5 Ways to Destroy your Monthly Bills
We’re going back to basics in this post and having a look at the one of the most pervasive, yet somehow strangely overlooked “money sucks” your poor old current account has to deal with: Regular Monthly Bills. You all know how it goes, £40 a month here for the mobile phone bill, £90 a month there for the premium TV package, it all adds up horrendously quickly! Yes it’s sad but true, high cost recurring bills are a surprisingly popular sure fire way to ruin your personal finances.
The good news – if we can make many small or medium reductions on each bill, this can add up very quickly to tangible savings.
So pay attention gang: here are five of my best tips for destroying your household bills! 🙂
1. Open your bills and read them!
According to this handy infographic below (click for full size picture), over 1 million people don’t even bother opening their bills in the first place.
Talk about falling at the first hurdle!!! I would have thought that it goes without saying but given that stat, this has to be the first and most important tip: Open your bills and read them properly. There was a feature on watch dog just the other night in fact where a certain energy company was dishing out bills of ridiculous proportions; I’m talking in the region of £1000 and even up to £10,000!!!
Imagine if those people had not been checking their bills! If they had the money in their account the payment would have come out, not only would they be losing out on current account interest, it also might have left them short to buy their basic essentials until they managed to sort it out! In the case of the £10,000 bill, the payment may not have gone through and they could have ended up with extra bank charges which would have been even harder to claim back. Nightmare!
By opening and reading their bills they had extra time to ring up and get it sorted before any payment had been taken.
These are obviously extreme cases but hopefully you get the point, if you pay attention to your bills each month it will become very easy to spot an outlier of a higher bill than normal very quickly, and then you can take action to remedy the issue as soon as possible.
2. Track your bills
The next step after reading your bills is to track them. You can do this in a spreadsheet or by using online software such as Money Dashboard. Simply the act of being aware of your monthly spending on bills and how they changing over time will help you reduce your bills.
How? Well for example, if you notice your electricity bill getting a bit “Shardy” then you will be more inclined to make sure lights and other gadgets are switched off when not in use. Similarly if you monitor your mobile phone bill 1, the natural inclination is to watch your minutes and data throughout the month, resulting in lower bills.
3. Sign up to a cashback current account
You have to pay certain bills each month, there is no way around that, but if someone is going to offer you cashback to do it then why look a gift horse in the mouth!? The GrandDaddy of cashback accounts is the Santander 1,2,3 account. We’ve been using this account since March 2013 and so far we’ve earned a not insignificant £381.64 from cashback and interest!!!
Here’s a quick list of the benefits*:
- 1% cashback on water and council tax bills (and the first £1,000 on your Santander mortgage)
- 2% cashback on gas and electricity bills
- 3% cashback on communication and TV bills
- Interest: 1% if your balance is £1000+, 2% for £2000+ and 3% if £3000+ (up to £20,000)
*Please note there is a £2 monthly account charge but this obviously gets eaten up very quickly by the cashback and interest!
To get the best out of this account: Make sure all your bills go through it, have over £3,000 as your “base level” of cash (it’s a great place to store your emergency fund) and if possible get your mortgage through Santander as well. Just make sure they also offer the lowest or at least equal to the lowest interest rate. There is no point in going for a 3% Santander mortgage when you could get 2.5% elsewhere, as the 1% cashback on your monthly payment would get easily cancelled out by the higher interest rate.
There are obviously other bank accounts out there and you can find a great list of banks and other services here at the consumer connect program.
4. Cancel unnecessary bills
So you have your basic household bills that most folk would say are unavoidable: Gas, Electricity, Council Tax, Mortgage. But what about the other monthly bills, is there any way you can restructure your household so you don’t need to pay “the other ones”? Some ideas:
- Home phone bill – Do you really need a home phone with all the cheap mobile deals out there?
- Sky Sports/Movies and other premium TV Services – Do you really watch all those channels? It is worth thinking hard about this one. More often than not I would say that most people don’t get true value from these services, and they can be upwards of £100 per month with all the bells and whistles. My personal opinion: Not worth it!
