TO DETERMINE WHERE TO GET THE CHEAPEST PETROL. HOWEVER, PLEASE DON’T DRIVE 30 MINUTES OUT OF YOUR WAY TO SAVE A FEW PENCE ON YOUR PETROL – REMEMBER THE HOURLY VALUE CONCEPT!

#24 – Car Expenses – Change Your Driving Style

In a small experiment that I carried out in November 2014 on improving fuel mileage by driving sensibly, I found that I was able to increase my miles per gallon by over 25% by making just a few small changes.

This can be summarized into:

Driving in the highest gear possible Avoiding high speeds (optimal fuel efficiency is at 55mph) Not accelerating too quickly Avoiding heavy breaking Maintaining the correct tyre pressure Not leaving the car idle Removing unnecessary weight from the car

In the month of the test, I managed to improve my average miles per gallon (mpg) from 38.7 to 48.2 through these techniques alone.

This has an obvious beneficial impact on saving money on your household bills through reduced petrol consumption, but a more unmeasured impact on safety, reduction in maintenance costs in the long-term (break pads, tyres, etc etc) and even on your car insurance (see tip #37).

ACTION POINT: DRIVE MORE SENSIBLY AND FOLLOW OUR 7 POINT PLAN TO INCREASING YOUR AVERAGE MPG.

#25 – Car Expenses – Claim Repairs Caused By Potholes

“Had an accident that wasn’t your fault, claim back hundreds”…we’re fed up of hearing these adverts by now. However, one thing you may not have known is that if you’ve had a repair that wasn’t your fault (because it was caused by a pothole), you could actually claim for the damage caused.

You’ll need to prove that it was the pothole that caused the damage, but it’ll often be obvious when this is the case. Say you hit a pothole, and straight away the car is pulling to the left (or a tyre pops), then it’s pretty clear cut.

Take notes (what time it was, where exactly the pothole is) and if you can take a photograph of the pothole. Then, you’ll need your mechanic to put into writing that it was likely that the damage was indeed caused by hitting a pothole.

You then need to identify the “responsible party”. This will usually be the local council for smaller roads, and the highways agency for motorways and larger A-roads. At first, you should send a letter along with the evidence of the damage and the invoice/receipt for the repair work. Often, this will be successful and the responsible party will send you a cheque in the post.

Unfortunately, life isn’t always that easy. If that fails, you are going to have to make a full claim including getting the road repair policy and inspection history for the road where the pothole was, reviewing inspection logs and all manner of other things. Then, the responsible party may pay your compensation (either in full, or try to make a compromise). If they still reject your claim, and you are sure that you are in the right, you can take it to the small claims court.

ACTION POINT: FOLLOWING REPAIR WORK THAT WAS CAUSED BY HITTING A POTHOLE, IDENTIFY THE “RESPONSIBLE PARTY” AND SEND A CLAIM (INCLUDING AS MUCH INFORMATION AS YOU HAVE) TO FIND OUT IF YOU ARE DUE COMPENSATION.

#26 – Car Expenses – Slash The Cost Of Breakdown Cover

People often pay way over the odds for breakdown cover. If you’ve followed our tips above regarding second hand cars, the basic breakdown cover may be right for you. If you then follow our tip #109 and use cashback sites, you’ll find that the cost of breakdown cover could be much less than you have historically been paying.

For example, the RAC standard breakdown cover for one vehicle (which includes Roadside Rescue – covers you if you are more than 0.25 miles away from home, will fix anything it can by the roadside and will tow you to a garage of your choice within 10 miles of the breakdown point) is only £27.99. Using quidco.com, you can earn £9.50 off that amount, meaning that your cover drops to only £18.49 per year.

You can add “recovery” (taking you and up to 7 passengers to any chosen location anywhere in the UK) for £27 per year, making the total £54.99. Again, with Quidco, the cashback now pops up to £18.50 and hence your annual cover is only £36.49 for the year with full recovery cover.

Compare this to the £100s that some people pay for breakdown cover and this could be an easy way to save money on your household bills!

ACTION POINT: TAKE A LOOK AT YOUR CURRENT BREAKDOWN COVER AND CONSIDER SWITCHING TO A CHEAPER PROVIDER (USING CASHBACK SITES TO MAKE THEM EVEN CHEAPER).

Ways To Save Money On Household Bills – Insurance

Whilst insurance tends to be paid annually (or at least it should be as per tip #30 below), if you work out how much you are paying in premiums each month for all of your insurance product, you’ll realise that it’s one of your largest monthly expenses. Don’t worry, we’ve got 11 tips to help you save money on your insurance costs.

#27 – All Insurance – The “Can I Afford Not To Have It” Rule?

Before we look into how to save money on household bills by reducing your monthly insurance premiums, I would like to share with you our overall opinion on insurance. Understanding what insurance is, and how it works, will make sure that you are not wasting money on unnecessary insurance.

Effectively, all insurance (in the long term) costs the person taking out the insurance money and makes the company which provides the insurance money. The figures shown below are representative of AON Insurance from their 2014 annual accounts. The profit and loss statements of all insurance companies effectively work in the following way:

Money you pay in premiums (revenue) £100

Money they pay out in claims (costs) (£59)

Money spent on salaries, advertising, etc (£27)

Profit £14

Therefore, for every £10 you spend on insurance premiums, less than £6 comes back to you through claims, and the remainder is split between paying the directors and employees, covering company running costs and paying the shareholders of the insurance company.

I repeat: in the long-run, insurance COSTS you money.

Our #1 rule for insurance is therefore if you can truly afford not to have the insurance cover, then don’t.

Take, for example, a biro. It costs 20p. If you broke it, you could afford to replace it, no problem. Therefore, if you could take out insurance at 5p a year, you know that on average it will only be worth 3p a year (as per the calculations above) and hence you wouldn’t take it out.

However, if you only had a net worth of £3,000 and your house burned to the ground destroying everything in it and the building itself, you couldn’t afford to rebuild it. Therefore, in this case, even though you know that ON AVERAGE you would be losing money by taking out the insurance, you couldn’t afford to pay for the worst case scenario and therefore buildings and contents insurance is a good idea.

One exception is when insurance is legally required, for example car insurance. Whilst people with a high net worth and a second hand car may not benefit from car insurance in the ways described above (i.e. they could afford to pay for repairs if they were to crash), the legal requirement to take out the insurance overrides this rule.

ACTION POINT: FOR ALL INSURANCE PRODUCTS, DETERMINE WHETHER YOUR NET WORTH ALLOWS YOU TO LIVE WITHOUT THE INSURANCE. IN THE LONG-TERM, ALL INSURANCE COSTS YOU MONEY, SO AVOID TAKING OUT UNNECESSARY POLICIES.

