Entries Tagged 'advice' ↓

Financial companies seek to make money out of us. By and large they are very successful. The profit of the top banks is second only to the oil companies. This means we need to be wary of their attitude; we need to bear in mind, that to save ourselves money we will have to see through their sales technique, small print and things they would rather we didn’t know. If we an attitude of deference and loyalty to the big finance companies, they will just sell you their most profitable products, making sure you receive the lowest return on your financial situation. These are some tips to get a better deal from the financial system.
Using A Credit Card / Interest Free Overdraft as a Loan.

It is possible to use a credit card as a means to borrow money at very low rates. It requires some care; but, if you build up a balance and then transfer it to other cards, it is usually possible to enjoy interest free credit for upto 12 months. Typically, banks now charge a 2% balance transfer fee. If you switch credit for 12 months, it is an effective interest rate of 2%. Much better than loans or the usual interest rate on credit cards. However.

• Make sure you stick to the agreement and never miss a payment; they will use this as an excuse to cancel the 0% agreement.
• Don’t get overconfident and borrow thousands of pounds assuming you can switch it all to 0%, if you become too indebted banks may stop giving out 0% interest credit cards.

Always Protect Credit Rating.

If you have a good credit rating, these tips become much easier to do. If you develop a bad credit rating, you will find it more difficult and expensive to take out financial products. This is especially true in the current climate. Protecting your credit rating is so important it should be taught in schools. But alas, it isn’t. However, you can teach yourself - most of it boils down to common sense. See Tips for improving credit rating

Complain

Banks know the importance of Public Relations. They don’t like unhappy customers. If you have receive a late payment penalty, or charged for going £1 overdrawn, don’t just feel miserable and inwardly curse the bank. Write a polite letter explaining why the penalty was unfair / not deserved / an accident due to lost post e.t.c. You may be surprised that banks often respond to complaints in a favourable way. If they don’t respond suggest the local newspaper may be interested in the story of an 70 year old lady charged £60 for going £0.05 overdrawn. Remember there are many things that you can complain about, such as failure to explain alternatives or failure to explain all terms and conditions. For example, many British customers gained a refund from taking out personal loan insurance. Banks were found guilty of misselling, many millions of pounds still remains unclaimed.

Complaining to Your Bank 

Don’t Stay With Existing Products For Ever.

This is the biggest single mistake people make. Financial companies view these loyal consumers as the ‘cash cows’ - basically they are easy pickings. Even if they get charged high interest rates, the banks know they will not lose these customers because the customers are either too lazy to switch accounts or have a mistaken feeling of loyalty to the company. It is the same for insurance, savings accounts and mortgages. Sometimes it is just a matter of asking the bank for a better deal or renegotiating your insurance deal. Some customers are amazed that if they ask for a new quote, it maybe their existing company who offer
the cheapest deal.

• Every year take the time to renew your big bills and outgoings; true it takes time but the hourly savings make it very worthwhile.

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It is often the case that a frugal lifestyle can make a big difference to also helping the environment.

These are some tips which will help you save money and the environment

1. Moderate Heaters and Air Conditioners.

To heat the house an extra 2 degrees becomes relatively more expensive and contributes to increased carbon emissions. Try getting used to having the thermostat a little lower and the air con a little higher. Just by wearing an extra jumper you can make a big difference to your bills and the environment

2. Maximise Insulation

You can save heating bills by maximising the insulation for your house. This can involve investing in upgrades such as loft insulation, double glazing and cavity wall insulation. Check to see whether the government or agencies may be able to subsidise this. My local council (Oxford) provided cavity wall insulation for free!. The above will pay off in the long run. But, you can also make immediate savings by cutting out drafts, closing windows and using thick insulated curtains.

3. Only Boil What You Need.

To Make a cup of tea, my lodger used to boil a full kettle, enough for 12 cups! Not only does this take longer, but it uses energy unnecessarily. Eventually, I got round to asking him to only boil minimum and it will make a difference to saving money and energy. Similarly when boiling vegetables don’t have the pan boiling for 30mins, there’s nothing worse than overcooked brussel sprouts!

4. Cycle and Walk.

Nearly 50% of all car journeys are less than 3 miles. All of these journeys could be completed by walking or cycling. Both of these types of transport are much cheaper than other filling up with petrol (gas). This is especially important with the price of oil being so high. As an added benefit it will also help you get fit!

