Did you know that in 2017-18 the outgoings of households in the UK was greater than their income for the first time in nearly 30 years? I was reading a report by the Office of National Statistics and it got me thinking about those financial commitments many people have that we could perhaps lower (or scrap altogether) in order to make up that shortfall and live within our means.
I thought it would be a good idea to be honest with you about how I live and the costs that I DO have, so I’ll share those outgoing shortly but, first, here are 5 financial commitments I don’t have that others might…
I actually can’t remember the last time that I had a phone contract. I think it must have been during my first year as a student in 2005 and I probably got some kind of student deal at the time. Since then, I’ve been a Pay As You Go customer and for about 8 years I’ve been with giffgaff on a sim-only deal. Just to clarify, I’ve never worked with giffgaff or been sponsored by them, I just use their mobile services but I think if you order a free sim though this link I get some extra credit on my phone woo!
The reason I use giffgaff is because I can choose how much credit I want to add, when to top-up (it’s about £10 every 6-8 weeks) or whether I want to buy a ‘goodybag’ bundle for a month. I sometimes do this if I’m going away and expect to be using my phone more and need some data. Even then, I only usually get a £6 or £8 bundle so it’s not a huge expense for me.
The thing is, if you’re at home, or work, or college, or in coffee shops, hotels and restaurants, you’ll be connected to the wifi and won’t be using the data you pay for with your contract each month. Plus, if giffgaff-to-giffgaff calls and texts are free so most of the people I contact are also on giffgaff and we never pay a penny! You just have to have an active account and I think you need to top up once every 3 months to keep it going.
Could you do without your phone contract? Could you buy a handset (perhaps secondhand) and then just pay for the texts, calls and data you actually use each month? Would that save you some money on your mobile phone bills?
Now, I DO have a car, but I don’t have any finance on it. It’s far from new, but it’s in good condition, it’s reliable and it cost less than £1000 so I could buy it from my savings. I think one of the biggest financial commitments these days is having a car – possibly on hire purchase, with a personal loan, or through car leasing deals.
Is that somewhere you could save some money each month? Sure, if you have a nice new company car, you’re on to a winner (especially if they’ll pay all your expenses that go with it!) but if not, perhaps buying a secondhand vehicle would cut the cost of your monthly repayments and could even cost less to insure (let’s face it, the value of the vehicle is less so there’s less risk to the insurer).
LOANS AND CREDIT CARDS
Sure I’ve had loans and credit cards in the past. I’ve been a student! But since university I have worked hard to clear any debts and have tried to keep my credit score squeaky clean before (and during!) getting a mortgage. I haven’t been tempted to add a loan repayment to my monthly outgoings since as I haven’t needed to buy anything in that much of a hurry that I needed to borrow the money. Instead, I’ve got into the habit of saving before I buy – it doesn’t take long, honest!
Actually, I tell a lie – I DO still have a credit card but the balance is 0. It’s the credit card I got in order to build up my credit score before getting a mortgage. It’s odd that you have to borrow money to improve your credit score, isn’t it? Credit is a complex thing – in fact, it could be a whole other blog post so have a read these guides on credit scores and how to rebuild your credit from the CashLady website to find out more about how loans and credit cards affect your credit score and how to improve your rating for the future.
Hmm, TV is something that I don’t have as a financial commitment but that I do have. Kind of. Actually, we don’t have a TV aerial so we only watch on catch-up and I pay my TV license for that. What I’m talking about here is Sky TV, Virgin, NOW or any of those kind of TV services (I don’t even actually know what’s out there) that you pay for with a monthly contract.
It’s the same with other paid-for entertainment services like Spotify, Netflix, Audible or anything else like that (again, I have no clue what’s available!). Basically, if it’s not free and I have to pay monthly for something, I’m probably not going to do it. That said, I did take advantage of the £59 Amazon Prime for the year, on Prime Day but that’s more for delivery. I don’t know if we’ve actually used it for TV or films at all – I’m going to have to check it out to make most of having it this year!
It seems like everyone has a membership with their local gym these days, whether they actually go to it or not haha! I haven’t ever signed up because I wouldn’t want to commit to the monthly outgoings. Instead, I put the cost of monthly membership aside and that’s my budget for all activities. That way I can include swimming, dancing and classes I want to go to anywhere.
And, inevitably, I don’t use up the budget I’ve put aside each month, because we tend to walk and cycle and using the outdoor tennis courts nearby is only a couple of pounds!
Next up, here are the 3 financial commitments I do have each month…
Ahhh it’s something I wanted for so long and now all I want to do is pay it off! But that’s a monthly expense that I think is definitely worth it. I’m not losing money each time I pay for the mortgage (unlike all those years of renting I did previously).
Instead, I’m kind of saving money when I pay my mortgage each month. And you can save even more on interest if you arrange to over-pay your required repayment value each month. Fingers crossed for a speedy repayment so that I can remove this expense from my spreadsheet altogether!
I can’t imagine that there are many people who don’t have insurance for one thing or another. I have car, buildings and contents, and life insurances, which takes a chunk of my monthly budget but is a necessity. Well, you can’t drive a car without insurance, can you?!
I pay my insurance monthly, which means it’s a monthly commitment rather than a one-off cost but I prefer to spread the cost throughout the year as part of my monthly budget. That said, I’m going to look into the extra costs that are added on to the premium by paying in this way and might switch over to a yearly payment if the savings are worth it.
One of life’s essentials, right? Without it I wouldn’t have any way to make money, I couldn’t easily communicate with my friends and family, and I couldn’t even watch any TV! So I have a broadband contract for 18 months at a time and I always make sure that I’m happy with the rate and never just let it roll-over after the contract period – especially if there are savings to be had!
Let me know what other expenses you have and DON’T have each month in the comments below and please share your tips for cutting the costs of your monthly expenditure and financial commitments – I’m interested to hear your hacks and learn from your experiences.
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