The past year has seen UK plc slip into a recession made doubly worse by a simultaneous banking crisis, the effects of which have both conspired to rock the property market. As a result of these conjoining and unprecedented circumstances, hard-pressed homeowners are finding their equity shrinking with each news bulletin and everyday household running costs continue to spiral.
With no end in sight to the recession until at least 2010 according to most commentators, 2009 is predicted to be an extremely difficult year for all homeowners. To combat the worst effects on household finances, consumers have to become better informed to obtain the most cost-effective products and services. Indeed, for many in 2009, making one's money stretch as far as possible may well be the key to financial survival. Here are nine ways the average family can be better off to the tune of nearly £3,700 just by shopping around for everyday essential household services.
Resolution 1: Switching mortgage
Despite recent restrictions on lending, there are still a large number of mortgage products available for home purchase, subject to status. However, it is a fact that 50% of us still continue to pay the lender's standard variable mortgage rate. For those who have sufficient equity in their homes and a suitable credit rating, it is possible to get a much better deal by switching to an alternative lender.
How much saved: Ray Boulger of respected mortgage experts John Charcol advises that even in the current market, switching a repayment mortgage of £100,000 on a typical lender's SVR (Standard Variable Rate) of 5.5% to the most current competitive deal will save £1035 per year.
Resolution 2: Crushing credit card debt
The last decade has certainly seen prosperity and living standards rise, but most of this has been fuelled by cheap credit, credit which has to be paid back. According to The Consumer Credit Counselling Service, overall UK credit card debt has risen steadily in 2008 to around £54 billion, an increase of some £912 million since the beginning of the year. The average adult owns nearly 2.5 credit cards and has a personal credit card debt level approaching £2,300. The CCCS is now dealing with almost 50,000 credit card related debts per month, 3.5 times more than last year, so the problem is endemic. Usually, problems arise because of the interest rates charged.
How much saved: Complacency with credit card debt is a recipe for financial disaster so become a wise consumer and switch from expensive interest rates to more competitive rates on other cards. For example, a person with a £3,000 credit card balance on the typical standard APR (annual percentage rate) switching to one offering a 0% introductory rate would save around £510 interest per year even after taking into account the average balance transfer fee of 2.5%. You can compare the latest credit card deals on This is Money.co.uk.
Resolution 3: Reducing sky-high utility bills
Overall global fuel prices may have plummeted in recent months but the key concern for consumers is, following the massive resultant price hikes, why this hasn't percolated down through the system into lower utility bills now. With a little judicious web-surfing, consumers - particularly those who have never switched gas or electricity supplier before - can save a substantial amount off their annual fuel bills.
How much saved: According to leading comparison search site uswitch.com, a family paying the average dual fuel bill of £1293 per annum who has never switched before could save up to £350.
Resolution 4: Cutting water charges
The bane of low occupancy households is the disproportionate cost of standard water charges. For example, a couple of empty nesters living in a four-bedroom detached home will pay exactly the same water charges as a family of six living next door, yet use 70% less water. Some water companies allow consumers to change to metered water supply and if they are not happy with the savings made within the first 12 months, to revert back to non-metered billing.
How much saved: According to the Consumer Council for Water, a single person living alone in a property with an average rateable value could save around £100 by having a water meter installed. See your local water authority website for details on switching to a water meter.
Resolution 5: Booting and E-Baying
Two phenomena of the past twenty years are Ebay and car boot sales, both excellent ways of disposing of the redundant junk which ordinarily gathers dust in attics. Local boot sales are held every week throughout the year in most communities although they are more popular in summer. Ebay is a free registration 24-7 global marketplace where sole traders and individuals can sell unwanted items cheaply.
How much saved: Getting rid of old possessions via Ebay or a boot sale will free up useful room in the attic and, on average, should generate at least £500!
Resolution 6: DIY not GSI (getting someone in)
We're an undisputed nation of DIY lovers. Between August 2007 and July 2008, UK homeowners spent nearly £12 billion on DIY and home improvement products. Despite this, many of us are still quite lazy when it comes to fixing things around the home, much preferring instead to engage outside professional services.
How much saved: A professional decorator will charge around £750 to strip, prepare, re-paper and paint an average 25ft lounge. Just decorating two rooms in your home will save £1,500 - the equivalent cost of a decent week's holiday!
Resolution 7: Home Insurance
In the UK, we are brand loyal to the last when insurance renewal time comes around. Indeed, we rarely ever shop around to try and beat the renewal price offered. Insurance companies prey on this complacency and some of the worst deals are the renewal premiums made to existing policyholders.
Saving: Using one of the leading search comparison sites, the dearest quote for someone needing buildings and contents cover for a four-bedroom detached property in Berkshire was £560 and the cheapest equivalent cover, just £260 - a saving of £300.
Resolution 8: Banish your bank!
Banks have taken a lot of criticism over the last few months for being partially responsible for the credit crisis - but it always seems to be valued customers who suffer most with higher charges and continued poorer service. Internet bank accounts are safe, secure, 24-7 and pay so much more interest than an ordinary high street bank.
How much saved: If one were to pay an average salary into the best online current account, it could make an extra £100 a year in interest alone, around 40 times the poor rates offered by conventional high street banks. Compare offers at ThisisMoney.co.uk.
Resolution 9: A-rate your home
With the introduction of Energy Performance Certificates (EPCs) in the Home Information Pack, properties are now rated for energy efficiency similar to modern kitchen appliances, from A to G. Take a look at our guide to energy saving, guide to adding environmental value to your home and guide to installing renewable technology in your home for energy and money-saving ideas.
How much saved: According to a study by the Energy Saving Trust, making sure that each of your household appliances are A-rated will save the average homeowner over £50 a year on fuel bills. For free energy efficiency advice, log onto the Energy Saving Trust website.
related information
- how to improve your credit rating
- how to install renewable technology in your home
related links
- compare mortgage, current account and credit card deals at ThisisMoney co.uk
- uswitch.com
- Energy Saving Trust
- Ebay
- Find your local water authority
- Independent mortgage experts John Charcol
...for many in 2009, making one's money stretch as far as possible may well be the key to financial survival