5. Turn it Off.

Everyone know we should turn lights off when not in the room, but less well known is the cost of leaving electrical appliances on standby. If you leave your TV permanently on standby you will unnecessarily use electricity and energy.

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Economic Articles: 

• Economics and global Warming
  
• Will US economy really benefit from tax cuts?

Money Articles

• Egg Complaints come to the Boil - egg customers complain after company withdraws credit cards
• Banks criticised over poor information on interest rates 
• Investing in Yourself at the Simple Dollar

Blog Carnivals
Carnival of personal Finance 114 included my post Top Ten Tips for getting first mortgage 

Festival of Frugality featured my article: How to Save money and the environment 

One thing about participating in blog carnivals is that I feel I ought to change the title of my blog. Finance Blog is a bit boring. Maybe the Falling Pound or Simple Finance.

The art of complaining is a difficult to master. Some people are reluctant to complain despite awful treatment. Others struggle to complain without becoming angry and upset. In life there are many situations where it is important we complain in a polite but forceful and direct manner. Complaining should not be seen as a tortuous experience; it is an opportunity for both firm and consumer to benefit. In the long run firms do want to keep customers happy; if firms never received complaints how would they improve and learn from their mistakes?

Don’t Suffer in Silence

Too many people receive bad treatment or service and then suffer in silence. Inwardly we are cursing the company like mad; we will tell our friends about our treatment; we will feel sorry for ourselves and harbour a sense of righteous indignation - but, we won’t complain. Perhaps this is a British / Canadian phenomena, Americans generally seem less reticent about complaining. But, nevertheless, there are many people who avoid complaining and therefore never get the opportunity to rectify their situation.

Complain with Dignity

You can learn alot about how to make a complaint by observing other people in the process of complaining. Some people get so upset and unbalanced that it is embarrassing to be in the same room. The fact your meal is 20 minutes late is inconvenient, but it is not quite the end of the world. If you complain with dignity and calm you gain two benefits. Firstly, the company is far more likely to be sympathetic to your problems. Even more importantly, when you complain with dignity you don’t lose your inner peace of mind. We complain to get a better situation for ourselves; if we become angry, upset and emotional we will feel miserable even if our complaint is dealt with. To complain with dignity means we can still complain forcefully; we should be polite and calm, but this should not be mistaken for being feeble.

Be Clear of the Facts

There is nothing more embarrassing than making a long complaint only to realise it is you who are to blame. Before you make a complaint make sure you have access to all the facts. If appropriate, get together all the necessary paperwork such as terms of agreement. If you are in full possession of an agreement and can make specific references to order number, dates e.t.c, your complaint will have much more authority. It will increase the chance that your complaint will be taken seriously.

Written Complaints Often More Fruitful

Written complaints have various advantages. It enables you to marshal your thoughts and facts to create the most convincing case; when speaking it is easy to forget of certain details; it is easy to get angry and forget the goal of the complaint.

Complain to the Right Person

Sometimes complaints don’t get dealt with because we are complaining to the wrong person. If your initial complaint gets brushed aside try a different avenue. Find the contact of someone higher up in the chain of management. Quite often the initial complaint gets discarded, but, if we feel we have been mistreated we need to be persistent and not give up at the first rebuffal.

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If you would like to ask a question on the housing market, economics or mortgages, feel free to leave a comment at the bottom of this post.

I will endeavour to answer it the best I can.

I studied PPE at Oxford University and now work as an Economics teacher at Cherwell college in Oxford.

If you would like to ask a question on Economics, you can visit my Economics Blog - ask Economics Question 

Financial New Year Resolutions

The New Year is an opportunity to make a fresh start, getting rid of bad habits and resolving to find some new good habits. Financial Resolutions for the New Year can include:

Have an Annual Financial Service.

At least once a year it is worth looking at all your financial decisions and decide whether they can be improved on. For example, each year you should check that you have the best insurance and mortgage quote. Make sure your investments are offering the best return with a sufficient diversity of risk. During your annual financial service it is an opportunity to look anew at each decision. Sometimes we continue with a product / service only because it is easier to maintain existing deals without the bother of switching. During this service, you will work out your true financial state and work out whether you need to make any changes to avoid debt.

Build Net Worth

Don’t just think of income that you can earn. Think of ways that you can increase your net worth. This may involve gaining qualifications to enable higher paid jobs in the future. It may involve building your personal brand to enable greater income flows in the future. Building net worth is also a route to passive income. - income that is not dependent on how many hours you work for someone else. Creating a website is an excellent way to generate potential for net worth

Avoid Impulsive Buying.