#28 – All Insurance – Compare Prices

So, you’ve determined from tip #27 that you need a certain kind of insurance because you can’t afford to live without it, or because you are legally obliged to take it out.

The next step is to perform a full market comparison of the insurance that you can obtain. This is for two main reasons:

The difference in costs between different providers for the same product can be absolutely enormous. Due to the current environment of “introductory offers” renewing your insurance year on year rather than comparing other introductory offers elsewhere can be extremely expensive.

A small example will show you how much of a difference this can make. We have performed a search on the comparison website confused.com for car insurance for my wife and I. Using the same details, and the same levels of excess and cover, we can see the following two options:

So, you can see that if you simply went with Prudential because you saw an advert in the newspaper or because you know their name, then you’ll be paying way over double the cheapest provider. Equally, you’ll find that for renewals, your provider will shoot your premiums up in the hope that you are simply too lazy to compare prices elsewhere.

So, shop around on your insurance using confused.com to reduce your insurance premiums and save money on your household bills. However, make sure you always read the small print to ensure that you are comparing apples with apples, and that each provider gives you the same level of cover.

ACTION POINT: FOR ANY INSURNACE THAT YOU HAVE DETERMINED THAT YOU NEED, YOU CAN COMPARE PRICES FROM HUNDREDS OF INSURANCE PROVIDERS USING CONFUSED.COM TO FIND A MUCH CHEAPER INSURANCE QUOTE FOR YOUR CIRCUMSTANCES.

#29 – All Insurance – Consider A Higher Excess

You can see in tip #28 that we chose an excess of £100. However, by changing the “excess” that you are willing to pay, you can reduce your annual insurance premiums in order to save money on your household bills.

An “excess” is the amount of a claim that you will be liable for yourself. For example, with an insurance excess of £100, if you have a car accident and you need to claim for £300 of damage, you will only receive £200 compensation from your insurance provider.

The higher you set your excess, the cheaper your premiums will be, but the lower the amount you’ll be able to claim if you actually need to use your insurance. Therefore, choosing your level of excess is a very interesting mathematical problem.

Firstly, you need to work out why you are taking out insurance. If it’s because you have a legal requirement to, then you’ll generally want to pay a higher excess to reduce your monthly premiums, because you probably won’t be claiming anyway unless you have significant damage.

In my car insurance example, I used an excess of £100 and my lowest annual premium was £205.64. However, if I raise my voluntary excess to £500, then my premium with the same provider reduces to £191.16.

Now, this saving doesn’t seem like much (only 7%), however this might still be worthwhile as you may not be making any claims for amounts between £100 and £500 anyway (due to the value of your car, keeping your no-claims, etc).

On the other hand, with contents insurance, a common claim amount may be in this range (a burn in a carpet, etc) and hence it may be worth paying the slightly higher premium to reduce your excess.

This will be different for every single person and for each insurance policy. Therefore, our advice is to work out the difference in the insurance premiums using different levels of excess in order to work out which is best for you.

ACTION POINT: WHEN COMPARING INSURANCE PRODUCTS, RUN A COMPARISON AT EACH DIFFERENT EXCESS LEVEL TO WORK OUT THE SAVINGS IF YOU ARE WILLING TO PAY A HIGHER EXCESS.

#30 – All Insurance – Usually Pay Annually

Again, as you can see in the example in tip #28, insurance premiums are often much cheaper if you pay annually rather than through monthly installments.

In our example, we can either pay £205.64 if you pay annually, or you can choose monthly installments (and pay £18.74 a month) which is an annual equivalent of £224.85.

Therefore, we can either:

Pay £205.64 upfront

Place £205.64 into a current account earning X% interest and pay the monthly installments.

In order for the X% to make enough interest to make up the difference between £205.64 and £224.85, the interest rate would actually have to be a whopping 18.2%. Obviously, this level of return isn’t available from such short-term investments and hence it’s a no-brainer to go with the upfront payment instead of monthly installments.

Many people may just think that the difference is less than £20 so go with monthly, but that kind of thought process will make and keep you poor pretty quickly!

ACTION POINT: UNLESS MONTHLY INSTALLMENTS ARE THE SAME AS ANNUAL, TRY TO PAY ANNUALLY FOR INSURANCE PREMIUMS, OR YOU’LL END UP PAYING THE EQUIVALENT INTEREST OF MANY HIGH INTEREST CREDIT CARDS.

#31 – All Insurance – Secure Your Belongings

Whether you are insuring your car or your contents, you could save money by securing your belongings. For example, by having alarms fitted on houses and cars, you can reduce your insurance premiums. In addition, keeping your car indoors can often make your insurance cheaper (subject to tip #35).

Moreover, by securing your belongings, they are less likely to be stolen, so you are less likely to make a claim, to incur the insurance excess and suffer from increased future premiums because you have previously made a claim.

Finally, most insurance products will be void if you haven’t sufficiently secured your belongings. For example, if all your home contents were stolen because you left the window open, you’ll probably not receive any compensation what-so-ever from your insurance company.

ACTION POINT: SECURE YOUR BELONGINGS BY LOCKING DOORS AND FITTING ALARMS TO YOUR CARS AND HOMES. HOWEVER, AS PER TIP #35, DETERMINE WHETHER IT’S CHEAPER TO USE YOUR GARAGE OR LEAVE YOUR CAR ON THE DRIVEWAY OR ROADSIDE FOR INSURANCE PURPOSES.

#32 – Car Insurance – Try Adding a 2nd (or 3rd or 4th…) Driver

This is another strange concept in the car insurance industry, but definitely worth exploring if you are a younger or inexperienced driver (and sometimes for anyone at all).

When completing your comparison for your car insurance with confused.com you should try adding some additional experienced drivers to your insurance policy, even if they aren’t going to drive the car.

This is especially effective for young drivers, who will be adding their parents or more experienced friends (especially those with a good history of no claims) to their policy. This is because premiums are calculated using an average of the risks that each driver on the policy poses. Therefore, the lower average overall risk, the lower the premiums.

ACTION POINT: PLAY AROUND WITH YOUR CAR INSURANCE COMPARISONS BY ADDING ADDITIONAL LOWER RISK DRIVERS (SUCH AS PARENTS) – THE MORE THE “AVERAGE RISK” FALLS, THE CHEAPER THE OVERALL PREMIUMS.

#33 – Car Insurance – Use Your No-Claims Bonus (But Don’t Always Protect It)

The more you drive without claiming, the cheaper your premiums will become. This very sensible and logical theory is called your “no-claims bonus” in the car insurance industry. Basically, for every extra year that you haven’t claimed, the higher reduction you can receive on the standard premiums.

