Where does all my money go?

4 tips to help you stay out of debt

By Alexandra Smith

But I think I need this hat!
Tip 1 - Don't use a credit card. The word 'credit' sounds positive so call it a 'loan card' instead. It would be practical to use a 'loan card' to buy food shopping if you've ran out of cash and then go on to pay off the total debt when you get your next wage. However, buying luxury items you can't afford and racking up a debt of hundreds of pounds which you can't pay back will just give you an extra unnecessary bill. Even if a luxury item is at a 'sale' price, you could be paying full price or even more if you factor in the ridiculously high interest rate your credit card company will be charging.

Tip 2 - Read your bank statements. If you double check where your money is going then you can mentally try to cut down on your spending. You may also have some old standing orders or direct debits for services you don't even use or need anymore. Cancel them with the company which takes the money rather than your bank in case you have to give a notice period (or else the company or your bank may charge you more or fine you for not paying up as agreed in their terms and conditions).

Tip 3 - Check your bills and renewal notices. Insurance companies and car-rescue services are good at sending you a quiet letter informing you that your insurance is due for renewal and that 'You do not have to do anything,' as they will take the money via your existing direct debit. If you check how much they're now charging with what you paid for the previous year then you may notice the bill has gone up by a few hundred pounds. Go on a market comparison site and get some new quotes. If you find a cheaper deal then call your old insurer to cancel your renewal with them before you sign up with a new insurer as you may find your old insurer will try to match your new quote. Remember to arrange your new insurance to start when the old one finishes and not before.

Tip 4 - Don't have a contract phone. If you don't use your phone much then clearly you'd be financially better off with a SIM which you can 'top up.' If you do use your phone a lot and can't cut down then at least get a contract which covers what you use and nothing more. If you call your provider when you're existing contract ends and suggest you can no longer afford to stay with them then they may be more helpful in getting a cheaper deal for you (especially if you keep your existing handset). If you don't plan to use the internet on your phone, check its settings and those of any applications you install because most handsets access the Internet automatically which may cost you extra if you're not on an Internet tariff.

Do you have any good tips to help us stay debt free?

© This article and its photo(s) are the property of Alexandra Smith. Only use or reproduce with permission.

Disclaimer: These tips are created from lessons I have learnt during my own experience.  With regard to the content and advice on this blog, Alexandra Smith makes no representations or warranties about its accuracy, reliability or suitability for anyone. Any reliance you place on the blog or its content is at your own discretion and in no event will Alexandra be liable for any loss, damage or injury in connection with your use.

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