British credit card holders owe an average of £2,000 on their plastic.
To clear a debt of £2,000 on a card with an interest rate of 17% will take two years assuming a monthly repayment of £100.
To clear that £2,000 with a monthly payment of a more affordable £30 (at 17%) will take 17 YEARS.
But people are turning to other ways of borrowing, including payday lenders, friends, family, store cards and other loans for cars – even day-to-day living costs.
Life saver: 50 ways to leave your debts behind.
According to one survey, average household debt stands at around £13,000.
To clear a debt of £13,000 at a modest 6% interest with a monthly repayment of £100 will also take around 17 years to clear.We’ve run out of money.
By Richard Browning
There are, however, plenty of simple ways to make significant savings on your regular spending that could clear your debt in less than a year. Here are…
This is Money’s top 50 – updated – money-saving tips
These tips may appear light-hearted but are deadly serious.
1. Change your attitude to your mortgage
Unless you make the mistake of buying a train ticket in Britain on the day of travel, the most expensive item you are ever likely to buy is your home. If you’re not in the privileged position to pay cash, make sure the loan you use to finance it is the best available. For example, if you are paying your lender’s full standard variable rate (SVR) you are probably paying hundreds of pounds a year more than you need to. There are thousands of deals to choose from and while it is vital to check the small print for hidden catches, this is a relatively easy way to save a lot of money. Remember: loyalty to your bank benefits your bank, not you.
Even better, if you can afford to make overpayments on your mortgage, you’ll clear your debt several years early and make massive savings. For example, if you borrow £100,000 at 6% over 25 years, you’ll pay it back at £643 a month. The total charge for credit will be £93,000. But if you can overpay by £100 a month you’ll clear the loan in less than 19 years, giving you 6 years of mortgage-free living and saving a staggering £25,000 in interest.
Links: This is Money mortgage finder | Mortgage calculators
2. Clear your credit card debt
One of the golden rules of financial planning is to clear your most expensive debts first, in other words your credit cards. OK, credit cards offer a convenient way to pay for goods and services but if you can’t clear the balance every month, consider a low-cost loan as an alternative. Do the sums: a credit card debt (APR 16.8%) of £2,500 over five years will cost £1,212 in interest. A loan at 7.8% will cost £527. A saving of £685.
Link: This is Money credit card finder
3. Cut the cost of your fuel bills
Because official inflation calculations don’t include the price of things that go up, energy companies are allowed to increase bills by 10.4% whenever they feel like it. They try to do it every time you blink. Average gas and electricity bills now stand at around £1,500 a year. In exchange for one fifth of a state pension, you get completely incomprehensible bills and guff from the chief executive about how everyone else is to blame. But that doesn’t mean you need to be ripped off. If you’ve never dumped your original supplier you can still save more than £300 a year. If you have switched before, you can, as a result of this flawed privatisation, switch again to any number of companies that will charge you about the same. If you believe that gas and electricity prices won’t fall in the near future, you can fix your bills for up to four years. It is very easy to switch. You can do so with a few clicks of the mouse. Your new supplier will take care of the formalities.
Link: Must read – Is it worth switching?
4. Consider installing a water meter
We take our tap water for granted. And why not? The companies behind the supply exist to make a profit, we pay them to supply water and have every right to expect it to flow from our taps. But if it doesn’t rain the water companies have to import bottles of Evian and put up prices. It costs 2p to flush the loo – but that rises to about two quid if you have to use Perrier. So you may want to consider the possibility of installing a meter. If you have a big home with few occupants you may be surprised to learn you could halve your annual bill.
Link: Should I install a water meter?
5. Cut your home phone bills
BT used to be called British Telecommunications but shortened it after a survey found that only 4% of school leavers could spell telecommunications, while 6% could spell BT – even if they believed it was a sandwich without the lettuce. It was also shortened to reflect its habit of charging more and more for less and less. It owned the infrastructure it could do what it liked. If you must use your phone there are scores of cheaper alternatives that package your telephone, television and broadband access, some that offer low-cost alternatives using your existing BT line.
Have a look. You may be in for a surprise.