With many insurance policies, there is an option to “protect your no-claims discount”, meaning that you pay higher premiums in order to retain your discount even if you need to make a claim. However, it’s worth remembering that all insurance companies do things for a reason, and that reason is ALWAYS to make the company and their shareholders more money. Therefore, on average, you’ll end up paying more in increased premiums to protect your no-claims than you would be losing it if you have a claim.

Additionally, it’s worth considering that having an accident will still probably cause your baseline premium to increase, even if the discount remains the same. Therefore, without ever having made a claim you may get a 20% discount for your no-claims on a £200 policy. If you’ve had an accident, even though you still get a 20% discount, your base policy may increase to £240, meaning that although you still have your “no claims”, it doesn’t mean that your cost can’t go up.

ACTION POINT: IF YOU’VE HAD CAR INSURANCE FOR MANY YEARS, THEN YOU SHOULD MAKE SURE YOU REPORT THIS PERIOD OF “NO-CLAIMS” TO YOUR INSURANCE PROVIDER IN ORDER TO RECEIVE A NO-CLAIMS DISCOUNT. HOWEVER, DON’T GET OVERLY HUNG UP ON PROTECTING YOUR NO CLAIMS WHEN YOU DO HAVE AN ACCIDENT.

#34 – Car Insurance – Use A “Blackbox” Or Driving App

A pretty cool new innovation in the insurance industry has made a positive impact on allowing sensible and responsible drivers to reduce their car insurance.

If you follow all our suggestions that we outlined in tip #24 to improve your mpg through driving more sensibly (avoiding quick acceleration, braking more slowly, etc), then you’ll be able to install a device in your car to measure this.

This may be a bespoke device provided by your insurer, or could even be an app on your smartphone. This then reports to the insurance provider that you are an excellent driver and therefore pose a lower risk of making a claim.

The issue at the minute is that these apps and devices are currently only available through the more “well-known” insurance providers. These are the companies which spend millions on product development, advertising and overheads (including HUGE director salaries and bonuses), and are therefore the providers who have the higher premiums.

That said, especially for younger and inexperienced drivers, the discounts for proving that you are a safe driver may well exceed the difference between the expensive and cheaper premiums, so will be worth exploring.

ACTION POINT: IF YOU CONSISTENTLY DRIVE SENSIBLY, THEN YOU MAY BE ABLE TO REDUCE YOUR PREMIUMS BY HAVING YOUR DRIVING STYLE MONITORED BY YOUR INSURANCE PROVIDER.

#35 – Car Insurance – Use Your Garage (Or Not)

As per tip #31, keeping your car in a garage or on a driveway instead of on the road will reduce your insurance premiums.

But, the insurance industry is a funny old game. The whole system of calculating premiums is a very complex affair, using incredibly deep algorithms and specific data on claims in your area.

Therefore, keeping the car on the road, or on a driveway/garage, could be cheaper for many, but also could be more expensive for some.

For example, on my same insurance quote from tip #28, by keeping my car in a garage at the same address rather than on the road, my cheapest quote increases from £205.64 to £229.02 (a whopping 11.4% increase).

ACTION POINT: WHEN COMPARING INSURANCE PRODUCTS, CHECK IF IT IS CHEAPER TO KEEP YOUR CAR ON THE ROAD, ON YOUR DRIVEWAY OR IN YOUR GARAGE. SURPRISINGLY, IT MAY ACTUALLY BE CHEAPER FOR SOME PEOPLE TO LEAVE THEIR CAR ON THE ROAD!

#36 – Home Insurance – Combine Buildings & Contents Insurance

As for car insurance (and in fact for any insurance under the sun), we would recommend that you complete a market-wide comparison of your home insurance through a comparison website such as confused.com.

When you do this comparison, you’ll often find that you can save a significant amount on your home insurance premiums when you take out buildings and contents insurance at the same time with the same provider.

However, don’t just automatically do this without first thinking about tip #27. Whilst buildings insurance is almost always a requirement (as houses aren’t cheap to rebuild, and it is often a mandatory requirement for being granted a mortgage); the need for contents insurance will vary depending on the value of your contents and your net worth.

For example, my wife and I don’t currently have contents insurance as, even in the worst case scenario, we could afford to replace every single item in our house if it all disappeared tomorrow. This is because we live in a one-bedroom, second floor flat and don’t have excessive expensive consumer goods. #moneystepping and all that!

Although we clearly wouldn’t want to, it is cheaper in the long-term to run that risk rather than paying for the insurance to mitigate it.

ACTION POINT: IF YOU DECIDE THAT YOU DO NEED BOTH BUILDINGS AND CONTENTS INSURANCE, YOU COULD SAVE A HUGE AMOUNT ON YOUR PREMIUMS BY COMBINING THE TWO INTO A SINGLE POLICY.

#37 – Warranties – Avoid Extended Warranties

Finally, use this approach to thinking about insurance to determine whether you should be buying certain items in the first place. Say you want to buy a £1,000 TV. You look into an extended warranty (which is essentially very similar to insurance) and you decide that if the TV broke, then you couldn’t afford to replace it and therefore, by following our rule in tip #27, that you should take out the extended warranty.

WRONG!

What this should actually be telling you is that if you can’t afford to replace the luxury item (the expensive TV), then you shouldn’t be buying it in the first place. Adding an extra monthly expenditure to cover the risk that something you can’t afford, and that you don’t need, might break in the future is financial madness.

Did you know that many products (especially expensive electronics and white goods) are sold at very, very low margins? However, retailers are often happy to make low profits or even losses on sales of these products, because they make their money through financing and extended warranties.

It is estimated that only 20% of the price that you pay for your warranty actually goes to cover the repairs of faulty products. The remaining 80% is split between overheads, admin and marketing. Nothing I want to be paying for…!

The fact that the retailer can make more money from charging interest on financing and the price of extended warranties rather than the product itself must surely tell you how bad an option taking out financing and extended warranties are.

ACTION POINT: SIMPLE – NEVER TAKE OUT AN EXTENDED WARRANTY. IF YOU CAN’T AFFORD TO REPLACE THE PRODUCT, YOU SHOULDN’T BE BUYING IT!

Ways To Save Money On Household Bills – Credit Cards

High interest credit cards and loans are a terrible by-product of the consumer economy that we’ve got so used to in the UK. Anyone who is paying interest at these rates is essentially paying for nothing, other than accelerated gratification which they’ve not earned.