- TV License – You could even go one step further. With ITV Player, BBC iPlayer and so on, there is every chance you can ditch live TV and therefore do not need to pay for a licence anymore, while still enjoying quality programming via streaming services.
- Mobile Phone Bill – Any chance you could ditch the contract and go onto PAYG?
- Gym – Not a household bill as such but an obvious one to cancel, when it is so easy to get your exercise for free! I recently downloaded a Free App called Sworkit (There are loads of others out there though), which organises workouts for you. It’s pretty good IMO, so check it out if you need motivation and structure to your exercise but don’t want to pay for it.
- Cinema pass – Early readers of the blog will know what I think about this one! Just bite the bullet and cancel that mofo!
- Magazine subscriptions etc – Really? With all the free content on the internet and your smartphone in your pocket at all times, I cannot believe that people still buy these old fashioned waste of trees. I’d cancel any monthly subscriptions I had right now if I were you!
5. Cut down on remaining bills – Shop around!
It would be hard for most people to knock out every single bill in the above list, so why not look at how to reduce your bills in each category that is still remaining. This can be done simply by shopping around and researching all the various options available to you (this happens to be one of the corner stones of what being frugal is all about!). Some more ideas to get you going:
- Energy (Gas & Electric) Bills – Sign up to MoneySavingExperts Cheap Energy Club for automatic alerts when you are paying too much for your bills. Money Dashboard offer a similar service although I haven’t used that one yet, but also worth checking out!
- Mobile Phone Bills – Ring your supplier and negotiate a better deal. Threatening to leave normally works wonders here, especially if you back it up with research on what other deals are out there.
- Pay TV – You could cancel Sky with all the bells and whistles and move onto a much lower cost Basic TV + Phone + Broadband deal with Virgin or Talk Talk and save yourself up to £80 a month. The broadband on Virgin would be faster as well because it’s fibre optic, so streaming content would be more viable!
- Home Phone Bill – If you are still with BT (like me, unfortunately!) you can pay for a year up front and save about £5 per month on your line rental. You can also look at other pay up front deals here
Hopefully you can see that the small wins can quickly add up to substantial savings in the region of £100’s of pounds per month!
There are no doubt many other tips and tricks on shaving a few pounds off your bills, but hopefully that is more than enough ideas to get you started with.
As always… if there are any other tips that I’ve missed out, can you let us all know in the comments!? Thanks!
Notes:
- Bonus tip from weenie on this one, you can use software/app called Bill Monitor to do this, and it will advise you on the best contract to get as well! Cheers weenie! 🙂 ↩
All good solid advice. It’s so easy to get wrapped up on the investing side and forget that it is the expenses that really decide how/when you’ll reach FI.
Right on UTMT! I’ve had this area wrapped up for a while but thought it was worth another refresher for any new readers lurking about. I really need to concentrate on the disposable income spending… more on that will be coming soon, maybe in the new year, I don’t want to depress myself too much just before xmas! 🙂
Hi,
The Santander account is a beaut if you use it for cash back.
Great point about MSE and savings on utilities. Didn’t know about that. Boom. Some money saved.
Mr Z
Glad to be of service Mr Z 🙂
Hi TFS,
Some nice tips here. I still find it amazing that people don’t change their utility providers every year (or look to). I think the ‘pain-free’ savings are a great way to start too. The bills you already spend money on like electric, gas, telephone, broadband etc.
If you’re able to shop around every year on these and using Topcashback, cashback credit cards, and/or cashback accounts, you’ll make a significant saving. These initial savings usually lead to motivation in the non-essential spends like Sky, Gym, subscriptions etc.
Cheers
Huw
Yep it is strange, when it is so easy nowadays, and the ROI of your time is so high. I agree once you start seeing the benefits of extra money in your account (providing you don’t spend it instantly on more bells and whistles!) then it should provide some extra incentive to look at other areas of spending for most people, so it’s a triple win, yay!
… and, pay in one lump sum if you can, i.e. car insurance, car tax, anything that attracts interest or higher payments if you pay in instalments. I’d rather save the money in advance, earn interest on it, and then pay in one go.