Link: Cut your phone bills with This is Money
6. Consider a pay-as-you go mobile
If you’ve ever argued that that a mobile phone is a necessity rather than a luxury – great news, you win! This year it was reported that statistically everyone in Senegal and Algeria now has a mobile phone.Something everyone has loses its luxury status. What can end up being completely over the top, is the type of phone you can’t afford and the packages of minutes, texts and that internet access measured in megas that no one understands which are by-and-large sold by liars. Point is, if you hand over £50 a month to your mobile phone company, that’s £600 a year – or around £1,000 of your gross salary. But you can buy phones for less than a tenner and top up with a pay-as-you-go vouchers for not much more. Algerians aren’t all using iPhones, you know.
Links: How to get a cheaper smart phone | Compare more than 300,000 mobile deals
SAVING MONEY SINCE 2005
When this article was created eight years ago, the world of money was a very different place. Years of cheap credit had sucked common sense from millions of people who filled the void with a spending binge. By 2005 this was represented by an average credit card debt of £2,000 each. It seemed a lot of money then. It was to get a lot worse.
By the end of the binge in 2008 we’d reached almost total financial and social meltdown.
On the plus side in 2005, the price of petrol wouldn’t smash the £1 a litre barrier for another two years, people could still afford to heat their homes and a university education cost at least £27,000 less than it does now.
Fast forward to Britain in 2013 and it’s a wonderful place – if you’re rich.
Average credit card debt has stayed at around £2,000 but remember, trying to pay that off at £30 a month will take around 17 years.
7. Make a shopping list
If you’re not organised or haven’t got a pen, this one is really hard. But stick with it and you can eat well and save enough for a holiday without thinking about it. Part of the problem is the power of the supermarkets. These giant museums of food have spent millions on tricks to make you put stuff you don’t want in giant trolleys, keep in the fridge for a week and then throw away. We each chuck out nearly £500 of food each a year. That’s moronic but that’s the supermarket business model. Make a shopping list. Dig out the cookery books, plan a few meals and only buy what you need.
Saving: £20 a week = £1,040 a year
Link: Mysupermarket for price comparisons
8. When was the last time you went to the market?
One way to beat the supermarkets – that is, to eat healthily for less – is to use your local market stalls. Lower overheads generally mean lower prices. Where supermarkets have ‘half-price’ strawberries that aren’t half price, the local market will often have the same fruit for a quarter of the price of the pretend half-price ones.
9. Consider own-brand goods
Not all own-brand supermarket products these days come with a health warning and a stomach pump. They don’t need to. Some are quite good. Obviously, the modern supermarket trick of reducing the size of the packaging and the weight of the contents means you can buy a 24-pack, multi-sack of crisps that between them only contain the shavings of one potato but you can still buy a tin of Sainsbury’s own-brand baked beans for 25p and a loaf bread containing grams of protein at Asda, Sainsbury’s or Aldi for 50p. Enough said.
Link: Own-brand baked beans comparison | Asda | Sainsbury’s
10. Don’t buy designer labels
Celebrities are given expensive clothes to wear. You’re not. Thankfully, millions of people have woken up to this and buy copycat fashions from the likes of Asos, which is now massive; bigger in fact than many of the logos slapped on the clothes at High Street designer jumble sale TK Maxx. If you’re still tempted, face up to the fact that you may only wear the outfit once. Can you justify paying hundreds of pounds for a name? And can you honestly say you can tell the difference at a distance between a £600 designer bag and a £9.99 one from the market? Think about it.
Links: Prada – note, no prices | ASOS.com offers discounted brands
11. Sell your clutter on eBay
Take this quick test: You’re at home. Open a cupboard. Look inside. If it’s full of clothes you haven’t worn, or ‘good ideas at the time’ you haven’t used, for, let’s say, three years – you don’t need them. So why not sell them to someone else who does? For fans of the understatement: Ebay is quite well-known and popular now. The great thing is you really can flog any old garbage – for a commission. Tip: you may want to buy a few items first to build up your rating as a respectable eBayer before you start selling.
Income: Will depend on what’s in your cupboard
Links: Selling Christmas presents on ebay | Alternatives to eBay
12. Use your talent to earn extra cash
If you’re not a pop star by the time you reach your 20s you’re probably never going to be. That’s probably just as well as the only way to pop stardom in 2013 is if Simon Cowell wants to marry you. But you may be able to use your talent as a guitarist to teach other wannabes the rudiments of the 12-bar blues.