The resolution – make a plan to pay down the high interest debt – and apply our tips below to reduce the interest that you pay, and even to start earning money through cashback and rewards.

#38 – Credit Cards & Loans – Make Sure You Have A Plan

Okay then, onto credit cards and loans. The very first thing you need to do if you have existing credit cards & loans is to make a plan. And I don’t mean the plan that the credit card provider has given you by making the minimum payments.

Let’s take a credit card that I actually use myself (but responsibly in order to obtain rewards and cashback – see tips #39 and #43), the Lloyds Duo Avios card, which charges an annual interest rate of 23.7%, if you don’t repay your balance in full.

The minimum monthly payments is the largest of:

1% of your outstanding balance; or

your monthly interest and fees; or

£5

This means that with a balance of £3,000, if you only made monthly minimum payments, you’d NEVER repay your debt. 1% of your outstanding balance would be £30 a month, but the monthly interest based on 23.7% APR would be £54 a month. Therefore, with the “minimum monthly payment plan”, you’ll have the same debt amount forever and you’ll end up paying interest at 23.7% APR. Not a good way to get rich!

Instead, make a plan. Create a detailed monthly budget using the free resource below to see how much money you can free up to start paying down your debt quicker:

Related Resource: Moneystepper Excel Budget (Free Download)

Note – this is our latest draft document for the 2016 savings challenge and is therefore still a work in progress. I will update this link each time a new version is released.

The quicker you can pay down those credit cards and high interest loans, the sooner you can start building real wealth and move down the path towards financial freedom.

In this same example of £3,000 debt, if you paid £100 a month off your credit card balance, you would pay it off completely in 44 months, making total repayments of £4,338.

However, if you were able to make a plan to repay £150 a month, then you would repay your debt in only 25 months, and reduce the total repayments to £3,746.

Whilst at first it seems that you are increasing your monthly payments, you have to remember that your monthly cost is the interest you are paying and not the total repayment.

In our two examples, in month 18 for example, you’d be paying £37.35 in interest when making £100 per month repayments, but you’d only be paying £19.77 in our second example when you make a higher monthly repayment of £150 per month.

ACTION POINT: CREATE A DETAILED BUDGET (USING THE FREE RESOURCE ABOVE) AND MAKE A DEFINED PLAN TO REPAY CREDIT CARDS AND HIGH INTEREST LOANS AS QUICKLY AS YOU POSSIBLY CAN.

#39 – Credit Cards & Loans – Use Credit Cards Responsibly

I made reference in tip #38 to “using credit cards responsibility”, but what do I mean by this? Well, the credit card can actually be a very useful weapon to have in your armoury when you are trying to battle towards financial freedom (too many metaphors?!).

In our article, the right way to use credit cards, we detail a four step guide to using credit cards responsibly:

Set up a direct debit to pay your card in full every month Benefit from “deferred cashflow” Use a rewards or cashback credit card (see tip #43) Reap other benefits (inc. cheap emergency fund, fraud protection, improved credit rating, etc etc).

ACTION POINT: DON’T BE SCARED OF CREDIT CARDS! LEARN HOW TO USE THEM RESPONSIBLY AND YOU CAN ACTUALLY MAKE MONEY FROM USING CREDIT CARDS THE RIGHT WAY.

#40 – Credit Cards & Loans – Take Advantage Of 0% Balance Transfers (And Money Transfers)

In the current environment, 0% balance transfer (and money transfer) credit cards are simply the cheapest forms of loans available. A balance transfer card allows you to take out a new credit card with 0% interest over a set number of months to pay off an existing credit card balance from a different provider. These cards usually come with an associated upfront fee of between 1% and 5% depending on the card. A money transfer card works on the same principle, but allows you to transfer cash to your current account rather than just paying off another card.

For example, there is currently a card on the market which has a 2.99% fee for balance transfers (or 4% for money transfers) but has a 0% interest rate for 40 months.

Dividing the fee by the number of month, this means that the APR on the card is a minute 0.8% per annum for the balance transfer and only 1.2% for the money transfer.

This can be a hugely powerful tool in paying down your existing credit cards and high interest loans whilst incurring much lower interest payments. It is also appealing for anyone willing to “stooze” – a concept of borrowing at a very low rate and investing at a higher return – which is outlined in more detail in our article on how to manage 0% interest credit cards.

However, before taking out these credit cards, it’s absolutely essential that you create a realistic and detailed plan, as described in tip #38, for paying these debts down to zero before the 0% interest period ends.

ACTION POINT: CONSIDER 0% BALANCE TRANSFER AND MONEY TRANSFER CREDIT CARDS IN ORDER TO PAY DOWN YOUR CREDIT CARDS AND LOANS MORE QUICKLY. BY DOING SO, IF YOU PLAN CORRECTLY, YOU’LL INCUR MUCH LESS INTEREST.

#41 – Credit Cards & Loans – Pay Off Your Payday Loan NOW!

There are some pretty bad products available in the financial world. But, other than illegal products and outright scams, payday loans truly have to be the worst.

The government recently implemented a price cap on payday loans meaning that lenders could not set interest rates above 0.8%. This seems like a good idea, until you realise that this cap is 0.8% per day!!!

That means that the government (in order to protect the consumer) has capped the APR (the annual interest rate) at 1,270%.

So, you can save your money in the banks at 0.1% interest rates, but if you want to borrow, lenders can charge you 1,270%! Gross!

However, many people think that there isn’t any other way. They need the money quickly and think that payday lenders are the only solution. However, I’d argue that this may only be true for about 1% of people taking out these loans.

Instead, you should look at alternatives to payday loans, including (but not limited to):

An agreed bank overdraft

Pay advance at work

The bank of Mum & Dad (or friends) – tip #42

Peer-to-peer lending

Credit unions

ACTION POINT: IF YOU HAVE A PAYDAY LOAN, DO EVERYTHING YOU CAN TO PAY IT BACK AS SOON AS POSSIBLE – IT’S KILLING YOU FINANCIALLY. IF YOU’RE THINKING ABOUT TAKING ONE OUT – DON’T! THERE ARE PLENTY OF ALTERNATIVES AVAILABLE THAT WILL BE MUCH, MUCH CHEAPER.

#42 – Credit Cards & Loans – Use The Bank Of Mum & Dad (Or Friends)

In the tip above on payday loans, we mentioned the so-called “Bank of Mum & Dad”.

If you are thinking about taking out debt with a bank, credit card, payday loan or anything else, there may be a much better option much closer to home.

For instance, you may have friends and family who are earning less than 1% on their savings. If you said to them that you need to borrow money in the short-term, but you would pay them 10% annual interest (or the equivalent), they would probably jump to lend you the money.

