Cut your costs with a touch of Jeannie genius

Forget the January sales. If you were one of the Britons who splashed out an estimated £20 billion on credit cards in the run-up to Christmas, now is an ideal time to get to grips with your spending.

Jeannie Sinclair, a housewife, saved £3,000 in household outgoings in just one year when her husband was made redundant. 'The company he was working for went bankrupt, and he was only getting a statutory redundancy payment,' said Jeannie, from Wakefield, in West Yorkshire.

'I was already thrifty, but I thought, "I've got to do something here". I looked at all the household bills and decided which ones I could reduce and which could be eliminated altogether.'

Jeannie gradually worked through every aspect of the couple's spending, from grocery shopping to the mortgage. She switched supermarkets, utility providers, savings accounts and insurers.

Her husband found another job within three months, but the habit of spending carefully has stuck, and eight years on Jeannie estimates that the couple have saved well over £20,000.

'Some people think I'm a bit obsessed, but this means we can spend money on things we really want, like travel,' she says. Since Jeannie started scrutinising their spending, the couple have been to Australia, Canada, the US, China and South Africa, and are planning to visit Dubai this year.

Does she miss any of the things she's cut out? Satellite TV or Sainsbury's? 'We found we were only watching one or two things on satellite anyway, and I still shop at Sainsbury's - I just do it more carefully.'

Shopping around takes time that many people with jobs and children (Jeannie has neither) just don't have. However, she says a lot of bargain hunting can be done by phone or on the internet. And potentially, most people can save hundreds of pounds a month by changing just one thing, their mortgage. 'You don't even have to switch lenders. You can save money just by asking your existing mortgage provider if there is a better deal available, or by switching from annual to daily interest.'

Jeannie, who worked as a volunteer for the Citizens Advice Bureau for a couple of years, is concerned about the massive debts many people are running up, particularly on credit and store cards.

Cash sets out below some of Jeannie's advice on how to shop sensibly, handle credit and get out of debt, but further pearls of her financial wisdom can be found in her book, How I Saved £3,000 a Year from the Household Budget, price £5.99 from JKS Books, PO Box 370, Wakefield WF3 1WV (cheque or postal order only).

Update your mortgage

Jeannie's mortgage interest rate was adjusted annually, and by switching to a loan whose interest was calculated daily she saved £18 a month, or £216 a year. She could have saved even more by remortgaging at a fixed or discounted rate. Ask an independent mortgage broker for a free mortgage review. London & Country (01225 408000) will even pay you £50 if you have had the same mortgage for three years and they can't find a replacement loan that saves you money.

Save on your food bills

Use cash in a special purse just for food shopping. Try the supermarket's own label. Make do with what you have in your cupboards and freezer. Buy only what's on your shopping list, and only take up special offers on items you use regularly, such as tea, toilet rolls, cheese and bacon. Shop at local markets and farm shops for fruit and vegetables. Comparing the cost of a shopping list of 24 items over six weeks, Jeannie found the Aldi and Netto chains cheapest. Netto stocks predominantly own-label products, while Aldi sells Scandinavian brands. If comparing the cost of top brands, Asda came out cheapest. Jeannie's saving was £40 a month, or £480 a year.

Save on heating bills

Turn down the thermostat on your central heating by just one degree. This saved Jeannie about £40 a year.

Shop around for insurance

This applies to car, house and contents insurance. If possible, pay in full rather than by instalments. If you have used the same company for years, you should be able to save by changing, particularly if you have not claimed. Jeannie's saving: £293 a year.

Pay less for your phone

Jeannie uses a combination of BT Together and Vartec 1363, the cheaper calls specialist, for her phone, saving more than £80 a year, compared with previous bills. Find deals in your area by visiting unravelit.co.uk, www.uswitch.com or www.saveonyourbills.com.

Be more energy-conscious

Don't leave electrical appliances such as TVs and videos on standby; turn them off completely. This uses far less energy. Defrost your freezer every six months. Use energy-efficient light bulbs. Fill washing machines and dishwashers with full loads. Jeannie calculates she is saving £200 a year on gas and electricity.

Cut down on clothes

Jeannie believes most people only wear 20 per cent of their clothes regularly, while a lot are worn only once, for weddings and other special occasions. She simply stopped buying clothes altogether for a while, and recommends you shop for clothes with a friend who will be ruthlessly honest about whether a garment suits you. Ask yourself whether you really need each possible purchase, and whether the colour does anything for you. Will it go with your other clothes, and do you feel great in it? If the answer to any of these is no, put it straight back. If you do buy it, keep the receipt in case you change your mind. Try to wait until the sales if you need anything new.

Cut out luxuries

Jeannie says: 'The mobile phone was the first thing to go. Paying £20 a month rental and hardly making any calls was ridiculous. So we cancelled the agreement and bought a 'pay as you go' mobile just for emergencies, such as the car breaking down. Saving: £240 a year. Sky TV was another luxury for which we paid £25 per month but hardly ever watched. The annual saving was £300.'

Pay off credit as soon as possible

Switch your balances to a card that charges a low rate or nothing at all for the first five or six months, and use this period to clear your debt. Do not spend any more on this card: the interest rate usually goes up after the initial period is over. Do not use store cards unless you can clear them in full every month: the charges are heinous. If you can pay off the debt in full every month, use a card with a loyalty scheme that offers you something in return - airmiles, or money off bills for example.

Motivate the whole family

It's important that children understand when money is short, so they can all pull together.

Discuss family finances and try to come up with ideas for saving extra money for special treats. Don't economise on things that make life worth living for you, such as chocolate biscuits or pizza. Concentrate on boring but simple savings, such as turning off lights when you leave a room, or having showers instead of baths.

Set a goal for the family to save towards, such as a holiday. Children could work to earn extra spending money by doing jobs around the home, perhaps weeding the garden or washing the car.

Children who are given too little pocket money usually turn out to be wild spenders when they start earning their own cash as adults, Jeannie believes. Giving small children pocket money to manage themselves and spend on treats such as sweets - and not giving them any more if this runs out - will teach them to budget. Older children can be given a monthly allowance to pay school expenses, go to the cinema and buy clothes.