Thursday, 28 July 2011

phone hacking - get £50,000 credit

Many words are grabbing the headlines at the moment. My favourite over the last few years has been 'austerity'. This word has a number of meanings but for me it is enforced or extreme economy.

For me, the current economic conditions are no worse than in the 1980's when inflation was running high, unemployment was high, in the UK

There is a paradox between having what is required, in the form of sustenance, shelter and mobility for living a basic life, as opposed to a consumerist,voracious consumption and false assets accrual, existence.

Opposite to this there is a certain pleasure that I gain in living a frugal life, whilst looking at how others may stupidly get themselves into debt by following populist societal norms, or what are regarded as the norms.

For me, a more pleasurable but old fashioned societal norm is the use of scraps to make something useful that can be used again to  reduce consumption.

e.g. bubble and squeak, bread and butter pudding etc...  if you have a wood burner, roaming local woodland for wind-fallen fuel.

The simple but effective method of frugality has its roots in war-time Britain, when rationing meant you had to make do with what you had.

Thus when I hear people whingeing about having to economise and living without luxuries, then I have no empathy as materialism is the root of the current evils prowling our modern society.

I believe the materialistic mantra has been fuelled by access to easy credit. To prove this, I am going to apply for as many credit cards as I can, without using them at all.

My hunch is I will be able to accrue £50,000 credit in a month.

Thanks for reading

Thursday, 21 July 2011

learn from our past - mend and make do....

The main thrust of my examples of money saving are to ensure best value by researching any spend, and avoiding spend if at all possible.

I have been raised on phrases such as 'waste not want not, and ' a penny saved is a penny earned'. These sentiments may not echo the thoughts of generation Y, who have been raised on terms such as 'disposable income' and 'outstanding debt'.

My point is that it is better to be self-sufficient in your financial planning, rather than rely on the boom and bust model of yore.

It has come to pass that disposable income has fallen, as state spending reduces and both government finances and stock markets struggle to recover from the recent debt crisis.

For me, I can go even lower than my current position if required, i.e live on less income.

In the UK, there is a minimum wage, which if required, I could revert to and live off. This means, that unless I become unemployable, I am safe. This does nothing to support my future financial goals, thus, I save even when income is low.

As previously detailed, this is done by ensuring all income and expenditure is accounted for by roughing it out on pen and paper and sharing the results with all affected family members.

So, it is back to the early eighties with the theme of daily life, I predict driven by the desire to progressively earn more and find ways to spend less.

My list of principles in this model are not exhaustive but give a framework for saving cash:

  1. Shop around, don't impulse buy and use many different outlets for your purchases; 
  2. Don't throw it away if it has extra life by renovation or repair; 
  3. Attempt to buy,shop and 'live' local, to reduce fuel consumption and commuting costs; 
  4. Reduce inventory at home of major purchases such as TVs, P.C.'s, white goods by only having what is necessary and selling the rest to generate cash; 
  5. DIY if you can, save on labour costs and VAT; 
  6. Enjoy frugal dining, learn from Generation X and eat your greens, there is no need to diet if more fresh food is eaten and in quantities that are not excessive (no family pizza for one!); 
  7. Live within your means and ditch credit facilities - wean your self off credit and learn to buy cash or save up for major expenditure; 
  8. Finally, know your financial situation and take action on it.

My model is simple, can be self taught and will last through the boom and bust of personal finance.

Thanks for reading.

Sunday, 17 July 2011

laptops - what is a good price to pay?

Looking at the recent technological developments with the I-pad and products that are similar in nature, it begs the question whether or not laptops are a good buy, at all.

Having researched the markets it seems that initially, I would need to pay £350 for a  decent laptop, and possibly £500 plus for an I pad or similar.I do not need portability so the decision will be for a laptop.

The thing that I find remarkable is the stagnation in the market, there is nothing that jumps out at me that would encourage me to buy right now?? this is a frustrating situation as I want to make a purchase but cannot find a single point to buy from??

The machine I want would be fairly basic but the criteria is Windows 7, 2gb RAM and 300Gb HDD.

The results of my search:

Amazon: Acer Aspire £260

Kelkoo, sorry, too complicated to progress...

PC World :£329.97 ASUS NP-S3510-A02UK

Best buy: - £299 Toshiba Satellite C660-1JR

e-bay- £269 Toshiba Satellite C660-1JR (no returns accepted - so won't go there)

My research thus far leads me to one newcomer to the market, Best Buy, and a trusted supplier, Amazon.