They are winning because they get a very good return on their money, and you win because you get to avoid payday loans and credit cards at higher interest rates, and you also can agree to these deals at very short notice if required.

However, I would encourage both parties to not think of it as “borrowing” from friends and family, but rather entering into a mutually beneficial financial business arrangement with them. To cement this, you should create a written agreement, which you both sign, which outlines how much you are borrowing, the agreed interest rates, and the agreed repayment schedule. This way, there can be no disagreements or falling out later down the line.

ACTION POINT: CONSIDER BORROWING FROM FRIENDS AND FAMILY RATHER THAN MORE EXPENSIVE LENDERS IF YOU CAN AGREE A MUTUALLY ACCEPTABLE INTEREST RATE FOR ALL PARTIES INVOLVED.

#43 – Credit Cards & Loans – Maximise Rewards & Cashback

As we mentioned in some of the tips above, one of the major benefits of using credit cards is the cashback and rewards that could be available. If you are able to pay down your balance in full every month, you could be earning up to 3% cashback or an equivalent through rewards.

For example, I outline in our article on the right way to use credit cards, how I earn the equivalent of 2.25% cashback through air miles on everything I spend on my Amex Avios Duo credit card.

Santander “123” credit card holders can earn up to 3% cashback at all major petrol station and on train travel (and 2% cashback at all major department stores).

The credit card which will be best for you personally will be dependent on how much you spend each month, and what you spend it on. However, as with you insurance, you can compare credit cards on confused.com.

Just head to the “rewards” section and you can find out which types of rewards and cashback cards are available and which may be best for you.

Remember to take into account any annual fees or charges on certain reward credit cards when trying to understand which will be best for you.

ACTION POINT: IF YOU PAY DOWN YOUR CREDIT CARD EVERY MONTH, THEN YOU COULD ACTUALLY BE MAKING MONEY EACH MONTH THROUGH CREDIT CARD CASHBACK AND REWARDS. SHOP AROUND FOR THE BEST DEAL FOR YOUR OWN PERSONAL SPENDING PROFILE.

Ways To Save Money On Household Bills – Gas & Electricity

Another area where Britons are generally paying too much is on their gas & electric bills. However, by following our 14 tips on how to find the cheapest energy provider, and how to reduce your energy usage, you can save a significant amount of money on your household bills.

#44 – Gas & Electric – Make Sure You’re With The Cheapest Provider

The first tip is similar to other tips we’ve come across in other categories. Whether it’s your bank account, your mobile phone provider, you insurer or whoever else, a huge percentage of Britons find themselves with bad deals, and paying well over the odds because they just stick with their current provider.

Part of the reason for this is that people think that it’s not worth the hassle to change.

Other people are simply too lazy to find out what else is out there. Well, our favourite comparison website, confused.com, allows you to compare all providers for your current usage to see how much you could be saving if you were with the cheapest provider.

Another service which also compares all UK suppliers to find your cheapest option is Energy Helpline, which takes your current usage and works out if you could save by moving to a cheaper provider.

As a test, I’ve gone to Confused and put in that I spend £40 per month on electricity and £30 per month on gas with the standard British Gas tariff. This estimates my annual spend at £840 per year.

However, a simple comparison shows that I could be saving over £200 per year by switching to GB Energy:

So, don’t be lazy, have a look to see how much you could be saving by moving away from the standard tariffs with the energy giants who are only focused on maximizing shareholder value rather than offering good value to their customers.

As an extra tip, see tip #109 and get cashback by using quidco.com where you can earn cashback when you change provider. In our example above, if you visit Confused via Quidco, you can earn an extra £24 when you perform a dual fuel switch.

ACTION POINT: PERFORM A COMPARISON TO WORK OUT HOW MUCH YOU COULD SAVE EVERY MONTH BY MOVING TO A NEW PROVIDER – YOU MAY BE SURPRISED AT JUST HOW MUCH YOU COULD BE SAVING.

#45 – Gas & Electric – Pay By Direct Debit & Get Paperless Bills

Almost all energy providers offer discounts for customers paying by direct debit. This seems like a win-win for me. The energy company finds it easier to manage the administration related to regular payments, and as the consumer you can just set up your direct debit and forget about it.

And these discounts can be pretty significant. For example, customers on the standard British Gas tariff receive a discount of 0.31p/kWh for gas and 0.93p/kWh for electricity. For the average customer, this will equate to over £40 per year for gas and over £30 per year for electricity.

So, if you are not already paying by direct debit, spending 15 minutes (or less) to set up your monthly direct debit should repay you over £70 a year (around £6 every single month!).

Equally, many of the cheapest providers will only allow you to obtain such a great rate if you agree to receive your bills and receipts online rather than through the post. Not only do you save on money, but you also save on paper. It’s always good to save the world, isn’t it?! J

ACTION POINT: IF YOU DON’T ALREADY PAY BY DIRECT DEBIT, SET IT UP! IF YOU DON’T ALREADY GET PAPERLESS BILLS, SET IT UP! YOU COULD SAVE HUNDREDS EVERY YEAR FOR DOING SO.

#46 – Gas & Electric – Install A Programmable Thermostat

It can often be the case that embracing technology allows you to reduce your household bills every month. We saw it with the driving apps for car insurance, and the new programmable thermostats can really help reduce your energy costs.

A programmable thermostat allows you to regulate the temperature in your property, and can be controlled from any location.

Say, for example, you are at work and you usually get home at 6pm. Therefore, your thermostat has been programmed to come on at 5.45pm so that your house isn’t an igloo when you step through the door.

But, today, your boss has asked you to work an extra few hours. No problem, you simply flick on your iPhone app and you can change your heating to come on at 7.45pm instead, thereby saving energy and money on your energy bill.