I pay most bills by direct debit, except gas and electricity which are variable, while unlikely and I’m probably over paranoid, I’d still rather avoid £10,000 leaving my bank account by mistake! Rather than look at something as £X a month, I look at it as the cost on my FI journey. I.e. gym £85pm x12monthsx9 years = 9K. Yikes. I’ll be running outdoors and biking to work then!
The Santander 123 account at 3% is brilliant. I load it up throughout the year then part empty into my ISA allowance in April. Rinse and repeat.
Oh yea I hinted on that with the BT thing but it applies across the board as usually you have to pay a premium to pay monthly as you quite rightly point out!
Yea we pay DD as well but a cursory glance at our online bills every month is definitely worth it! And then it’s all tracked automatically with Money Dashboard anyway, so hardly any time taken at all to view, monitor, and track.
That is a really good way of thinking about things, over a long time period. I usually just do it for 10 years as an arbitrary length of time, but to do it for the time period you estimate it will take you to get to FI is a much better idea and far more meaningful. You can then play around with projected spending and see how it would impact your time to FI up or down as you add and remove thing. I can feel another spreadsheet coming on… whooooohoo! 🙂
Solid advice – I’ve just gone to a cheaper mobile phone contract butI need to do the BT thing – getting quite expensive now.
Cheers again weenie for the idea about getting your mobile phone bill down 🙂
Im pretty proud of myself for having done each of the items you mentioned in the list on #4. The bit about the monthly magazines was a throwback for me! Back in my teens I was like a print magazine junkie. Thank god for the internet because anytime I get the urge to buy one now I just go on their respective webpages. Usually they have plenty of free info to satisfy my craving. Now, if I could only get my husband to let go of his Xbox Live yearly subscription!! (probably won’t happen)
Hi Naomi!
Glad to hear your are locking down those bills. Haha, I guess they are a bit of an outdated medium now, but there are plenty of them still on sale so someone must be buying them.
No ideas on the Xbox thing I’m afraid, as I went off video games in my mid twenties. Anyone else out there has any ideas please chime in with some advice! 🙂
If he uses Xbox Live to play multiplayer games then it might not be such a bad thing. Of course he could live without it, but playing multiplayer adds a lot of value to games – I played Mass Effect 3 for let’s say 50 hours single player, then another 150 online. Without online I’d have had to buy a new game. Cheaper to have Xbox Live in some situations!
(My xbox is in front of my exercise bike, so if I want to play I have to burn calories. Maybe you could get him to do the same. Then it isn’t wasted time/money!)
i’m a recent convert to the 1-2-3 account. I filled it up with some cash to max out the 3% interest as i can’t get close to that with the current range of cash ISA’s on the market. The £2 monthly fee is more than covered by the cashback.
Glad to hear it. I can’t believe the rates on cash ISAs are so bad compared to this account!
Great tips here and they carry over stateside as well. We have a wireless provider called Republic Wireless that is super cheap for unlimited 3G data, talk and text (about $30 /month) with no contract! We are very close to ditching our traditional landline…if the problems we’ve been having continue we’ll definitely be doing that.
The other monthly bills and utilities are tough to cut out entirely, but in the interest of conservation we’ve been able to nip and tuck here and there on each.
Where we really cut a nice chunk was from our cable bill. As I’m sure it is still in the UK, cable / satellite DTH packages are really awful and force you to take a bunch of crap to get the stuff you really want. We just went back to basic broadcast cable and then watch everything we really want online through Netflix or Amazon. I’m even able to watch Chelsea on NBC Sports through a relative’s login but I’d guess this would be tough to do without Sky over there!!
Hi Mr FC!
Yep I’ve heard of Republic Wireless having frequented most of the big US PF blogs, you can’t really avoid it 😉
It does sound good though. I think we’ve had it better than you guys over here until recent years, so we are used to lower bills, although I still know friends who are getting ripped off but don’t seem to really care so much.
Cutting expensive TV packages is key. Most of the stuff we watch is on free to air TV anyway so no point in paying for the extras, which we don’t even watch!
I am sure there are ways and means to watch a Chelsea game for free over here, if you really wanted to and left your morals at the door 😉