British credit card holders are thought to owe an average of £2000, whilst average household debt currently stands at around £13,000.
According to one survey, these debts – and their interest – can take up to 17 years to clear in regular monthly installments. Despite this, people continue to borrow and are increasingly using lenders, friends, family, store cards and other loans to pay for assets and living costs.
However, there are simple ways in which these debts can be paid off. Saving money on your regular spending for example could see you clear a debt in less than a year.
Here are some simple money saving tips to consider:
Clear your credit card debt first
Clearing your most expensive debts first is vital for financial planning. If you cannot clear the balance of your credit card every month you need to consider a low-cost loan alternative. 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.
Consider pay-as-you-go or SIM
Often people will end up with a phone they can’t afford and packages of minutes, texts and Internet access that they don’t even use. A £50 a month phone contract can set you back £600 a year, so why not consider pay-as-you-go instead? Buying a phone and topping up each month could save you hundreds of pounds a year. Getting a pay-monthly SIM card is another low-cost option.
Go to market
Shopping at your local market stalls will ensure you purchase good quality fruits and vegetables that are a quarter of the price of supermarket goods.
Sell what you don’t want on eBay
If you have clothes you never wear or technical goods you never use you might as well sell them to someone who will. eBay is a trusted site for selling your own stuff for a commission, and if you effectively build up your ratings you can quickly become a trusted and popular seller and make a good profit.
Stick to the highstreet
Designer clothes and accessories are a luxury – not an everyday item many of us should be buying. Today highstreet stores such as Asos, Topshop and River Island have great quality copycat catwalk fashions for a fraction of the designer price. There are also sites that loan out designer gear for special occasions such as girlmeetsdress.com and wishwantwear.com.
Shopping around for cheaper insurance for your car, travel and household may be an arduous task, but it is essential for saving you money. Automatically renewing your current policy could see you forking out more than necessary. Sites such as Gocompare help you to compare hundreds of policies in minutes.
Other ways you can reduce your outgoings include:
- Stop smoking.
- Limit drinking to weekends only.
- Learn to say ‘no’.
- Ask yourself, “Do I really need this?” before making a big purchase.
- Walk or cycle to the station/work rather than taking public transport.
- Cut down on expensive days and evenings out.
- Book early – theatre tickets, flights, train travel.