HOW LOCKDOWN HAS HELPED US WHIP OUR FINANCES INTO SHAPE

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Paperwork always fills me with ‘The Fear’.

Which is why, up until now, my coping method for life admin has been to ignore it for as long as possible. I made ALL the excuses, I didn’t have time (which, to be fair, I often didn’t), I’d do it later, I had to do something else first… but the reality was, I just couldn’t be bothered.

The bigger the paper mountain got, the less I wanted to deal with it.

But then lockdown happened, and – for the first time in years – suddenly I had some spare time in my day. Since all of life’s fun stuff had been put on hold anyway, I decided it was time to ‘woman up’ and sort out that paper mountain and find some easy ways to cut costs at home.

I took a deep breath, and dived in…

• I went through every single expense, cancelling old direct debits and subscriptions we didn’t really need anymore. Some of them I ummm’d and aaah’d about getting rid of, but in five months I haven’t missed a single one of them.

• I contacted both my credit card companies to find out which one had the lowest interest rate. It turned out one had an 18-month 0% balance transfer rate on offer, so I consolidated the two on to the lower rate. The balance transfer fee was paid off in three months, meaning I was saving a chunk of interest for the remaining 15 months.

• Our utilities and bills were all coming out on different days, so I rang up each individual company and arranged for the payments to come out on the first of the month (some allowed me to simply change the date, while others required me to pay a pro-rata amount of the monthly bill to push the date back). Now, as soon as they’ve come out, I can see at a glance what we have left, which helps me budget for the rest of the month.

• We were paying an exorbitant amount on our power and gas each month, so I signed up to Look After My Bills, a service that searches for the best energy deal, and automatically switches you over for hassle-free savings. Our new rate saves £30 every month – result!

• Going through the bills made me realise how much we spent on groceries each month, so I made a pact to reduce our weekly bill AND our amount of food wastage. I dropped the pricier ready made items and invested in a slow cooker, and started making all dishes from scratch. Not only was the food cheaper to make, it was yummier too. The more fresh salad and veggies we ate, the more we realised we didn’t miss the meat-heavy meals we’d previously enjoyed. Now, we have at least two vegetarian dishes each week, which is also saving us money.

• OH used to buy his lunch each day, which – as well as being expensive – wasn’t particularly nutritious either. I started making a little bit extra each dinner time so he could take a container of leftovers with him the next day (check out the delicious dishes you can make from leftovers on the Love Food Hate Waste website).

• We had some straggling debts leftover from our big home renovation – ‘buy now, pay later’ agreements for our sofa and carpets. Although they were both 0% interest rates, we decided to use the money we’d saved from our cutbacks to pay them off and further streamline our monthly outgoings. We also made a pact that, moving forward, we’d save to buy outright rather than tying ourselves debt again.

With our expenses trimmed back, now we started to think about how to get the very most out of our money. Lockdown has been a wake up call, reminding us how quickly life can get flipped upside down, and we knew we wanted to make ourselves as secure as possible. We looked at lots of options, including saving into ISA’s, increasing our pension contributions or overpaying on our mortgage, but just couldn’t decide the best route to take.

• To help clarify what we wanted to do, I used finance calculators to figure out how easy ways to cut costs at home. Pigly is a free-to-use personal finance site that takes away the guess work (for the UK, try Money Saving Expert or the Money Advice Service).

You just enter your personal details (in the case of a loan, for example, the amount you owe, the length of your loan and your interest rate) and it calculates exactly what you pay in interest. From there, you can work out how much you’d save by increasing your repayments and settling the loan earlier.

Seeing it in black and white made me realise how much interest we were actually paying, and was the push I needed, especially when I could see even a modest increase in repayments had a big cumulative effect.

Using the mortgage calculator, I quickly realised the most effective way for us to save money long term was to start overpaying each month. That way, we’d be paying back the borrowed amount at a faster pace AND simultaneously reducing the interest that gets added on top.

By choosing to overpay, rather than remortgaging to higher repayments (by reducing the term of the mortgage) we have much greater flexibility – if our financial situation suddenly changes or we have an unexpected expense, we can divert that overpayment. Added to that, we have the safety net of being ahead of our mortgage repayments, and not in immediate danger of falling into arrears.

It’s a great feeling to be back in control of the family finances. Moving forward, there will be no more ignoring the paperwork or feeling anxious when I check the bank balance.

Lockdown forced us to make better decisions; now I know exactly where every penny is going and not a single one is wasted.

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