Income: It’s not unreasonable to charge £20+ an hour
Link: How to make a fortune on You Tube
13. Do DIY
We’re a nation of obsessive DIYers and for around £100 you can take a course at your local adult education college to improve the skills needed to tackle most household repairs. If the college runs plumbing courses you could soon be on track to wiping out costly call-out charges and extra insurance policies once and for all. Remember to film yourself at work so that if it goes wrong you can sell the footage to Harry Hill (see link).
Link: How to build your own house | You’ve Been Framed
14. Shop around for the cheapest household insurance
Unless you drive – car insurance is mandatory – you don’t need insurance. But it’s strongly advisable, especially now so many people surf the internet while driving. And can you afford to foot the bill if your house burns down or his smashed up by a 4×4 driver playing Angry Birds, who flees the scene like a sparrow in a catapult? Probably not. There’s a multitude of rubbish on the internet and many highlights of previous years have faded into uselessness – but one of the lasting oases of online usefulness is being able to find cheaper insurance. You can compare hundreds of policies in minutes.
Links: This is Money’s insurance deals finder| How to beat the car insurance trap
15. Don’t automatically renew annual travel insurance
If your annual holiday insurance policy is about to expire and you don’t have a holiday booked, DON’T renew the policy. You’re handing your money over to cover an eventuality that won’t happen. People do this! Don’t! You wouldn’t have car insurance if you didn’t own a car. Some people probably do, dagnabbit. But you definitely wouldn’t insure your pet giraffe if you didn’t have a giraffe. So don’t insure a holiday to the Serengeti you haven’t booked it. Simply restart the cover again the next time you book a trip.
Link: This is Money’s travel insurance finder
16. Choose cheaper breakdown insurance
The breakdown sector is dominated by big companies with short names such as the AA and RAC. But being towed home if your car breaks down is just another form of insurance like any other and there are scores of cheaper alternatives, some with names made up of actual words.
Saving: Up to £100 a year
Link: This is Money’s breakdown insurance finder
17. Are you paying too much for your life insurance?
Ever since we started washing our hands, humans have been getting healthier. As a result we’re living longer – and the cost of insuring the unthinkable is getting cheaper all the time. If you were sold a policy when you took out or mortgage you may have been under too much stress to shop around. You could be missing a trick.
Link: This is Money’s life insurance finder
18. Book early
Low-cost airlines are growing up. Easyjet lets you choose a seat. Norwegian is planning transatlantic flights for £300. Michael O’Leary, the boss of Ryanair, has even promised to be nice. Just remember, only a few seats on each flight are sold at bargain-basement prices and once they’re sold, the prices rise. So book early.
Link: Skyscanner – the air fares comparison site
19. Book your own package
As High Street travel agents die out quicker than the ingredients of rhinoceros horn love tonic, it seems that we still love a good old package holiday.And why not?You just book online or by telephone. Easy life. By combining car hire with flights, the agents can often bring the costs down. You’re also protected, accommodated and flown home if you’re grounded because Iceland pulls another volcanic-ash-based PR stunt (everyone’s heard of Eyjafjallajökull now). But if you want to save money and your holiday consists of flights, accommodation, transfers and possibly car hire, then take this test. Order a brochure or get a quote from a leading holiday company and work out the price of your holiday including all the complicated supplements. Now go online and, starting with the flights, try to put the same package together.
Links: Holiday bargains picked by TravelMail
20. Learn to say ‘no’
It’s easy to give in to the demands of a screaming child in a packed Poundland on a Saturday afternoon. ‘Get me that bottle opener! I want a bottle opener. I know it’s poorly made and won’t last more than seventeen and three-quarter minutes. But I’m six! I want one. It’s only a pound!’ Similarly, how often does a ‘swift half’ after work turn into a £151.12 drinking session? Saying ‘no’ a few times a year will do wonders for your bank account.
21. Go pre-paid for cheaper illnesses
One of the best things about being ill, and let’s face it there aren’t many, is that NHS prescriptions cost only £7.85 per item. This is amazing value unless you need, say, four prescriptions a month. Four x £7.85 suddenly equals £31.40 or £376.80 a year. But one of the best things about being that ill is that you can cap the amount you pay using Prescription Prepayment Certificates (PPCs). You pay a fixed fee every three or 12 months and it covers all your prescriptions during the period you’ve paid for. A three-month all-inclusive PPC costs £29.10 and for a year it’s £104, a saving of £270 on the four-item example. You can pay by direct debit. Time to learn your 7.85 times tables.
