Saturday, 4 January 2014

Happy thrifty new year ~ or how I reduced my bills by over £100 a month

As 2013 winds down, it’s time to start thinking about what you want to accomplish in the New Year.  I know many of you will be setting some new financial goals. Here are my top frugal living posts to get you started!
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Happy New Year! 

I'm starting the new year as I mean to go on, and one of the decisions I've made (I'm not saying resolutions because they never last) is to be even more thrifty than before. It's a bit of an odd decision in some ways, because I'm two months into my new full-time job so on paper I'm much better off than before, but let me explain.

It's over 10 years since I've worked full-time, and in all of those years I was earning a modest salary so after paying all the essentials (mortgage, bills, petrol, etc.) there was little left over. Financially, I've had to be very frugal but I've always been good at managing money so we've still had a comfortable home, a car, decent clothes and a UK seaside holiday every year. 

But after years of living on a part-time wage - and there were many times when it seemed like we were managing by the seat of our pants - I really want to get some savings started as well as an emergency fund for when the unexpected happens. 

Credit card
One of the things I've been working towards is paying off my credit card bill, which at its highest was about £4,200. That may not seem a lot to some people but to me it was a huge burden, and over the past couple of year I worked hard to pay off as much as I could each month. A couple of months ago I finally got the statement I had worked towards - a zero balance! Man, that felt good!

Credit card bill with zero balance
Something to celebrate - a zero balance
I've kept the credit card, but not before asking the credit card company to reduce the credit limit to £1000. This serves two purposes - if I ever became the victim of credit card fraud the amount of damage they could do is vastly reduced, plus it removes the temptation to buy something I can't otherwise afford. I'm only going to use the card in real emergencies, and as soon as I have some reasonable savings I'll cancel it altogether.

Over the past couple of months, since starting my new job, I've been working on a new budget for household expenses, savings, and paying off existing debts. Well, I say debts but apart from my mortgage the only debt I have left is a bank loan which I took out just over a year ago. I used it to consolidate some other debts (some of which dated back to my divorce) and it also had a lower interest rate than the other debts I was paying off. It was a good decision for me, but now I feel the pressure to pay it off as quickly as possible. If it ran its full course it would run for another 22 months but I want to pay if off in 12. I've already made one extra payment and will continue to overpay until it's paid off.

Some of the other ways I'm saving money are:

Menu planning. I've never really done this before but because I get home much later than before it's handy for the girls to know what's planned and they will often start preparing the meal for when I get home. (Or, even better, the Teenager will often cook the whole meal - result!) But the main advantage of is that it saves a lot of money - who knew! I now plan the weekly shop around our menu plan, and only buy what's on the plan. If I'd realised how much money I would save I'd have done it years ago. It sounds so simple, and honestly it is.

Scrutinising my bank account. I've always checked my account for bank charges and errors because banks make mistakes like anyone else, but last month I went through my direct debits and cancelled a few that were non-essentials or no longer needed, such as a magazine subscription, a website subscription, the teaching union fees (I'm no longer teaching) and a mobile phone contract that we didn't use. More on that in a minute. All in all, it took me about 10 minutes to save just over £35 a month.

Mobile phone contracts. I pay for three mobile phones - one for me, and one each for my daughters. I don't really like PAYG phones because I like the girls to have a phone on them for safety, and I don't like the idea of them running out of credit and being unable to contact me, so I've always used monthly contracts but I've reviewed what we have and saved a lot of money.

Mobile phone companies like to tie you into long-term contracts - these days it's not unusual to have a 24 month contract. I waited until our contracts expired - ask your provider if you're not sure - and contacted Virgin Mobile to renegotiate. Usually, they will offer you a massively reduced monthly premium just to stop you taking your business elsewhere and when you're no longer under contract you have the control.

I rang Virgin when the Teenager's contract expired but I didn't like the offer they made so I asked them for a PAK code for the phone (which allows you to unlock it to use with other phone providers). I then shopped around, before the Teenager suggested going with GiffGaff who have cheap monthly payments (you choose from a variety of packages) and,  best of all, no contract! It was very easy to arrange online and once they'd sent us the Sim card we inserted it into the Teenager's unlocked phone. Job done. The cost went from £17.99 with Virgin to £10 with GiffGaff, a saving of £7.99 a month.

Tall Daughter's contract ran out in October and mine ran out last month. I rang Virgin again, and this time they were keener to keep our business. I turned down their offer of new phones (which would automatically tie us in to a further 24 months) and opted to continue using the phones we already had (both work fine, they're just a bit scratched) and a Sim-only 12 month contract for both phones - my bill was reduced from £12.34 to £5.00 a month, and TD's went from £18.50 to £7.00 even though we still have the same phone, text and internet allowances. That's a saving of £18.84 a month.

In addition, when I was checking my direct debits I noticed that there was a third Virgin mobile payment going out each month. I rang them and asked why if I was still being charged for The Teenager's phone but after several phone calls, two emails and a lot of raised voices (okay, just one raised voice: mine) it turned out they had made a mistake when renewing TD's contract the previous year and had charged me for a third (unused) contract. Bearing in mind that I must have allowed the initial permission I'm also at fault, and given that I like to think I'm pretty good at managing my finances this was a major error on my part. For over 12 months a direct debit for £12.99 had been leaving my account for something I never had or used!  I think I missed it because it was a similar amount to another mobile contract and it had nothing to identify it on my bank account other than 'Virgin Mobile'. Seriously people, check your bank account and query every single payment.

So, all in all, after cancelling the third contract (and getting a refund) and renegotiating the other two that's a saving of £31.83 a month. Add that to the other savings I made by cancelling other direct debits and that's a very handsome saving of £61.83 a month. Combine that figure with the menu planning savings and I've easily reduced costs by over £100 each month. Not bad, especially when you consider I thought I was already pretty thrifty!

I'm going to continue saving money wherever I can and although it would be very tempting to use the extra money to fund our lifestyle, I'm putting it into a savings account to give us a bit of stability.

Are you thrifty? When was the last time you checked your bank account? What are your best money-saving tips for 2014?