7 ways to get your finances on track

7 ways to get your finances on track
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Cut your debt

It’s always better to pay debt off before you start to save, unless your debts are on 0% credit cards or loans you cannot pay off early without a penalty charge. “Generally the cost of debt is higher than the return on savings, so reducing your debt will have a positive impact on your finances,” advises Jasmine Birtles at moneymagpie.com. Organisations such as your local Citizens Advice can offer debt counselling. You can also get information at the Directgov website, and free debt help at charity StepChange (0800 138 1111) and National Debtline (0808 808 4000).

Trim spending

“Part of the reason we over spend is because we try to keep up with everyone else,” says Jasmine. “Tell your friends you’re cutting back and they will probably be grateful because they will need to, too.” Try just using cash. “With debit and credit cards it can seem like you're not really spending money. Work out how much you should be spending each week, take that amount out of the cash machine and make it last the whole week. It's amazing what a discipline it can be.”

Ditch store cards

Often sold with the incentive of a discount on your purchase, store cards can quickly rack up enough in interest to wipe out whatever saving your initially made. Many store cards including Argos, Homebase and Wallis charge close to an eyewatering 30% APR. A couple offer lower interest rates such as Top Shop and Debenhams both at 19.9% APR but even still you're better off using a credit card that comes with a lower interest rate and rewards or cashback in return for your loyalty.  Plus you can shop where you like with a credit card.  Don't have any form of plastic unless you can pay it off.

Did you know 92% of Brits are happy to shop in budget stores but 34% say they wouldn’t use a pawnbroker, however much they needed the cash. Source: uSwitch

Get better deals

Energy costs have spiraled in the last year, so it's essential you are on the best deal. If you've never switched suppliers and are on an old-fashioned standard tariff, then you are almost certainly paying over the odds. Switching from the most expensive energy tariff to the cheapest can save you £274, says uSwitch.com. Earn discounts on your bill by moving to dual fuel - getting both gas and electricity from the same supplier, paying by direct debit and managing your account online. Ditch the big six and look at smaller suppliers like First Utility, Ovo Energy and Spark Energy. Research deals using www.energyhelpline.com/yours.

Arrange an overdraft

“Even if you have no intention of going overdrawn, it’s a wise move to arrange an overdraft limit on your current account just in case of emergencies,” advises Andrew Hagger at moneyextra.com. “The charges for authorised borrowing vary from bank to bank but are always a much cheaper option when compared with unauthorised overdraft costs. The best thing to do is to find out from your bank what they charge for agreed overdrafts so you can get an idea of the costs you’ll face if you dip into the red for a few days.”

If you only use an overdraft for four days each month, the total annual cost is less than £10 with First Direct, M&S Bank, Post Office, Metro Bank and Nationwide Building Society FlexAccount. Compare this with a yearly bill of around the £80 mark for the same borrowing scenario with Lloyds Bank (Club Lloyds), TSB Classic Plus, NatWest and RBS Select. So don't pay over the odds, switch to an account that matches your needs.

Pay less for protection

Whether it’s motor, home or travel insurance it’s always worth shopping around to obtain the best price regardless of your age. With motor insurance, most providers will consider drivers aged up to 75 with others happy to quote up to age 85.  The amount you can save will depend on your own personal circumstances but with the cost of insuring your car at a four-year low, it's more important than ever not to simply accept the renewal price. Instead shop around for a better deal using comparison sites including www.moneysupermarket.com and www.confused.com. Always ask your current insurer if it can match or beat the price as it’s unlikely to want to lose your custom and it will save you the hassle of switching.

Get your house in order

Pay off your mortgage early to give you more disposable cash in later life. If you have a tracker mortgage, the chances are you’ve seen your monthly payments tumble. Don’t waste that extra cash: use any monthly savings to ‘overpay’ on your mortgage. But check mortgage terms in case there’s a limit to the amount you can overpay. “If your kids have left home, why not let out your spare room?” says Lorreine Kennedy at CareMatters. The number of live-in landlords age 55-plus has doubled over the past year and you can boost your income by £4,250 a year, tax free, under the Government’s Rent a Room scheme. Find out more at www.direct.gov.uk.