Links: Learn more and apply for a PPC | Help with health costs
23. Avoid expensive days / evenings out
Plenty of museums are free. For those that aren’t, join Artfund, which offers access to 200-odd museums, historic houses, galleries and castles for a small annual fee. Theatres aren’t free. But if you live in London you can get half-price tickets to the West End theatres every day at tkts. Better still, if you regularly go out in London join one of the theatre clubs that fills empty theatres and concert halls on the QT from about £3 a ticket.
Links: The Audience Club | Play by Play | Tkts
24. Beat the ticket touts
Ticket touts earn their living by getting hold of tickets that are ‘otherwise unavailable’. You don’t stand a chance when promoters are handing tickets straight to them. But here’s some news: most tickets are available to everyone when they first go on sale. You just need to know when they go on sale. Simply sign up to for the free ticket alert newsletters from the ticket main agents to ensure that you’re first in the queue. And make sure you’ve signed up to your favourite bands’ websites for the insider knowledge.Saving: £100s
Links: Ticketline | Ticketmaster| Stargreen| Gigantic| Seetickets | Toy Dolls
25. Don’t be a Bucket – or try to keep up with the Joneses
Trying to keep up appearances is a costly illness. It’s called snobbism. A snob, says the dictionary, is someone who ‘vulgarly admires or imitates someone of superior social position or wealth and looks down on those he considers inferior.’ Famous snobs include the monstrous comic creation, Hyacinth Bucket. Don’t be a Bucket. Remember, you cannot judge someone by what they have because you don’t know how they got it. Chances are they’re in more debt than you are.
Link: This is Money’s guide to getting out of debt
26. Trade down your car
So, you bought an American sports utility vehicle (SUV) that nets 15 miles to the gallon on a whim. Obviously we’re all very impressed – especially by the personalised number plate and the way you can Tweet while negotiating narrow lanes outside schools. But can you honestly justify the ongoing expense? If not, get rid of it. Then visit a car supermarket, where you can choose from thousands of cars at knock-down prices. If you’re a true money saver, consider an ex-rental model which you can pick up for a fraction of the cost of a new one.
27. Ask yourself: do I really need this?
Imagine the scenario. It’s lunchtime and you’ve got an hour to kill. You find yourself in a department store and there’s a sale on. You pick up a beautifully packaged selection of barbecue tools, an antique-look cast-iron chimenea and associated garden paraphernalia. And it’s half price. Now, stop! Ask yourself: Do I really need this? Exactly. You live in a flat. It doesn’t even have a back door. Put it down and walk away.
Link: See all our latest money saving tips
28. Walk/cycle to the station/work
29. Get off the station before your usual stop and walk
We may be creatures of habit but isn’t it worth tinkering with the routine if it’s costing more than £50 a month in unnecessary fares?
Link: Living Streets – the pro-pedestrian campaign| The urban walking planner
30. Cut down your drinking
A few beers or wines after work a few nights a week is a financially debilitating state of affairs.
You no (sic) that. Hic.
Link: Calculator: Pleasures v treasures
31. Pack up smoking
Apart from the brands that launch special cheapo starter packs for children, every cigarette now costs about 40p. Those forty pees add up to around £3,000 a year if you smoke 20 a day.
Saving: Maybe £3,000 – wow.
Link: Get a free quit kit
32. Cancel your gym membership
Have you heard the one about the guy who in 1997, joined a pay-as-you-go gym and never went? Over those 14 years, it’s cost absolutely nothing. Yet plenty of people are happy to shell out £40 or £50 a month by direct debit to a gym they never go to. £50 a month for 14 years is £8,400 and that doesn’t include the crisps you have to buy from the vending machine after each visit. If you use the gym three times a week, great. If not, cancel your membership immediately. You’ll soon save enough to buy your own bike and, if you’re so inclined, a rowing machine. And if you can still afford it, a crisps vending machine. Consider running home from work three times a week. It’s free.