The most common thermostat of this type in the UK is the “Nest” learning thermostat:

This is expensive at £179, but depending on your energy usage, it could pay itself back fairly quickly. Say you have a large family and you pay £100 per month on your energy, you only need to reduce your energy usage by 15% and it pays itself back in one year. Based on feedback online, this type of saving is not uncommon, with many people reporting a 30%+ saving on their energy bills. ACTION POINT: BASED ON YOUR ENERGY BILLS, WORK OUT WHAT REDUCTION YOU WOULD NEED IN YOUR USAGE TO MAKE THE NEST LEARNING THERMOSTAT WORTHWHILE. THEN, COMPARE ONLINE TO SEE IF YOU THINK THAT REDUCTION WOULD BE POSSIBLE. #47 – Gas & Electric – Unplug All Unused Electrical Devices Another way to slash your bills is simply to unplug every device in your house that you are not using, rather than leaving them on “stand-by” mode. Most household devices use energy even when they are not actually switched on, so by unplugging them at the wall, you will reduce your energy bills. This may be more than you think. An estimate that we made in our article about saving money on electricity by avoiding standby mode, showed that savings may run to over £100 on your energy bills each year! Additionally, if you house is hit by lightning, this will also stop your devices being destroyed by an electrical surge. If you think that the manual process is too much time and effort, then you may which to purchase an energy-saving plug to reduce the usage whilst on stand-by. ACTION POINT: UNPLUG ALL OF YOUR HOUSEHOLD DEVICES WHEN THEY ARE NOT BEING USED AND NEVER LEAVE STAND-BY MODE ON. #48 – Gas & Electric – Shower Instead Of A Bath One of our most popular ever posts is a comparison of the costs of taking a shower versus the cost of taking a bath. The conclusion is that changing from taking a bath twice a day to showering using a water efficient shower less regularly could be saving some consumers over £250 per year. Therefore, if you are looking to slash your household bills, then maybe you’ll be willing to give up the luxury of regular baths in exchange for a water saving shower:

ACTION POINT: CONSIDER REPLACING REGULAR BATHS FOR WATER SAVING SHOWERS IN ORDER TO SAVE HUNDREDS ON YOUR ANNUAL ENERGY BILLS.

#49 – Gas & Electric – Use Energy Saving Devices

There are a plethora of energy saving gadgets and devices available now which could help you reduce your energy usage, having a positive impact on both your household bills and on the wider environment.

Some ideas where you could save through energy saving devices are:

These will have varying impacts on your energy usage, but each should pay for themselves in a relatively short amount of time.

ACTION POINT: RESEARCH DIFFERENT TYPES OF ENERGY SAVING DEVICES TO REDUCE YOUR MONTHLY ENERGY USAGE AND THEREFORE SAVE MONEY ON HOUSEHOLD BILLS.

#50 – Gas & Electric – Lower The Temperature Of Your Hot Water

This is a remarkably easy tip for saving money on your household bills. What happens when you run your tap? Is the water too hot to touch? Do you ever need your water to be that hot?

The hot water heater is a major energy drain in most homes, accounting for about 14% of energy costs. For the majority of households, the water is kept hotter than most people ever need.

To keep the water at that heat in your home takes a lot of energy, which will cost a great deal of money.

ACTION POINT: GO TO YOUR BOILER AND REDUCE YOUR HOT WATER TEMPERATURE BY A COUPLE OF DEGREES. KEEP MOVING IT DOWN UNTIL YOU REALIZE THAT THE WATER ISN’T HOT ENOUGH FOR WHAT YOU NEED.

#51 – Gas & Electric – Stop That Heat Escaping

You spend a lot of money heating your home, but much of that heat could be escaping without you being able to feel the benefits. However, there are a number of ways that you can reduce how much energy escapes your home, and it doesn’t cost a bomb to put these in place:

Loft insulation alone can save you up to £175 a year, according to the Energy Saving Trust, and this can be installed for free by either the government schemes, or through energy companies. British Gas, for example, is offering free insulation worth up to £1,000 to all households, regardless of their energy supplier. To qualify for this, you must apply before the end of November and your home must also meet certain requirements (e.g. having less than 60mm of loft insulation).

Cavity wall insulation could add another £135 per year of savings in your energy costs.

Also, some vulnerable people can take advantage of the Warm Front scheme, which pays a company to improve insulation on your loft, cavity walls and hot-water tank. To qualify, you must receive Pension Credit with your state pension, have an income below £15,860 and receive Child Tax Credit or Working Tax credits, or claim income support.

Even if you can’t get this insulation for free, it may be worthwhile improving the insulation in your property to reduce your bills. You can also take more obvious steps, like closing windows and doors to stop heat escaping from rooms that you are trying to keep warm.

ACTION POINT: HAVE A LOOK AT THE GOVERNMENT SCHEMES TO SEE IF YOU COULD BENEFIT FROM FREE INSULATION FOR YOUR LOFT OR WALLS. EVEN IF YOU CAN’T, IT MAY BE WORTH INVESTING IN THIS TO REDUCE YOUR WASTED ENERGY AND RELATED COSTS.

#52 – Gas & Electric – But, Don’t Trap That Heat In

On the other hand, you shouldn’t be trapping that heat in on your radiators, as it can be extremely inefficient. By placing items, such as clothing, on your radiators, you are effectively doing the same thing as when you insulate your loft and walls.

However, the problem here is that you are keeping the heat within the clothes and hence you have to use a lot more energy in order to heat the room.

Instead, you should be trying to circulate the warm air as efficiently as possible, which you can do with radiator boosters, which are effectively a fan which pushes the air from behind your radiator around the rest of your room:

Also, drying clothes on radiators is not recommended as it can lead to damp and rot in the room in which you are drying the clothes.

ACTION POINT: DON’T DRY CLOTHES ON YOUR RADIATORS AND PROMOTE CIRCULATION OF HOT AIR IN YOUR ROOMS WITH A RADIATOR BOOSTER.

#53 – Gas & Electric – Put Some Clothes On

This is advice straight from your grandma: “You’re cold? Then put on a jumper”. And, if you are looking to save money on household bills, clearly she is right. Instead of putting on the heating, just pop on another pair of socks if your feet are cold, or put on a thick jumper or cardigan.

Whilst I don’t recommend that you risk hyperthermia by not putting the heating on, in spring and autumn months, you can save a lot of energy, and money, by avoiding putting the heating on and simply popping on a couple of extra layers.

ACTION POINT: DON’T PUT THE HEATING ON – STICK ON A SWEATER!!

#54 – Gas & Electric – Submit Your Meter Readings

Another sneaky tip of those blasted energy companies is that they will hold onto your cash. Generally when you start with a new energy provider, they will estimate your usage and set up a direct debit for you to pay every month.

Then, if your actual usage is higher, they will contact you to increase your direct debit to ensure that your account is always in credit.

However, they are much less likely to contact you if you are paying too much. They will just let the credit (the difference between what you’ve been charged and what you’ve paid) sit in your account.

Obviously this money isn’t earning you any interest while it is sitting in the energy providers account, but instead is actually is earning the energy company interest!

So, submit your meter readings on a regular basis and flex your direct debits to make sure that you aren’t making large overpayments and not putting your money to good use.

This is even more important if you are in credit card debt for example. Having £200 sitting in your energy suppliers’ account due to overpayments you have made on your direct debits is even more painful when you are paying high interest on debs elsewhere.

