Cutting Your Costs

After sitting down and drawing up a spending plan, cutting your costs is the next step on the road towards financial freedom.

Take a good long hard look at your spending plan / budget – especially the big ticket items like your mortgage, insurances and domestic utilities. These large expenses are where you should concentrate your energy because these are the areas where you have the opportunity to make the biggest savings.

When was the last time you reviewed these high ticket items?

Check your credit report to ensure that there are no mistakes which might be costing you thousands – if your credit score is impaired – it can affect your ability to borrow at reasonable rates.

Cutting Your Costs – On Your Mortgage

Ensuring that you’re on the best available mortgage rate can save you tens of thousands over the lifetime of your mortgage. Other than cutting back or repaying your debts, there is no better way of cutting your costs than reducing your mortgage outgoings.

The maths is simple

If you borrow £100,000 at 3% over 25 years your will repay £142,263
If you borrow £100,000 at 4.5% over 25 years you will repay £166,75
If you borrow £100,000 at 6% over 25 years you will repay £193,290


So by ensuring your credit report has no mistakes and your credit score is high, you can save over £50,000 over the course of your mortgage term by having access to the lowest mortgage rates.

£50,000 potential saving on a £100,000 loan!!!

Call up your mortgage company – check what rate you’re on. See if they have any deals which can put you on to a lower rate. If not – start shopping around to see what you can get elsewhere.

There are lots of mortgage comparison sites – try a few of them out.

Making sure that you’re on the best available rate has to be your No.1 priority when cutting your costs.

 Cutting Your Costs – If You’re A Renter

If you are a renter – have you ever considered asking for a reduction in your rent?

Your landlord might be more than willing to receive less rent from a good tenant to prevent you from leaving, and then having the hassle of finding replacement tenants or from a potential void period.

Other big ticket items from your savings plan each month, though important pale into insignificance compared to mortgage or rental costs.

Cutting Your Costs – On Your Utilities

Making sure you have made sure you are on the best tariffs for water, electricity and natural gas (which doesn’t take long) is another natural and easy step when cutting your costs, then you can knock these off the list for potential savings. Again, there are many comparison sites and switching tools available to help ensure you’re getting the best rates.

Some people make a big song and dance about cutting back on cable or subscription TV.  I’m not a big TV watcher so have never bothered with cable or satellite channels but I can see the attraction it holds for many.

If you don’t want to ditch your cable services have you thought about playing a game of bluff with your providers customer service / client retention team?

Maybe if you call them up and threaten to take your business elsewhere they might find a new special tariff for you in order to keep your business.  The same goes for any service provider – make a list – call them up and tell them times are hard, you’re broke and you can’t afford their package any more. You might save a heap of money in half a dozen phone calls.

As a consumer you are a valuable commodity – companies spend large amounts to attract your business and will move mountains in order to keep you. Just like asking for a reduction in rent from a landlord – if you don’t ask you don’t get.

Give it a try – you might surprise yourself.

Cutting Your Costs – On Your Motor Insurance

One area where it is becoming increasingly possible to make significant savings is in your motor insurance policy.

In current economic times where the price of everything seems to be going up – motor insurance is one area that’s bucking the trend and premiums are falling.

Take a look at this chart showing how the average cost of motor insurance has fallen in recent times in the UK. The price of the average policy has fallen by a whopping 34% over the last two years. If you haven’t had a reduction in your car insurance at your last renewal – you should be bargaining hard the next time its due.

Cutting Your Costs

Cutting Your Costs


The ABI (Association For British Insurers) say that increased competition for new customers (see above for negotiating with your existing suppliers for a cheaper rate) and a cut in the number of fraudulent claims being paid.

This in conjunction with improved car security and immobilisers fitted as standard, and tracking devices on luxury cars allowing for satellite tracking of stolen cars have all been contributory factors in the reduction in motoring premiums.

One big negative point is still the high number of “whiplash” injury claims which add £90 a year to the average bill.

So – how does this affect you?

Simple – if you’re looking to be cutting your costs – then your motor insurance policy is something that you should be looking to slash as soon as your next renewal comes round.

Play hardball with your current provider or shop around on the comparison sites or directly with providers and play one off against the other.

Your custom is valuable – they want it – so don’t sell yourself cheap. After all its your money and you’ve worked hard to get it.

Once you’ve cut back on the bigger items of expenditure – you have to ask yourself are there any benefits to spending a lot of time and energy on shaving pennies or cents off the smaller stuff each month.

Cutting Your Costs – On The Small Stuff

I know I know that saving a bit here and there eventually adds up to a reasonable sum – but our time is our most valuable commodity. You have to ask yourself the serious questions about if it’s a wise use of your time trying to shave off small amounts of expenditure here and there – or is your time better spent on attempts to increase your income as opposed to decreasing your expenditure?

For the vast majority of people – we are not extravagant spenders – it’s just that the cost of living is getting higher and taking up an ever increasing proportion of our pay.

Once you’ve taken care of the big stuff, the only solution to this is to earn more money. And this is something that I intend to cover over a series of upcoming posts.



  1. Good suggestions all the way around, particularly with regards to reducing your mortgage, which is typically the largest expense for most people. The wife and I recently refinanced at a lower rate, going from a 30 to 15 year loan, keeping the payment the same. The plan is to make extra payments toward the principal and pay off the loan in 11 years.

  2. Sounds like a good plan there James – I’ve never been a fan of 30 year mortgages for anyone unless they are first time buyers in their 20s.
    The interest you end up paying over 30 year deals is eye watering

  3. My brother just renewed his motor insurance and he was pretty shocked that the amount was really high compared last year! I’m looking forward to your series on how to earn more money.

  4. Cutting costs is by far the most effective way to bring financial independence within reach. Looking back on decades of your life, you won’t miss most of this spending at all. Especially things like TV, etc.

    • Your right Nick – but the point I was trying to make is that in current times while the cost of living is rising faster than wages, spending a lot of time cutting back on the small stuff is like trying to hold back the tide. Once someone has prudently looked at cutting back on their bigger bills – time is better spent on trying to earn more money than save a few pence here and there.

  5. I have long ago planned on spending wisely in order to save for the sake of financial freedom. I am glad to share that I have started, though a relatively small step, on cutting my utilities costs and trust me when I say that the amounts I have saved since was put to better use, meaning more important things and I was just glad.

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