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5WAYS TO SAVE MONEY; Cut costs as prices rise to stay in black.

Byline: ALEX MORGAN

FOR once, most people are in agreement with the Government. They admit the standard of living is falling, and no one with bills to pay is going to argue.

The Office for Budget Responsibility, who supply the economic forecasts, says households can expect prices to rise faster than earnings for the next couple of years.

Almost six out of 10 workers don't expect a pay rise this year, according to website uSwitch.com, and the vast majority of those who do get one won't get enough to keep up with inflation.

Accountancy firm PwC says that, over the past year, food prices have risen more than six per cent, while housing costs are up three per cent and running a car is ten per cent more expensive.

And the pain is set to continue.

The OBR predict wages will rise by an average of 'Taking few check just two per cent in 2011, while the cost of living will go up another four or even five per cent, as food, petrol and other essentials become even less affordable.

Ann Robinson, uSwitch. payments out of your account produce saving' c om's director of consumer policy, said: "With the cost of living outstripping pay, consumers need to start paying serious attention to their spending habits."

Thankfully, there are steps you can take to combat this gloomy state of affairs Rethinking your finances can free up a surprising amount of cash to help meet those spiralling bills.

. ?Cut housing costs: if you are a homeowner, your mortgage is likely to be your biggest monthly outgoing.

Four out of 10 people say they are worried about meeting repayments if interest rates rise.

Moneysupermarket.com say switching to a cheaper mortgage deal now could be the answer.

According to the price comparison site, someone with a pounds 150,000 mortgage moving from the average standard variable rate of 4.74 per cent to a market leading two-year fix at 2.79 per cent would save just over pounds 1000 a year after fees.

Someone with a pounds 75,000 loan could free up around pounds 500 to spend elsewhere. ? Rethink household bills: If you have different suppliers for your landline, TV and broadband, see what you could save with a combined tariff, but don't pay for channels or services you don't need.

If you get gas and electricity from separate firms, uSwitch.com calculates moving to an online "dual fuel" tariff and paying by monthly direct debit could save pounds 300 a year.

a minutes to monthly going bank can a big Spending a few minutes checking other monthly payments going out of your bank account could also produce a significant saving.

If you are paying for things such as gym membership that you don't use regularly or subscriptions to magazines you no longer read, cancel now.

? Take care with cover: Don't waste money on insurance that you won't benefit from.

For instance, mobile phone cover is costly and may be duplicating your contents policy, while card and loan cover is notoriously expensive and hard to claim on. When essential policies are due for renewal, always shop around for a better deal. Moneysupermarket.com say the average customer who compares prices online, instead of just accepting their provider's quote, can shave over pounds 280 from the cost of car insurance and almost pounds 125 from home insurance. ? Shuffle credit cards: Nearly half of credit card users clock up interest charges because they don't clear their balance each month. If you are among them, look into moving your debt.

Moneysupermarket.com say someone shifting a pounds 2000 balance from a card charging the average rate of 18.28 per cent a year to one offering zero per cent transfers for 18 months, could save pounds 260 in interest.

If you have outstanding loans or credit agreements, or live on your overdraft, see if you could save here, too, by switching to cheaper credit.

Personal loan rates start at around 8.5 per cent for pounds 5000 repaid over three years and seven per cent for pounds 10,000 over five years.

If your credit history is not good enough to get one of the most competitive bank or building society deals, consider a credit union, where members can typically borrow between pounds 5000 and pounds 15,000 for under 10 per cent.

But before you repay an existing loan or cancel a credit agreement, check for early repayment penalties.

. ? Put your cash to work: If you have savings and debt, think seriously about using the bulk of the money to reduce what you owe, as the interest you are paying out is likely to be more than you are earning.

To get the best rate on any savings you have left, get a market leading instant access cash Isa.

Unlike an ordinary savings account, where the taxman takes a fifth of the interest earned by basic rate taxpayers, with an Isa you keep everything you make.

Top rates are currently around 3.3 per cent - to earn as much in an ordinary instant access account you would need to make over four per cent, which isn't possible in the current low-interest environment.

If you have a substantial amount of cash and are a mortgage holder, look into paying off a chunk of your debt.

Or, if you can't afford to say goodbye to your savings, see how much you could gain by transferring to an offset loan.

Your cash is balanced against your debt, substantially reducing the monthly interest.

Richard Tolchard, senior mortgage product manager at First Direct, said: "They will benefit from a higher equivalent rate of interest with the added benefit of instant access to their savings."

Finally, consider moving your current account - Halifax/Bank of Scotland's Reward account pays pounds 5 every month you pay in pounds 1000.

CASE STUDY Peter shops around for deals OFFICE workers Peter and Annie Hughes use price comparison sites to keep their household bills down.

The Edinburgh couple also make the most of their savings with an offset mortgage.

Peter, 36, said: "I go on Confused.com every year to get the best price for car insurance and we use Moneyfacts to compare deals on things like credit cards."

When they moved house five years ago, the couple switched to a Yorkshire Building Society loan that offsets their savings against their debt.

Annie, 37, said: "We were a bit uncertain about it at first but the financial adviser said it would cut our monthly payments and we can withdraw from our savings any time we want."

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DESPAIR: It's tougher to make ends meet as prices rise and wages stand still
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Title Annotation:Business
Publication:Daily Record (Glasgow, Scotland)
Date:Apr 14, 2011
Words:1118
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