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How to avoid having to borrow money to pay bills

Esther Shaw
Written by  Esther Shaw
5 min read
Updated: 03 May 2022

Finding bills a burden? You don’t need to go into debt to deal with them. We show you how

It can be particularly stressful juggling your income and stretching it to cover al lthe bills. While this can feel very worrying, there are plenty of steps you can take to try and avoid taking on more debt.

Here we take a look at how to budget, save on costs and manage your outgoings to help you stay on top of all your household bills.

Take stock of all your outgoings

Begin by going back to basics and getting a real understanding of all the bills you have to pay.

As well as listing out all monthly expenses, don’t forget annual costs, such as travel insurance, home insurance, pet insurance, car insurance, breakdown cover and so on.

Set up a calendar to pay all bills on time to avoid unnecessary charges – as well as potential blemishes on your credit record. Cancel direct debits for bills and subscriptions you no longer use.

Close up of hands holding credit card

Draw up a budget – and stick to it

Draw up a spreadsheet setting how much money is coming in and going out of your account every month – and where exactly it’s going.

Looking at how you spend your money, and where you can trim back, can help you plan a budget that meets your daily costs. It can also help you build up savings in an emergency fund so you’re prepared for any changes.

Check out online budgeting tools such as MoneyHelper and the one offered by Citizens Advice. Take a look at budgeting apps such as Yolt or Moneydashboard

Once you’ve got a plan in place, be disciplined about sticking to it.

Make sure all your bills are as low as possible

Make savings on regular outgoings such as credit card payments and the broadband bill, by shopping around for cheaper deals.

While you can’t switch your water supplier, see if you can make savings by moving to a water meter. As a guide, if there are fewer people living in your household than the number of bedrooms, you should be able to save.

Never auto-renew insurance policies, as there are no rewards for loyalty. Switch to make savings on the cost of your cover.

Don’t opt to spread the cost

While it can be tempting to pay insurance premiums monthly, many firms charge interest when you pay this way. It’s usually cheaper to pay in one lump sum upfront if you can.

Try haggling

If you’re nearing the end of your broadband or mobile contract, try haggling with your provider. If you aren’t making progress, say that you’re considering leaving. Firms may pull out all the stops to try and keep you – meaning savings on your monthly or annual bills. Don’t be shy. Even a small discount can make a difference.

Move to a cheaper mortgage

While interest rates are rising, it could still be possible to make savings by switching to a low rate fixed deal, particularly if you're paying your lender's standard variable rate (SVR).

Compare mortgage rates and see if you could save by switching. Remember to factor in any fees associated with a mortgage switch as this can impact on your overall savings. 

In some cases a higher rate mortgage deal could be better value, for example - if it has no set up fees. 

Cut interest to 0% with a balance transfer card

If you’ve got balances sitting on a handful of cards, get a balance transfer card to pay off the debts on those old pieces of plastic. You can currently find balance transfer deals with more than two years interest-free borrowing, giving you oodles of time to clear what you owe. 

Watch out for balance transfer fees and make sure you clear the debt before the 0% period ends or you’ll get stung with a much higher rate of interest.

Make more than the minimum repayment

If you’re struggling to make ends meet in a certain month, there’s nothing wrong with paying the minimum on your credit card. But if you only ever pay this amount, it will take you a long time to repay the full balance.

Pay more than the minimum whenever you can, as this will mean savings in the long run.

Better still, clear your debt in full each month and you’ll pay no interest at all.

Save on interest charges on your overdraft

With a 0% money transfer credit card, you can shift money from your card into your account. You can then use this cash to clear your overdraft or other debts. The best money transfer credit card deals allow you to shift a balance for a fee (typically around 3%).

Boost your income

If you’ve got an empty driveway, you could potentially earn hundreds a month by renting it out to someone needing a place to park. Try YourParkingSpace and JustPark.

Make some cash by flogging old mobile phones, toys or clothes on sites such as eBay, Gumtree, Preloved or Facebook Marketplace.

Land yourself a little windfall by tracking down lost savings at MyLostAccount, or earn in your lunch break by taking part in surveys at a site such as ValuedOpinions and Net up to £5 per survey.

Avoid the temptation to go on a spending spree

Impulse buys online were one of the defining financial behaviours of the pandemic as people sought pick-me-ups to help them get through lockdown.

But as we start to enjoy our new-found freedoms, we need to resist the urge to splurge.

Tempting as it may be to try and make up for lost time by blowing huge sums on a high-street shopping spree, now is the time to build some good money-spending habits. 

If you see something you really want, step back for a few days and see if you still feel the same about the purchase. Take time to consider your budget before you buy.

Keep an eye on ‘incidental’ spending

For many of us, a morning coffee and shop-bought salad or sandwich are just part of the daily routine. But spending on ‘invisible’ items such as coffees, lunches and treats can soon mount up.

Save some serious pennies by taking a home-made coffee to work in a keep-warm cup and getting up five minutes early to prepare a packed lunch.

Try buying more basic brands

As you load up your trolley, check out supermarket own brands rather than more costly brands. You’ll make big savings at the checkout, and might not even notice the difference. 

Shop around for cheaper petrol

Make savings on the forecourt by typing your postcode into PetrolPrices to find the cheapest pumps locally.

Boost your savings by driving more smoothly, removing heavy items you’re carrying in your boot, and switching off the air con. Each of these actions will mean you use less fuel.

Look after your mental health

In recent years the covid 19 pandemic has been a very difficult time for many people. It has exacerbated financial worries for some - negatively impacting on our mental health.

Given all this, now is the time to prioritise self-care. Small changes can make a big difference.