ACTION POINT: CHECK YOUR ACCOUNT ONLINE TO SEE IF YOU HAVE A LARGE CREDIT BALANCE. IF THIS IS THE CASE, CONTACT YOUR SUPPLIER TO REDUCE YOUR MONTHLY DIRECT DEBITS AND GET A REFUND ON YOUR BALANCE.

#55 – Gas & Electric – Replace Your Boiler

All of the tips so far have been how to reduce the amount of energy you use, and thereby saving money on household bills as a by-product. However, all your efforts to save energy may be in vain if you still have an energy inefficient boiler.

It is estimated that boilers account for over 55% of what you spend in a year on energy bills. The average energy bill in the UK in 2014 was £1,265 per year.

So, that means that around £700 per year, or nearly £60 per month, comes from your boiler. The Energy Saving Trust also estimate that replacing a “G-rated” boiler with an “A-rated” could lead to savings of up to £340 every year.

The problem is that these savings do not come cheap. One of the cheapest and most common boilers of this type, the Valliant Eco TEC Pro, costs £1,100.

Therefore, you basically need to work out the payback period on getting a new boiler, and if your savings each month will justify getting a new boiler.

It is also worthwhile checking out the government ECO scheme, which qualifies home owners to have their old inefficient boilers replaced completely free of charge. However, the criteria are quite strict and so this won’t apply for many people.

ACTION POINT: DETERMINE YOUR ESTIMATED ANNUAL SAVING OF YOUR CURRENT BOILER AND AN A-RATED FUEL EFFICIENT BOILER. THEN, COMPARE THIS TO THE COST OF BOILER INSTALLATION TO SEE IF IT IS WORTHWHILE.

#56 – Gas & Electric – Consider Solar Panels

This may seem like a fairly drastic way to save money on your household bills, and to be honest it is. In fact, it is more akin to an investment. However, with “fixed” returns of up to 10% per year depending on your usage and installation, it is an option which is appealing to many households.

I won’t go into any great detail here, but highly recommend that you read more in our detailed article below if you are interested:

Related Article: What Are The Returns on Solar Panels UK? (Moneystepper)

ACTION POINT: READ OUR DETAILED GUIDE ON SOLAR PANELS TO DETERMINE YOUR ESTIMATED RETURN ON INVESTMENT (ROI) FOR INSTALLATION. WITH SOME PEOPLE NOTING AN ANNUAL FIXED ROI OF UP TO 15%, THIS CAN BE A GREAT OPTION FOR MANY.

#57 – Water – Consider Installing A Water Meter

This is a tip that hugely divides people. That is because for some, installing a water meter can indeed save them money every month, but for others it will lead to higher bills.

Effectively, if you are currently not on a water meter, you need to try to estimate whether you are using less water than you are being charged for.

Standard water billing works on “average usage” for your area, and hence you personally may be using less than that. If that is the case, having a water meter installed could end up saving you money.

The problem is, without having a water meter, it is very difficult to estimate how much water you are using. For most people, the following rule of thumb will best determine whether a water meter will be right for you:

“As a rough rule of thumb, a water meter will save you money if there are more bedrooms than people in your household.”

However, this is incredibly general. So, have a think about what the “average” person uses, and what you use. If you think that you are under the average, then go ahead and get one installed.

Luckily your decision (at the time of writing) is not final. If you choose to switch to a water meter, you will have a trial period of 12 months, during which time you’ll be given the option to switch back to your old charges.

However, in certain areas of England, metering is becoming compulsory and hence you won’t have such freedoms.

ACTION POINT: IF YOU BELIEVE YOU USE LESS THAN THE AVERAGE AMOUNT OF WATER, YOU CAN HAVE A METER INSTALLED ON A 12-MONTH TRIAL. IF IT ENDS UP COSTING YOU MORE, YOU CAN REVERT BACK TO YOUR OLD CHARGES (T&Cs APPLY).

Ways To Save Money On Household Bills – Mobile Phones

As mobile phones (mainly thanks to Apple) have become an increasingly important part of our lives, maintaining a mobile phone (especially a smart phone) has become ever more expensive. Often the price of the phone is wrapped into the contract, on which you can end up paying lots of interest without even knowing, and hidden charges for data and calls abroad can soon add up.

Therefore, follow these 7 tips to keep the cost of that smart phone as low as you possibly can in order to save money on your overall household bills.

#58 – Mobile Phone – Opt For SIM Only Deals

Recently, a listener to the Moneystepper Q&A Podcast posed a question related to obtaining an upgrade on her existing contract compared to a SIM only option. You can read the full show notes by following that link, but the crux of the answer was that she could save over £400 over the course of two years by going with a SIM only deal rather than her contract.

The basis of the SIM only plan is:

Buy your phone (either new or second hand) upfront from the cheapest provider possible (I personally got mine from Amazon) Get a SIM only deal whereby you pay a certain amount each month for a goodybag of usage. The price and contents vary, but the example we use is with giffgaff where you can get 500 minutes, unlimited texts and 1GB of 4G data for only £12 a month Change your goodybag each month depending on whether or not you exceeded your usage.

Not only can this save you hundreds of pounds, but you’ll also be able to avoid being locked into lengthy contracts.

If you sign up to giffgaff using the banner below, you’ll earn £5 free credit when you order your SIM. Win-win!

ACTION POINT: SEE HOW MUCH YOU COULD SAVE BY COMPARING SIM ONLY OPTIONS AGAINST YOUR CURRENT CONTRACT. IF YOU WISH, WE OFFER A £5 FREE CREDIT WHEN YOU ORDER YOUR FREE SIM WITH GIFFGAFF WITH NO OBLIGATION OR CONTRACTS.

#59 – Mobile Phone – Buy Second Hand / Reconditioned

As we discussed in tip #58 above, you are much better off buying your mobile phone upfront rather than through acontract.

Moreover, I personally am of the opinion (just like for cars in tip #18) you should opt to buy a second hand phone rather than a brand new one.

For instance, a new Apple iPhone 16GB 5s currently costs £299 on Amazon. However, you can get a “like new” condition second hand phone from the same site for only £205.

I personally did this with my last phone, and it was just that: like new. I couldn’t see any difference between what I received in the post and a brand new phone. Equally, there was no difference in the returns policy.

The only difference was the price tag, where I got the same functionality for £94 cheaper in this case, which is a whopping 32%.

In this world of consumerism, we have a horrible tendency to buy and throw away. This is not great for the environment that we live in, and moreover it’s not great for our bank balance.

ACTION POINT: WHEN BUYING A NEW PHONE, AS LONG AS THE RETURNS POLICIES ARE IN PLACE, DON’T BE AFRAID TO GO SECOND HAND TO SAVE A SIGNIFICANT AMOUNT COMPARED TO BUYING BRAND NEW.

