Day 56: Money Saving Expert @Home

As Savvy-Saver-In-Training, I’m an apprentice to anyone who’ll have me. This time, I looked to Martin Lewis of MoneySavingExpert.com for help.

Their “Money Makeover” has eleven tips in the “household” category which, they claim, can save you upwards of £6,750.

1. Gas and electricity

• The problem is that I’m a renter in a shared house. I’ve no idea how long I’ll be staying in my current pad, and to get the cheapest deals you need to tie yourself in for at least two years, or incur early exit fees that negate the benefit of switching suppliers in the first place. Secondly, opting for direct debit gives you great savings. Unfortunately, I can’t rely on my housemates to transfer the money before the bill leaves the joint account. Every time we accidentally fall into the overdraft, we incur a £25 fine, which also negates the savings you get initially.

Savings: Nil

2. Food shopping

• The argument goes that we’re all duped by the supermarket. We are too thick to understand that just because something is “three for two” doesn’t necessarily make it a great deal. Apparently we’re comforted by the words “discount” and “savings”, too blind to read our shopping lists (because we’re all doing shopping lists now, boys and girls, aren’t we?).
• As I’ve written about my food shopping before, I’ll leave you to read my other posts on this subject.

Savings: £50/month

3. Council tax

• It’s said that 400,000 homes are in the wrong council tax band, and are paying too much. Within minutes, you can check how much all of your neighbours are paying, to give you an idea of whether you’re one of the 400,000. I clicked onto direct.gov.uk and had a nosey to see what the houses around me were paying. With the exception of one house, which has been extended, and is now much larger than all the rest, we are all in the same band. No savings to be found here, then.

Savings: Nil

4. Home phone & broadband

• MoneySavingExpert says that you don’t need to pay any more than £15 per month to get top-notch telephone and broadband. Well, now I feel like a numpty. I did a lot of scouting around a couple of months ago, trying to get the best deal for our house. Orange was the one I settled for, and they charge us £25 per month for high speed broadband and unlimited phone calls at any time. The only upside I can see is that at least our bill is divided by three, so I’m only paying £8.83 each month. Ah well, you win some, you lose some.

Savings: Nil

5. Childcare costs

• Alleluia, praise the Lord! Not applicable.

Savings: Nil

6. Cut boiler cover costs

• Fortunately, my landlord is responsible for our boiler repair (which is rather frequent, in my house). No savings for me.

Savings: Nil

7. Free international calls

• I don’t make any international calls, but if I did, I’d use Skype anyway.

Savings: Nil

8. Calling mobiles

• My mobile contract gives me more free minutes than I use, and our home phone gives us free calls to mobiles.

Savings: Nil

9. Should you use a water meter?

• Already got one.

Savings: Nil

10. Cut your digital TV costs?

• We only have Freeview, which, as the name implies, is… free.

Savings: Nil

11. Direct debits

The instruction is thus:

“Being a Cancellation Hero is simple: unearth EVERY wasted regular payment and stop any you no longer need or use. “

As I’m pretty hot on keeping my finances in order (if not in the black) I’m well aware of what each of my direct debits is for. On the website people complain about having paid white goods insurance for over five years, without even realising! I’m not sure how you could do this, but I, for one, do not.

Savings: Nil

Well, Mr Lewis. I’m not very impressed with your eleven tips. You told me I would save seven grand, but the only saving I’ve made, I was already doing, without your help. Sigh. Still, I hope this has helped someone.

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Day 51: Plan A

Are any of you also part of the see it-want it-get it brigade? I certainly was, and it’s taken quite a lot of hard work to change that. Now I just see it-want it, and feel rather disappointed I can’t get it then and there.

So, can I ever buy what I want, or am I doomed to eternal frustration?

Of course I can still buy things, even outrageously expensive things, if I so desire. I just have to make sure that I have the money to do so before I hand over the plastic, rather than guiltily stressing out afterwards. The new mantra is want it-save for it-get it.

Let me give you an example. There’s something I’ve wanted for a long time, but thought I’d never realistically be able to afford. Well, two things actually. Flights to America and to Cambodia.

Unlike, say, a new laptop or even a car, I can’t write down the exact price of these, because they’re constantly changing. This would be the first step: write down how much the thing you want costs. Whether it’s a mansion in the centre of London, or something much smaller, you need to have an idea of the cost, so that you have something solid to work towards.

Secondly, we need a time frame. For me, I know that I can get flights much more cheaply if I go before I reach 26. That gives me around 650 days to save. On the basis that I go before I turn 26, a rough estimate would be £800 for Cambodia and £500 to the US.

Thirdly, get out that calculator! In my case, to save £1,300 in 650 days would be £2 per day. So, roughly the price of a cup of coffee.

Depending on your personal situation, you might need to switch the last two points over. For example, if you know that you can only afford to save a very limited amount per month, you’ll have to work out your time frame on that basis.

 

Now then, do we all have a chubby pink piggy bank to pop in those pounds every day? A daily act of physically putting aside the cash would be reasonable for something like a meal out, or a new pair of jeans, but I’d probably need a life-sized piggy to save for my ambitions.

A better idea for me is a savings account and a standing order. It took me about two minutes to set mine up. I have the set amount going out from my current account on the first day of the month; then I have a leftover amount to live off for the rest of the month. If I forget all about the savings account for the next 650 days, and do absolutely nothing else, I will have amassed enough to see my family in Cambodia, and friends in the States.

It’s something I wasn’t sure I’d ever be able to do, but as the sand grains slip through the hourglass, slowly but surely, I’ll get there.

Day 1 : Facing Up To It

Like an alcoholic at her first AA meeting, today I’m taking the first step in admitting that I’m in trouble, and that I need help.

The debt crept up on me. Every month I’d get a couple of hundred pounds worse off, but I shrugged it off. Somehow, in my head, I was rich. It didn’t matter if I had the shadow of a steady deficit, because I’d be fine. Why? Because I’m middle class? Because my parents and grandparents never got into debt?

Mine is an old-fashioned family, where the word “debt” is synonymous with “shame”. It’s just not done. My parents have never bought a sofa, holiday, car, house or telly on credit. They work, and they save. I suppose I assumed I’d live my life in the same way, without actually putting in any effort to do so.

Admitting it, then, is the first step. I’m using two overdrafts and a credit card. I’ve got a car on credit. A mobile phone on a lengthy, pricey contract. I tied myself into a year-long gym membership because I could afford to do so at the time.

Deep breath. I’m in debt. I’m overspending to the tune of £200 a month. I need to change. This is my journey. Now. Live. Today.

Step 2: Potentially even harder, even more humiliating. I scuttle back to my parents. The very people who have brought me up to live within my means, and tutted and scowled at my compulsive purchasing and ugly materiality. I ask for £500, to stop the debts from boiling over.

In return for a promise to live more frugally, and to pay back the loan by 30th November, I am thrown a rubber ring. Now I just have to learn how to swim…