Know for sure how much is in your bank account at any given time.

Get into the habit of knowing exactly how much you have in your account and when direct debits and other standing orders are due to be made. This is easy to do by online internet banking.

Not only will this reduce costs to you in less charges from your bank and creditors for missed payments, you will be more focused on how much you are spending and how much you need to keep in your account to budget for essential bills.

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Don’t get suckered into thinking you’re the one benefiting from earning points.

Loyalty cards operated by the major supermarkets and other retailers serve 2 purposes:-

Firstly, they perform great market research. They can see exactly what you are spending your money on and where you are doing it. This is far greater invasion of privacy than any current national ID card proposal. They then use this information to target marketing at you.

Secondly, and more importantly, you end up spending more money with them and earning them more profit. If this were not true then such schemes would not exist.

Many people loose sight of the fact that they get back just a couple of percent of what they spend. Am offer of  3% discount would not turn many heads in a high street window display.

People become emotional attached to building up points as if it were on a par to putting money in a saving account.

Of course, there are excellent offers to be had for people who know how to play the system. If you do your weekly food shop in the same place every week, you may as well take advantage so long as it does not make you spend more than you would.

Cash back credit cards
The above also applies to cash back credit cards. Typically you may get a few percent back on purchases for 3 months, then 1% thereafter on a card with an APR of 15%. So, you only profit from such an offer if you settle your card balance in full each month and are not seduced into spending more by the effective 1% discount.

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Advice given by Charles Dickens in his 1850 Novel, David Copperfield.

A famous line from Charles Dickens’ David Copperfield equates money with happiness:-

“If a man had twenty pounds a year for his income, and spent nineteen pounds nineteen shillings and sixpence, he would be happy, but that if he spent twenty pounds one he would be miserable.”

This may sound like stating the obvious, but the cause of much misery stemming from debt problems is that too many people simply spend more than they earn for no good reason other than credit is available to them.

It is true that most debt related problems are a result of change in circumstances; this is certainly the case for most of our debt management clients. However consider this, is you’re treating yourself to a period of overspending now, then you must at some time do the reverse, spend less than you earn to repay your debts, plus the interest. 

To this, many people say for example, “I need to spend now to kit out my new flat, I won’t need to spend so much later on”. There is some sense to this, but if your overspending is just a way of life without laying any foundations for the future, then think about this:-

• Where were you financial 12 months ago, where you are now and where you will be in 12 months time?
• Does this conflict with your longer term financial plans?

I wonder if Oscar Wilde had debt problems, one of his famous quotes is:

“Moderation is a fatal thing. Nothing succeeds like excess.” –Oscar Wilde

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Budget for how much cash you’ll need for the course of the week and do your best to stick to it.

Don’t treat the cash machine like a bottomless pit of money.

This is especially true is your are already over drawn with your current account. Each trip to the cash machine is borrowing more money and leading your further into debt.

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If you do your weekly food shopping while hungry, you are more likely to make impulse, non-essential food purchases

Shopping after lunch has a second benefit as you may loose a few pounds of weight if you’re better able to resist such temptations.

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…and more importantly, stick to it.

Many people with a finance and debt management problem have a needless over spending problem.

One place to cut down on this is in the supermarket. How many times have you bought food on impulse only to throw it in the bin when it’s gone off?

Make a list before you go. When arriving at the checkout, anything in the basket which is not on the list, get rid of. If it’s stuff you just want, then you can’t actually need it as you didn’t know you wanted it unitl you saw it.

If you’re feeling brave, budget how much you’ll need to spend and take cash only with no other means of payment.

Exceptions can be justified if the item is on offer and by making a calculated, non-planned purchase now, there is reduced planned spending at a later time, and hence a net saving.

Another example of turning planned spending in to overspending is doubling up when clothes shopping.

How many times have you gone out to buy for example a jumper, and come home with having bought two from the same shop. You couldn’t decide which you prefered so you bought them both. Worse still, they are the same, except in colour. What always happen’s is that you will prefer one over the other and that one you will wear more and get better value from it.

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The raw ingredients to make a sandwich costs about 25p, so why pay £2 for one from a shop?

If you buy lunch at work everyday, think how much you could save if you bothered to make yourself a packed lunch. I know lunchboxes are very un-cool, but could easily save £50 plus per month, and eat a lot healthier at the same time.

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Sit down and work out how much you spend each month. List essential outgoings and all other non-essential spending.

Most people are surprised at how much that can save if they were more disciplined with their money. When I did this, I realized I had a £25 per month magazine and a £17 per month chocolate habit. So not only did a save some money, I lost a few pounds also.

You can use this handy income and outgoings calculator to see where all your money goes.

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You can save even more money by not buying it at all.

Just because something is good value, it is a waste of money if you don’t get that value from it as you never use it. There is good sense in buying in bulk, but do you really want to pay for it with this month wage packet, when you won’t be using it for another 12 months.

This is especially nonsensical when you are paying high interest on outstanding debts.

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What we mean is, stand there in the shop and count out the money note after note.

You’ll have a greater sense of how much you are really spending.

When buying that desirable, but not essential Ipod, hand over 10 twenty pound notes rather than swipe your credit card. Maybe you’ll change your mind and realize than £200 in your pocket with worth more to you than the latest gadget. (more…)

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