Buy what you want, rather than what businesses succeed in selling to you. Impulsive buying is easy to do, especially around Christmas and in certain locations. Therefore, be careful where you spend your time. Be prepared to wait and come back later - If you really want something, you will come back and get it later.
Don’t Be A Slave to Money

If we are judicious with money we can make it go further. However, don’t forget that money is there to be enjoyed. Make a list of how you would like to spend money this year. Work out how much free time you are able to create.

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The rise in number of mortgage defaults is caused by many factors. see: mortgage defaults. In the US, and to a lesser extent in the UK, increasing numbers of homeowners are struggling to meet their mortgage payments and are facing the possibility of their home being repossessed. If this is the case and you are Struggling to Pay your mortgage, these are some  actions, which can potentially save your home being repossessed.

1. Remortgage

This is perhaps the easiest and most effective method. If you happen to be on your bank’s existing standard rate, the chances are you will be able to find a much better deal. Those who are looking to remortgage, can usually take advantage of a mortgage rate 1-2% below the standard variable rate. This can equate upto £100 a month for homeowners on a standard size mortgage. Whether you are struggling or not, it is always worth trying to remortgage.

2. Extend Mortgage Term

If your monthly mortgage payments are getting on top of you, consider extending your mortgage term. By doing this you will see your monthly payments fall. The downside is that you will end up paying more in the long term. However, if it means you are able to continue meeting the minimum mortgage payments, it is worth doing.

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In the past 20 years rising average wages have corresponded with people working longer hours. In many ways this is contrary to expectations; you would expect people with rising living standards to spend less hours at work, and use their increased earning power to enjoy more leisure time.

However, it seems increasingly common for people to spend more time working, no matter how much income they gain. How do we know when we have the right balance between earning money and enjoying leisure time? These are some suggestions to avoid getting the wrong balance between money and work.

1. Decide How Much Income you Need.

What income would enable you to do the important things and save a certain % for the future? If you work out how much income you need, this will enable you to avoid the trap of seeking to earn as much as possible. If you try to earn as much as possible, income becomes the sole objective and you end up with no time to spend it. Remember money is a means to an end, not an end in itself.

2. Place a Value on Your Leisure Time.

Work may give you $20 per hour. But, how much value do you place on your leisure time? Leisure time has a potentially great return than another $20 in the bank. It is not just about valuing leisure time, but valuing relationships. Many workaholics find that spending every hour earning money, inevitably leads to declining relationships.

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• Is it a good idea to get a Mortgage with the help of your parents?
• Is it a good idea to help your children get a mortgage?

In the UK House Prices have risen much faster than average incomes. This means that, despite rising real wages, young people are finding it increasingly difficult to get on the property ladder. This situation is also predicted to get worse. A report by the Association of Mortgage lenders predicts a further 40% rise in house prices over the next 5 years. This is against a backdrop of a fundamental shortage in supply.

With this depressing state of affairs, how can young people get a mortgage?

1. One option is to consider self certification. However, without a large deposit, they will find it to be an expensive option. There is also the real problem of having to borrow much more than income.
2. A second option is to consider a joint mortgage. This is when you share a mortgage with someone else. However, the immediate downside is that you have to share the house; disputes may arise and it will never feel like you own the house in its entirety.

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On leaving college / University you will probably find yourself in a combined situation of:

1. Large Debt.
2. Paying a high % of income on Rent.
3. Struggling to Get On property ladder.
4. Working hard in a new job.

If you have recently left college and entering into the field of work, these are my financial tips to help improve your long term financial situation.

1. Buy a House rather than Rent.

Buying a house gives many long term financial advantages. It is like an investment for when you are older. If things go to plan, a 30 year mortgage taken out when you are 25 means that you will be able to live rent free from the age of 55. In effect, this is like saving for a pension because it is improves your standard of living in retirement. Therefore, if possible try to buy a house. If this means not paying into a pension fund, no harm. Buying a house is a better use of money than getting a pension.

• But how to get on the Property Ladder?

Of course, in practice buying your first house is increasingly difficult. House prices have risen faster than incomes making it increasingly difficult to get a mortgage for even the cheapest house. If you find yourself in this situation, don’t despair, there are various things you can do to get a mortgage on a low income.

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