FOOL'S EYE VIEW
Seven Ways To Kill Your Bills!

By Alison Hunt (TMFAlly)
June 21, 2005

Bills! We hate them but we still have to pay them. But there are many ways we can save money – it simply takes a little time and effort. If you'd like to potentially save thousands of pounds, read on:

1. Mortgage

Do you know the rate you're paying for your mortgage? If it's your lender's Standard Variable Rate (and you're not tied in) you could save a lot of money by finding a better deal.

Say you have a £100,000 repayment mortgage, at an interest rate of 6.75% for 25 years. Your monthly repayments will be £690.91 each month and you'll pay back a total of £207,273.

Now, imagine you were to re-mortgage to a flexible deal with an interest rate of 5%. Your payments would now drop to £584.59 each month leaving £106.32 in your pocket.

What's more, you'll now pay back a total of £175,377 saving yourself nearly £31,900!

But that's not all. If you were to re-mortgage to the cheaper deal but kept your payments the same at £690.91 (i.e. overpay each month by £106.32) you would pay back a total of £153,534 – saving yourself nearly £54,000 on your original deal.

Plus, you'll shave 6.5 years off the term of your loan as it would now take just 18.5 years to pay off!

Alternatively, if you're a Fool with a lot of cash savings, you can make the most of them by re-mortgaging to an offset/current account mortgage but make sure the interest rate is still competitive.

Re-mortgaging doesn't have to be complicated. If you're able to think about finding a better deal, start by picking up the phone and asking your lender what sort of deals it can offer you - you could check its website first to see the sort of deals it offers new customers. This is usually the cheapest way to get a better deal as you avoid many of the fees involved.

However, if you have no joy, check out Teletext and the weekend newspapers for the Best Buy tables – many providers will even pay the legal and valuation fees for you. Finally, don't forget to check for expensive application charges or redemption penalties.

Find out more in our Mortgage Centre.

2. Insurance

If you're one of the many people who were persuaded to take out a life insurance policy, for example, through your mortgage lender, I have bad and good news. The bad news is that you're probably paying around 3x more than you should. But the good news is you're not tied to this policy; why not find a cheaper one?

Mortgage lenders make a tidy profit from selling us various insurance policies, relying on our apparent desire for 'peace of mind'. But over the course of a mortgage you could be needlessly shelling out thousands of pounds for cover that's not even particularly good.

By taking some time to find adequate cover yourself you can save a fortune. And a broker could help by searching many companies at once.

Fool partner The Idol, for example, is a broker which can provide a competitive quotation within minutes for twelve companies (including Norwich Union, Liverpool Victoria and Legal and General).

And don't just stop there – home and motor insurance costs can be slashed too. And remember to check out any useful money-saving deals: Egg, for example, is offering Free European family annual travel insurance (worth £80) if you take out its household cover. Or Egg members can opt to buy the travel policy for just £15.

So forget loyalty. Cut your premiums by shopping around.

Find out more in our Insurance Centre.

3. Switch Provider – Gas and Electricity

How long have you been with your gas and electricity providers?

If the answer is 'as long as I've had the house' then you're in for a treat! By switching suppliers, it's reckoned the average household could save around £170 and even if you have switched previously there may be more savings to be had.

Remember that dual fuel contracts are convenient but not always cheaper – it may be worth using two providers. And paying by direct debit will often earn a 10% discount.

You can switch Gas and Electricity supplier in our Get out of Debt Centre.

4. Water

Think you can't save money on your water bills? Think again if you're part of a small household. Fitting a water meter can save you a fortune. Try this calculator to see if you could save money.

5. Switch Provider – Telephone and Mobile Phone

Ah, phone bills...especially fun for students when everyone quibbles over who should pay for those calls to unidentified numbers. But phone bills don't have to be expensive!

Sign up for Call1866 and you can benefit from free calls to UK landlines (you just pay the 2p connection charge!) and calls to mobiles for just 3p/min at weekends (12p/min during the week). And if you call a lot of mobiles in the week, Call1899 charges just 10p/min.

And that mobile phone bill can be thrashed too – use Switch with Which? to check that you're paying as little as possible for yours.

You can save money by switching telephone company in our Get out of Debt Centre.

6. Broadband

When was the last time you checked your broadband connection speed? If you signed up for 1MB a year ago with NTL, for example, did you realise you should now be receiving 2MB for the same price?

If the answer is no, and you know a 3GB usage allowance will be sufficient for your needs, why not save yourself the princely sum of £7 per month by giving them a ring and dropping down to the basic package (which has in turn has been upgraded from 512kB to 1MB). Instead of paying £24.99, you'll now pay just £17.99 - and this goes for BT customers too.

And for those still on dial up, use this Broadband checker  and you may find switching could save you money.

You can switch Broadband supplier in our Get out of Debt Centre.

7. Transport

According to the Office of National Statistics, UK households spent an average of £418 per week in 2003-04.

Around £61 of this was spent on transport – the highest category of spending. This included £28.10 on buying vehicles, £23.80 on petrol/diesel, repairs and servicing and £8.80 on public transport such as rail, tube and bus fares.

If you commute to work, make sure you're paying as little as possible in travel expenses. Paying for an annual ticket for rail travel can often save hundreds of pounds when compared to paying monthly. And if this seems like a lot of money to fork out at once, consider taking out a 0% credit card and spreading the debt over six or nine months.

If you drive to work, why not lift share with others who live locally? Some companies will even reward groups doing this with a cash incentive. And if you're part of a two-car household but rarely use one of your cars, joining a Car Club (and selling the second vehicle) could save you a fortune. Or why not try cycling – you'll save cash and benefit from the exercise too - and you could cancel that gym membership.

So if you fancy saving some money, why not follow these tips and try to kill at least part of your biggest bills!

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