#60 – Mobile Phone – Only Pay For What You Use

This seems like a really obvious thing to say, but millions of people fall foul of this every month in the UK. If we needed milk for a round of teas, we’d buy one pint. We wouldn’t buy the six pint bottle and pour the rest away.

However, this is exactly what millions of people are doing with their phone contracts. We have already recommended that you go for SIM only when you choose your mobile phone. Within this, there are different levels of monthly goodybags that you can choose from, ranging from £5 per month (for 100 minutes, 300 texts and 100mb of data) to £20 per month for unlimited amounts of all three.

Many people opt for the most expensive for “freedom”. However, with many people now using facetime and skype for free video calls, and whatsapp and similar services for messaging, if you are careful with your data usage, the £5 per month option would be sufficient for many people.

Given that this package has unlimited free minutes to other giffgaff users, if you and the people you speak to most frequently all get this deal then I’d be surprised if you used more than 100 minutes per month.

And, regarding the data, I actually turn off my data when I’m away from wifi unless I need it for something specific (like finding a building, or checking if someone has sent me a whatsapp if I’m meeting them). Using this kind of “data diet”, 100mb should be enough to get you through the month.

If it’s not, you can move up to the next level: £7.50 for 250 UK minutes, unlimited texts and 500MB of UK data.

ACTION POINT: TAKE THE GIFFGAFF CHALLENGE! WITH A LITTLE PLANNING, I THINK THAT MOST PEOPLE COULD SURVVIVE ON THE £5 PER MONTH PACKAGE. WHEN YOU COMPARE THAT TO YOUR CURRENT CONTRACT, YOU COULD BE SAVING UPWARDS OF £30 EVERY MONTH.

#61 – Mobile Phone – Look Out For Free Wi-Fi

As mentioned above, you can drastically reduce the amount of data that you use by making sure that you turn your data off when you are away from wi-fi, and that you only turn on data when you need it. The good news is that in 2015, free wi-fi is everywhere.

In fact, in a city centre, you’ll find it hard to identify areas where you are more than a couple of minutes away from free wi-fi. You’ll find them in pubs, cafés, restaurants, shops, train stations, libraries, all over the place. In some cities, they’ve even started to install “citywide wi-fi” where you can simply log onto the free wifi from anywhere.

It’s important to be safe and aware of cyber hacking (so avoid using online banking and making purchases on shared wi-fi to be safe), and you’ll often have to provide details to get access. However, setting up a separate free email account just for this is an easy way to avoid the associated marketing.

By always using this free wi-fi, and turning off your 3G or 4G data while you are out and about, you’ll see your data usage fall dramatically and you’ll be much more likely to be able to live off the £5 per month deals we recommend in tip #60.

ACTION POINT: TAKE ADVANTAGE OF FREE WI-FI RATHER THAN GOBBLING UP YOUR DATA ALLOWANCE. SET UP A “FAKE EMAIL” FOR THIS TO AVOID EMAIL MARKETING SPAM IN YOUR MAIN INBOX.

#62 – Mobile Phone – Use Services Like WhatsApp & Facetime & Skype

So, that is your data allowance reduced, but how can you use less calls and text messages.

Well, as long as you are making calls when connected to wi-fi, you can use Facetime or Skype to contact other smartphone users for free.

Otherwise, you can check your home phone deal to see if you have periods of free calls to avoid using up your minutes allowance.

Also, remember that on our recommended giffgaff deals, you get unlimited calls to other people on the giffgaff network – so make sure your husband, wife, girlfriend, children, parents and best mates are all on the same deal!

For text messages, you can use WhatsApp messaging (or even messaging through Facebook) whilst you are connected to wi-fi in order to maintain your allowance if you don’t have unlimited messages in your deal.

ACTION POINT: MINIMISE YOUR CALL AND TEXT MESSAGE USAGE BY TAKING ADVANTAGE OF FREE SERVICES LIKE FACETIME AND WHATSAPP WHILST YOU ARE CONNECTED TO WI-FI.

#63 – Mobile Phone – Plan Your Trips Abroad

Although it is slowly getting better as European Regulation is enforced against phone contract providers, using your mobile phone abroad can still be pretty expensive. For example, the standard O2 rates are currently:

5p per minute for calls to landlines or mobiles

3p per minute to receive calls

8p to send a text message

2p / MB of data

Whilst these aren’t horrendous compared to what they have been in the past, connecting to data for a few hours and making a few lengthy phone calls can soon see that bill spiral.

The solution? The same as for when you are at home. Turn off your data unless you’re connected to free wi-fi, and make calls and texts through Facetime and WhatsApp.

If you absolutely must use your data whilst you are out and about, then you can plan for this by buying “bundles” in advance for heavy usage. If you are just loading tripadvisor to find a good restaurant, then turn all other data usage off other than that specific app or browser, and only look at what you need.

ACTION POINT: PLAN AHEAD TO MINIMISE THE COST OF CALLS AND DATA WHILST YOU ARE ABROAD. IDEALLY, AVOID USING YOUR PHONE AT ALL OUTSIDE OF FREE WI-FI AREAS.

#64 – Mobile Phone – Be Wary Of Insurance

We have covered this in the insurance section above, but it’s definitely worth reiterating here. In my opinion, not one single person in the UK should have mobile phone insurance.

Remember the rules:

if you can afford to replace it, then you don’t need insurance

if you can’t afford to replace it, then you shouldn’t be buying it and you should be opting for a cheaper phone.

Many insurance policies on mobile phones can cost so much in premiums that the cost of the insurance can exceed the cost of the new phone within 2-3 years. On top of that, there are many exemptions that exist which mean that even if you did make a claim, you are not guaranteed to get a payout.

Mobile phone insurance is one of the most profitable products for insurance companies, and therefore one of the worst products for you.

ACTION POINT: NEVER TAKE OUT MOBILE PHONE INSURANCE. IF YOU CAN AFFORD TO REPLACE IT, YOU DON’T NEED INSURANCE. IF YOU CAN’T, THEN BUY A CHEAPER PHONE!





Ways To Save Money On Household Bills – Home Phone, Broadband & TV

Right then – next up in the ways to save money on household bills is your home phone, broadband and TV. I’ve grouped these all together as they are often provided by the same companies and can all be negotiated together.

Once again, you may not like these “cutbacks”, but if you are looking to save money on your household bills, then implementing both of these tips will help you achieve that.

#65 – Home Phone & Broadband – Shop Around

You guessed it. The first tip is to shop around, usi