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Money: Has lockdown living left your finances reeling? Here’s how to get back on track…

UNLESS you’re one of those people who’ve used lockdown to take part in yoga workouts and wardrobe clearouts, the nation’s Covid-19-enforced staycation has quite possibly involved eating and drinking too much, and perhaps a bit of online shopping excess.

Coming out of hibernation may require a detoxing process, and one of the areas we should all be turning our minds to is our bank balance.

‘As households continue to navigate through unforeseen circumstances, now is the time to keep savings and spending habits under careful and regular review,’ says Alistair McQueen, head of savings at insurance group Aviva. He suggests a programme of monitoring and controlling your outgoings, which should enable your household to make significant savings. Here’s how to get started.

Step one

Take stock

Many of us find it hard to look at our bank statements and credit card bills at the best of times and, for some, post-lockdown is the hardest time of all. Sarah Coles, personal finance expert at Hargreaves Lansdown, says that 28 per cent of us go into the red at the end of the month, and almost half of us (43 per cent) went into lockdown with non-mortgage debt such as credit cards, overdrafts and loans.

‘In relatively good times, it didn’t seem to matter much — because payday kept us ticking over and low rates kept the pain to a minimum. So only around one in ten were worried about debt,’ she explains. ‘But the crisis has shown just how fragile payday can be. And while the banks have stepped in and are freezing payments for a while, it is worth using this as a time to take stock of our debt habits.’

A financial detox relies on you knowing exactly where your debts and savings are, so get hold of your bank statement or open your banking app, and log into your credit card accounts. You can use an online budgeting app such as Money Dashboard or Yolt to give you an ‘at-a-glance’ look at your entire financial picture. This allows you to hook up your bank, savings and card accounts to the same interface — so you can see exactly where your money goes and how much debt you have.

Step two

Diminish debt damage

Banks gave customers temporary breathing space with a lot of their debt during lockdown, but that support is now changing. If you’ve had a £500 interest-free overdraft buffer for three months, you will need to ask if you want it to continue, while new guidance from the bank regulator confirmed that anyone who can return to paying off their debts should do so. If you can’t, due to coronavirus, you can continue to request help until October 31.

If you have frozen your debt repayments, you might be in for a nasty shock. Interest still accrues when you take a payment holiday, so those who haven’t paid their mortgages or credit cards for three months will find that the balance they owe has grown. The regulator has given banks the green light to hike overdraft charges if they wish to, so once your grace period comes to an end you are likely to find this is an expensive way of borrowing money, too.

‘Putting off loan payments should be a last resort rather than a first port of call,’ says Sarah. If you are feeling overwhelmed, the key is to check whether any of your debt could be cheaper, and then ensure you prioritise how you pay it off. Start with your mortgage.

If you have considerable equity in your property and have come to the end of your current deal, you could save a considerable amount by remortgaging. According to research from Compare The Market, a consumer could save just under £200 a month by switching from a standard variable rate onto a new fixed rate product if they had an average £135,000 mortgage.

‘While there are fewer mortgage products available on the market than usual at the moment, with the housing market slowly restarting again and physical property valuations able to take place once more, there are still plenty of good rates to choose from by looking around online,’ says Mark Gordon, Compare The Market’s director of money.

Next, move on to your credit card. If you have a high credit card balance and a decent credit rating, you could save money by transferring to a zero per cent credit card, giving you time to pay it off. For example, NatWest is offering a balance transfer card with no fee and zero interest for 20 months, so you would pay nothing at all provided you have paid all of the money back in that time and have made minimum monthly payments.

If you do this, ensure you set up a monthly direct debit to pay off the balance gradually over the period. By doing so you could considerably cut the amount of interest you pay.

If you genuinely cannot pay back your debt, it could be worth getting in touch with a debt charity to see if they can help you to make arrangements with companies, rather than letting things spiral further. Try stepchange.org, or Christians Against Poverty. (capuk.org).

Step three

Switch your bills

By switching and stopping, you could save hundreds of pounds and not even notice the difference. According to comparison site Uswitch, more than half of us are on standard energy tariffs and could save money just by switching our energy provider — or even phoning our existing provider and asking to be put on their cheapest rate. You may also find you have a balance built up with the provider that they must return to you if you switch.

Switching broadband deals and your mobile contract could provide further savings, check out comparison sites such as Uswitch, CompareTheMarket and Moneysupermarket.

