Day 4 of our week-long series on how to eliminate debt. Today we’re going to look at simple ways to make some extra money that can be used to chip away at your debt.
In the article on snowballing debt I gave you an example of how as little as £50 extra every month could save you time and money off your repayment schedule. £50 may actually be a lot of money for some of you. Don’t panic. There are plenty of ways to make a little cash on the side and it’s a lot easier than you think.
So, how do you get that much needed cash? You have three courses of action: cut back on your spending, earn more money, or combine both these actions. I’m not teaching you to suck eggs. You know that you need to spend less and me telling you the same thing doesn’t help that’s why I have some practical examples for you.
Ways To Spend Less Money
As I said in the article on how to snowball debt, I’m sure that you can find even £50 extra per month for servicing your debt. This relatively small sum should be by no mean life changing. Here we go:
Make A List Of You Bills
I don’t mean the essentials. Yes, it’s nice to think that with a little creative thinking we can slash the cost of eating and travel but can you? If you don’t eat out often or use your car for short pointless journeys then it’s unlikely you can reduce your bills by much.
What we’re targeting here are your unnecessary luxuries and payments that can be reduced. Sky TV, mobile phones, rent, gas and electricity. Write them down.
Slash And Burn
Unnecessary luxuries are a financial burden and the money you spend on them could be better used elsewhere. It might seem harsh but ask yourself why you are spending money on the full Sky package when you have debts?
Go through the list and decide what you really don’t need. Don’t be soft now. The more money you can save the more you have to start attacking your debt. When all of your loans are paid off you can once more subscribe away to your heart’s content (as long as you don’t fall into financial hot water again).
Some Bills Can’t Be Offloaded
There are some outgoings that can’t be removed. Mortgages, home rental, utility bills; they’re all constants and, unless you live in a cave, there’s little change you can avoid them. You need to look at ways they can be reduced. Here are a few ideas for you to mull over:
Remortgage Your Home
The easiest way of cutting the cost of home ownership is to remortgage. Currently, interest rates are at an all time low so now’s the time to get the best deal. Here’s an example of the savings you can make:
Cost of Mortgage: £189,000
Current lender rate: 4.4%
Monthly payments: £1,061
By shifting your mortgage to an interest rate of 3.99% you’ll save yourself £54 per month (£1007 per month in repayments). You might think this is easier said than done but if you have a decent level of equity in your house you can get even lower rates.
Cutting Insurance Costs
Don’t forget local insurance companies. It pays to see what’s on offer locally as some companies simply aren’t on price comparison sites.
One of the easiest ways to save on your insurance costs is to move every year. Yes, it does involve a little effort but, as an example, my car insurance costs jumped by £200 per year after my introductory offer expired. By moving to another supplier I not only managed to avoid the rise but also received an additional saving of £37 per year. I know it’s not much but its £3 per month towards that figure of £50.
Bundle Absolutely Everything
Stop paying for your home broadband and telephone bills separately. Bundling everything into a single package will save you £££’s. For some ideas of how much a bundle will cost and the amount you can save have a look at www.broadbandbundles.co.uk/.
Reduce Your Mobile Phone Bills
Mobile phones are expensive but, for many of us, they’re a necessity. There are ways to cut the cost of your tariff. Start by looking at your bills. Do you have an unlimited text package that you rarely use? If so, change it. Likewise, an unlimited call plan might not be suitable for you. If so, change your plan.
Here’s a slightly more drastic idea for you. If you have a mobile phone that you like and you’re not interested in getting a new handset come contract renewal time the start thinking about PAYG tariffs. You will have to top up as and when required but here’s an idea of the savings you can make from this little inconvenience:
Vodafone (HTC Desire S with 300 minutes, unlimited texts and 250MB of data):
Monthly cost – £26 per month for 24 months.
That’s a total of £624.
Let’s say you’re a light user and you only need about 180 minutes and 100 texts per month:
PAYG Plan from Vodafone:
Monthly cost – £15 (when you sign up of the Freedom FreeBee tariff)
A saving of £1 per month that you can use to snowball your debt.
If moving to a PAYG package isn’t for you then ask what extras you can get from your monthly rental plan. Does your phone provider offer free mobile insurance? What about a free tablet or flat screen TV when you take out a new contract? They are gimmicks but they’re also great for selling on places like eBay.
Ask For A Reduction
Regardless of what you pay rent on don’t be afraid to ask for a reduction in the cost. Ask your landlord (it helps if you can find faults or problems with the property first). Ask your mortgage lender for a better deal. Ask everyone you’re paying for a better price.
In fairness, most of them will say no but don’t let that stop you.
I rent a house. After about 6 months of watching workmen fix every little problem with the house I got a bit annoyed. I read through the agreement and the original description of the property which both suggested it was a superb house ready to move into. Obviously not. I contacted the estate agent and the landlord and highlighted the disparity between the description and the reality. Then I asked for a reduction in the rental. Result? £80 per month back in my pocket.
Earn More Money
It sounds simple but earning more money might seem out of reach to some of you. Family commitments or time may prevent you from getting a second job but there are other ways to earn more cash.
Do odd jobs for other extremely busy people is one way to make some fast cash. If you’re green fingered then tidying gardens at the weekend is one easy way to make some money. Ask yourself what skills you have that other people have a demand for.
If you need to give your creative juices a little jolt then take a look at oddjobnation.com/ to see what’s in demand.
Buy It, Sell It
Did you know that there are people out there making a decent amount of cash buying and selling stuff? PreLoved is a perfect example of this idea in action. Here’s how it works:
First off, what do you have that people want? An old computer that you’re going to bin? It might be worthless to you but it could also be worth £30 to someone that wants to use it as a firewall. That old analogue TV might not be off any use to you but it could be worth £20 to somebody else.
That’s not the only way to make some fast cash. Buying from classified ads sites and selling on eBay for a higher price can earn you an awful lot of money. This also works the other way round. I’ll cover the ins and outs in a future post.
One more day to go in this series on how to crush your debt. Tomorrow we’ll be looking at some of the pitfalls that can occur and the common mistakes you can