Link: We write a lot about gyms, it can be a sordid business
33. Use your library
‘The whatrary?’ I hear the cries from behind iPads across the country. And by the time this article is updated again, number 33 may well need replacing. But for now, the local library is still a mecca for the money saver. It’s like the best of the free bits of the internet under one roof – only really well organised. Your library means you’ll never need to buy a cookbook, guidebook or lifestyle manual and if you can bear to wait a few weeks in the queue for the latest blockbuster, you never need to buy books. CDs and DVDs are great value too.
Link: Find a library book that suits your interests | The Reading Agency
34. The three-for-two trick
At the time of writing, Sainsbury’s has so many ‘you have to buy two or we’re ripping you off’ deals it feels like they must be secretly filming shoppers who only buy one of the special packets of I Can’t Believe it’s Ham, Oh It’s Not for a documentary to help people studying for their psychology PhDs. Trick: buy none. OK, there’s something to be said for buy-one-get-one-free deals when they pass the ‘Do I really need this?’ test. But the three-for-two is a particularly cynical way of enticing shoppers to buy an extra couple of items to feed the bin.The ‘offer’ is always priced into the deal so do your sums and shop around.
Saving: It’s a principle at stake here
Link: How to beat supermarket tricks
35. Buy clothes and presents in the sales
If life has drained every drop of human dignity from your soul, bingo! – Boxing Day sales were created for you. For the rest of us, there are quieter mid-season sales where you can find most things you need for half the price it would have been if you couldn’t wait. Unusual sizes tend to remain unsold for the longest. So it pays to be slightly abnormal or wear stuff that doesn’t fit. Even thinking about Christmas before 1 December should probably be a crime. But if you’re genetically tuned to buy something for everyone, the money’s tight and you can’t find a doctor to rewire your DNA helix, then buy in bulk in the sales. You not only save money, but you enjoy stress-free pre-Christmases and no last-minute birthday worries.
Link: This is Money’s money saving tools
37. The Christmas lottery
The joy of giving is wonderful. But the chore of trying to work out which piece of meaningless crud to give to which relative you haven’t seen since the previous Queen’s speech is tiresome – and unnecessary. Instead of trying to buy a present for every relative in your family, try to get together beforehand and pick one name from the hat. You then buy one thoughtful gift for that one person rather than attempting to please everyone at considerable and pointless cost. Everyone gets a present, everyone saves money. This works. No one minds. If they do. You win because you weeded out a hanger-on.
38. The National Lottery – it won’t be you!
The odds of winning the Lotto jackpot are stacked 14m to 1 against each ticket. It’s like walking on to a football field and marking a blade of grass with Tippex then asking a blindfolded friend, whom you’ve spun around a few times to go on to the pitch and pick a random blade of grass. If he picks the same blade dabbed in correction fluid… that’s like, and as likely as, winning the National Lottery jackpot. The price of entering the lottery has recently doubled to £2. That probably won’t be included in official inflation figures. Have a go at the lottery for fun sometimes. It’s not an investment or a savings or retirement plan. Perhaps you should consider saving extra money in an Isa.
Saving: £2 a week = £104 a year
Link: Best savings rates
39. Use your Isa allowances
If you’re not already aware, you can save up to £5,760 a year in a tax-free savings account called an Isa (for the more financially savvy there’s also a stocks and shares Isa). It means you don’t pay any tax on the interest accrued. Circa 2013, a Government-backed scheme called Funding for Lending that pumps money into banks means they don’t have to attract cash by offering attractive savings rates. So they don’t. Eventually they will, and spare cash saved into an Isa will start attracting interest of a couple of hundreds of pounds a year on the full allowance again.
Link: Best Isa rates| Funding for lending, the silent assassin
40. Claim your benefits and tax credits
There was once a stigma in Britain attached to claiming benefits. That was largely removed as we swanned into the then new millennium and the Government put benefits at the heart of the family budget. Child Benefit, Working Tax Credit, Child Tax Credit and other employee-related tax benefits were an attempt to make life affordable for the low-paid. The Government has since changed and the headline tax change has been big breaks for millionaires. But if you are entitled to benefits you should still claim them. It could be the difference between life and death. Saving: £100s
Link: Confused? Ask a This is Money Expert
41. How saving £50 a month now can save you £120 next year
Do you pay your insurance premiums by monthly instalments? If you do, then consider this: you are probably being charged a premium of between 15% and 20% for the privilege. In other words, if your home and car insurance bill for the year is £600, you’re paying up to £120 a year in interest by paying monthly. If you are in a position this year to save up for next year’s premiums in advance, you can save money by paying the whole lot in one go.