Step four

Blitz those direct debits

Gyms that aren’t open anyway, magazines you never read and television subscriptions that aren’t giving you what you want are all big cash drainers that you can most likely do without.

Recent research from comparison service Monva found that unused subscriptions cost the UK £1.8billion a year collectively.

‘Digital services such as Netflix, Amazon, and Spotify can usually be cancelled with just a few clicks — so spending some time with your bank statement to track down any unnecessary direct debits can make for some quick savings,’ says Steve Wiley, Monva CEO.

Going through your bank statement and credit card bill is the best way to identify the savings you could make in minutes, subject to contracts.

Step five

Declutter for cash

Everyone needs a little extra space after all of that working from home, and you might be surprised what your unwanted belongings could make you online. While eBay is the obvious choice for many items, sites such as Music Magpie and Ziffit make it easy to sell all of your tech, books and DVDs at once — and Music Magpie now also accepts Lego pieces by weight.

The caveat with these issues of course is that you might get better prices if you sell them yourself, but it is certainly an easier experience, especially if you use a mobile phone with a barcode scanner.

‘We claimed back £1,600 in overpayments for our energy’

Alice and David Deanie, from Manchester, have saved hundreds of pounds by ditching subscriptions and claiming cash from their energy provider. David, a magician who mainly works in hospitals, could no longer ply his trade due to coronavirus restrictions. He says: ‘Suddenly we had no income.’

The couple, who have four children aged between 18 months and eight, looked at every direct debit in their bank account. ‘First we stopped Amazon Prime,’ David says. ‘We didn’t miss it and it stopped us spending as much on online shopping.’ They also stopped their Now TV subscription and reclaimed overpayments worth £1,600 from their energy provider when they switched to another.

The couple, both in their early thirties, are using the money they’ve saved to launch Around The Box (aroundthebox.co.uk), a box of fun games originally developed in hospitals but now available to everyone to help them enjoy family time without their phones. It is going well but Alice says: ‘It’s important we’re as careful as possible’.

‘Little changes make a big difference’

WEB designer Claire Roach, from Cardiff, runs her own blog, Money Saving Central, but has had to put her own advice to work more than ever before since coronavirus hit.

‘We found ourselves on one very limited income and my husband and I have done everything we can to help our finances,’ she says.

One major saving has been switching energy provider from SSE to Bulb. ‘We’ve saved £20 a week,’ she says. ‘I give monthly meter readings, too, so I know that the bills I am sent are accurate.’

Claire and her husband Luke (together, above) have five children, and four living at home, so keeping bills as low as possible can be hard. But stringent meal planning has been one way in which Claire has been able to keep costs down.

‘I’ve been shopping at Asda where I have a delivery pass and only buying what I need really saves money. We also got rid of our Sky subscription, which saves us £27.99 a month,’ she says.

Cutting back: Claire and Luke have made savings by ditching subscriptions

‘We don’t miss it. We bought an Android box on eBay for £20 and we can find everything we need to watch for free on there.’

Luke, a bricklayer, has started work again now, but Claire says the couple will have to remain frugal for some time — especially since they had to dig into their emergency fund when coronavirus struck.

She says: ‘It wasn’t meant to be for this. It was meant to be in case the car went wrong or something, but we are very glad we have it.’

‘I’ve made more than £2,000 by selling my gaming clutter’

ART Anthony, from Newcastle, has made more than £2,000 selling his used items on eBay and Depop during lockdown.

Art (above) says: ‘I’m a freelance copywriter and designer. Though I’ve been able to keep a few of my clients, there is not much work out there and everyone is tightening their belts. The whole thing has been forcing me to grow up. I’m getting rid of old video games and consoles, and my vintage sportswear collection — thinking about what I still use and the items which I don’t.’

Most of Art’s sales are on eBay, but the Depop site is popular for vintage sneakers and other designerwear.

‘I find it’s never the things I expect that sell well,’ he says. He adds that working as a copywriter at copywritingisart.com means he writes better descriptions for his items, which helps them sell more easily.

And Art, 32, says his biggest win has been selling the steel case for a video game for £60, without the game inside it. ‘It was a buyer in the US,’ he explains. ‘Apparently the US case for the game has an unpopular character on it but the UK one doesn’t.

‘The house is beginning to look less cluttered, so that’s a bonus.’