How to save £1,000 in a day
The key at this time of year is taking a day to cut your bills and treating it like a job. This saves many £1,000 over the year.
Step 1: Do a detailed budget to check whether you spend more than you earn.
Step 2: Go through every bill and check energy, phone, cards and mortgage payments, train trips, petrol purchased, tax rebates, childcare costs and more to see if you can cut costs. See Martin's detailed Give Yourself A Money Makeover guide for full help on every element.
Step 3: If you're still spending more than you earn after that, then it's time to cut back.
Energy price simplification
From the start of this year energy providers, including all of the big six suppliers, were banned from offering any more than four tariffs each per fuel and per meter type. The idea is that this will simplify the energy market by making it easier to compare deals, though some of the market's cheap tariffs have been lost due to the rationing.
In practical terms though, what you do hasn't changed. My top tip is to still use an Ofgem approved comparison site to see if you can get a cheaper tariff by switching if you haven't already done so recently. Most households can beat price rises for up to four years with a cheap fix.
2014 is the year mortgages are back in vogue
For me 2014, is the year of the mortgage. There are two reasons for this:
- Help to Buy (part 2). This provides an insurance policy for mortgage lenders, so if you put up 5% on a home worth less than £600,000 (£400,000 in Scotland), the Government will insure the next 15% for the lender in case of problems. This means many more 5% deposit mortgages will be on offer. See the Government's Help to Buy information. Though remember, just because you can get one doesn't mean it's right for you. Ask yourself how well covered your repayments would be. Use a mortgage calculator, for example, to work out whether you could afford it if interest rates rose by 3%.
- Remortgaging returns. For those who've already got a mortgage, the big thing to watch out for is interest rates rising. We've already heard many eminent pundits suggesting the base rate will rise from 0.5% in 2015, or even as early as the end of this year.
If you're on a standard variable rate now, or you're on a cheap deal which is ending soon, or you're looking to remortgage - and you couldn't afford to pay your mortgage if rates rose to 4% - then you should consider whether it's right to lock into a cheap fixed deal now. If you're not sure, speak to an independent mortgage broker.
It's confirmed: Christmas will be happening again this year
While it may be gone for now, I have exclusively confirmed that Christmas will happen again in 2014, and it will be on 25 December. The advantage of this knowledge is it means there's time to plan.
First it means if you can, stock up on non-perishable Christmas goods now while they're heavily reduced.
Sainsbury's has Christmas napkins for 60p (were £2) in-store, while John Lewis has reduced its posh baubles online and in-store to clear. You can also get reduced-price Christmas cards and wrapping paper online at M&S, including multipacks of 20 cards for £1.50 reduced from £4. Lakeland has an assortment of Christmas gifts and accessories in its online sale, including party crackers for £4 reduced from £8 and six Santa candles for £3 reduced from £7.
Plus of course, if you have a friend who you know what they'll want, you could always get them the gift now.
More importantly though - work out how much you spent on Christmas, divide it by 12, and start putting that much cash away each month. So £600 is £50 a month. If you can't afford to do that, then you need to cut back on what you plan to spend, as it's very unlikely you'll be able to simply magic that cash out of thin air in December.
If you're saving it, I'd simply use a straight savings account, as the cash is protected and it pays interest. The top tax free easy-access cash ISA is from the Post Office at 1.8% year, though it includes a bonus, so remember to transfer after 18 months. It also only allows two withdrawals a year and you need a minimum deposit of £100. For standard savings Coventry Building Society is 1.6% a year, but it only allows four penalty-free withdrawals a year.