Living expenses and consumer debt levels have been on the rise for some time, but the credit crunch has only recently started to bite. It has become a struggle to find the additional money needed to pay debts and cope with basic living costs.
Conducting an income and spending analysis means that ways can be identified to cut costs, save money and reduce credit card debt. There is a large amount of waste in most personal budgets so it is possible to identify simple ways to save money and cut living expenses.
Save Money By Getting a Remortgage
If it has been several years since the last remortgage, there is a strong possibility that the borrower is on a Standard Variable Rate (SVR). SVR only serves to help the lender as the rate is typically 2% or more above the Bank of England base rate.
It is possible to save money by getting a remortgage. Getting a tracker or fixed rate mortgage can literally save hundreds every month. For example, a fixed rate mortgage at 5.5%, as opposed to an SVR mortgage at 7.5%, would save £250 each month.
The Rent a Room Scheme
It is possible to make a tax free sum of up to £4,250 a year by renting out a room. This can provide a useful source of additional income, especially if a property is larger than needed. If selling a larger house to buy a smaller one isn't possible, renting a room provides a financially viable alternative and could help pay the mortgage.
Cut Living Expenses By Reducing Work Transport Costs
Getting to work each day isn't cheap, especially given the inflation-busting rises that the train companies continue to announce. Cycling to work or organising a car pool scheme could cut living costs by as much as 75%.
Lower Utility Bill Costs
Use online price checkers to identify the cheapest suppliers of gas and electricity. Don't just use the same supplier because it is convenient as loyal customers almost always get the worst deals.
Enter a Debt Management Plan to Make Funds Available For Living Expenses
Are bank overdrafts, unsecured personal loans and credit card debt consuming a higher percentage of the net monthly income? A Debt Management Plan is a great way to make money available for living costs and priority debts, like the mortgage.
It is possible to freeze all interest and charges in most circumstances. A minimum contribution of £100 a month is paid to a debt managemt company. After taking their fee, the remainder is apportioned to creditors on a pro rata basis. Customers only pay what can be afforded.
Utilising one, or a combination, of the above ideas can free up enough money to make a material difference to peoples' finances. If struggling with credit card debt or making payments on personal loans, it is important to contact a debt counsellor before proceeding with a debt solution.
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