Link: This is Money’s best savings rates
42. Do you need all those TV channels?
Britain has gone digital. If you haven’t – that’s not a telly you’re watching but a very dull, repetitive documentary called Reflections In The Oven Door. Good news: there’s a world of shows better than a mirror image of your own head to choose from. But choose wisely. Before you know it, you could find yourself with a package of movies, sports, more sports you’ve never heard of, or a whole year’s contract to watch one football match. Freeview is free. You can buy pay-as-you-go Premier League football online. Saving: £100+
Link: Finder a better TV deal | Pay-as-you-go Sky football, movies
43. Bin the ready meals
The benefits of being able to heat an entire three-course dinner in a box from frozen in three minutes on full power, remove film, stir and heat for another three and leave to stand for a minute are generally outweighed by the mental anguish of suddenly realising that six minutes plus stir AND standing time is FAR TOO LONG! But have you thought about the costs? If speed is key, you can make fresh tomatoes on toast for about 20p, which is much healthier, cheaper and tastier than moist boxed fish-based mush crumbles.
Link: Is it cheaper to cook from scratch of buy a ready meal?
44. Take up a money-saving hobby
Hobbies not only open your mind to new experiences but they also take up your time – important if you would otherwise spend it in the pub drinking away your hard-earned money. If a painting takes 200 hours to complete, and you normally get through a pint an hour. That’s a saving of a least 700 quid a picture. Think about it. Get painting. Go fishing. Make quiche.
45. Fight your parking tickets
If we didn’t all love getting parking tickets there’d be a lot fewer traffic wardens cowering behind the nation’s wheelie bins with their notebooks, cameras and complex mental turmoil waiting to pounce on impoverished motorists with an ‘it’s not about raising money, it’s to keep traffic moving’ penalty notice. In the unlikely event that your affection for traffic wardens has been crushed because you’ve been awarded a parking fine you feel was unjust… simple, fight back.
Link: How to fight parking tickets
46. Avoid extended warranties
Electrical goods are more reliable than ever. If your new radio won’t last three years perhaps it’s not worth buying in the first place. Think about it: how many times has your fridge broken down in the last five years? And do you really need the hassle of claiming for repairs to a £10 toaster?
Link: Read our guide to extended warranties
47. Shop online
The internet is gradually taking over. It’s a slow process. Britain’s fourth largest supermarket, Morrisions, didn’t launch its online grocery service until… ah it still hasn’t. It will get better, if only because there’s nothing left to buy in the High Street apart from hand-me-down toys, ornaments and belts in charity shops. For newcomers, there are plenty of comparison websites to help find the best prices for bigger items. Go on, give it a try, it’s more fun than queuing up for half-an-hour at the supermarket checkout – especially if you can’t find your blummin’ Nectar Card at the end of it.
Saving: Your sanity
48. Make lunch – get free car
You spend a conservative £5 a day on lunch plus the luxury of £1.50 on a coffee and £1 on snacks, it’s nothing. It’s only £7.50 a day. Or £1,800 a year. Or, for the hard of understanding, the cost of a brand new £10,000 car after a mere five years. Over your working life you can easily chomp away more than £100,000. And you know what? An awful lot of people spend considerably more than £7.50 a day. While making your own lunch isn’t free, remember: a sandwich is just some bread with some stuff in between. And for the price of a small pension, does the coffee really taste that good?
Link: Perfect packed lunch
49. The Citizen’s Advice Bureau is your friend
If your debts are out of control please seek help immediately from your local CAB – their advisers can help you work out a sensible strategy to get you back on your feet.
Saving: It could save your life
Link: Find your local CAB
Current Accounts Of The Week
50. Add your own tips, save this article, send it to a friend
Technological progress since 2005 means you can now help your friends save money by sending them a link to this article by using the clever buttons below. Please add your own money-saving tips in the comments box too.
Online savings: The internet has been largely a boon for the cost-conscious shopper.