So, a little bit of basic research takes me back to Amazon, who have been great on customer service on everything I have purchased from them, thus far.

Thanks for reading.

Thursday, 14 July 2011

Fight for your rights -don't give up

If, like me, you have dabbled with the excellent e-bay, a a buying ans selling forum, then you will know that some transactions are slightly convoluted.

Having purchased a speaker for a Blackberry phone for my daughter, it didn't work.

I contacted the seller, who agreed to pay a refund. I haven't received this, even though it was promised on the 31st of March, 2011.
It is not my money, it is my daughters, so she asked me to chase it up.I use the government advice, a bit long winded, but it is important to know your rights as a consumer.
This is the site I normally use for advice on consumer rights.

I guess the items are 'not fit for purpose' as they do not work. My next course of action is to contact the seller again, if this doesn't work, then I'll contact e-bay, and if it is not resolved, I'll contact the Citizens Advice Bureau.

The point here is that we have many tools at are disposal as consumers, if we can take time to investigate and  use them.

Thanks for reading.

Insurance premiums, what can be done - £70 price difference

During the course of writing this blog I have looked at many aspects of personal finance.

An unsurprising, but all the same important, eureka moment for me has come at the point when I consider how much I pay for insurance. I have decided to try my hardest at obtaining the best price policies for the level of cover required, which in the past due to time constraints, was a very unscientific process.
By now, you'll know I need to visualise my search for and the costs of insurance this by writing it down:
Car insurance - £1500
House insurance - 250
Life insurance £30
Pet insurance - £12
Total £1792 p.a.
I think it is time for me to take a serious look a t how to buck the system and save money, without compromising on the levels of cover.

I have looked first at my wife's/my motor insurance policies.
In order to ensure that the data inputted is correct, I have checked through my last 5 years policies. I believe this is important to ensure that I get the right quotes, and that I have insurance cover that is legal.
The first variable I found when getting quotes is that all insurance comparison sites are not equal.. firstly from the ease of use point of view.. secondly from the data required and the actual outputs.
Some sites only need your three year, not five year driving history. Some are easier to log into than the others.It is very frustrating if a site cannot be logged into and you password cannot be retrieved....
The resultant quotes were quite surprising....(All U.K. comparison sites)

Go compare £350
Money supermarket £390
Compare the market £ 420
Direct line £1190

These figure were gleaned from inputting exactly the same data in a 2 hour period.

I will ring the insurance companies to check that the data is correct, but assuming I can save £70 on each of the 3 drivers policies in my household, then £210 is not to be scoffed at.

If I can realise the same saving on all insurance policies, then hopefully I can realise a grand total of £251p.a.
Arguably, If I save this money every year before I retire, it gives me £8041 on a 3% compound interest. More money for the pension pot...

Thanks for reading.

Monday, 11 July 2011

Saving power - add £4283 to your pension.

How to save electricity.

One expenditure that is definitely associated with the consumerist society is the consumption of energy.
I will specifically talk about Electricity.
There is a bewildering choice of suppliers and tariffs available in the U.K., when choosing who will supply your electricity, which makes it fairly difficult to establish a base line and always get best value.

Nevertheless, one element of power management that is in the control of all of us is how much we use.

I believe that my families power consumption has been fairly steady and is at a level that is both manageable and affordable.
This situation has been borne out of constant education of and habit forming of each user in our house.
The Thing's that we do to conserve power are:

All external lights are on timers so that they can be adjusted for lighting up time alterations;
Movement sensor lights are set at minimum operation times;
Plug sockets are switched off when not in use, at the wall;
All appliances are switched off when not in use or TVs on standby;
Most of us are out during the day so during these hours and when sleeping, power consumption is set at almost zero, bar freezers, refrigerators;
Any electrical appliances that are purchased are primarily purchased on the basis of economical consumption.
A small saving can be made at night if you cook on a timer, i.e. casseroles or cooking meat if your oven has a timer.

An area where you can proactively save money, is by using cheaper off-peak power at night to take advantage of incentives offered when the National Grid is at lower demand.
We consume a fair proportion, i.e. 15% of electricity at night to make use of the lower tariff, Economy Seven.
The Meter Point Access Number (MPAN) on your bill will also start with '02' if you have Economy 7 already installed.
If you have not got an Economy Seven meter, the process for getting one is to contact your power supplier who may, subject to contractual obligations, replace your current meter with a dual one. The costs involved would need to be balanced with the offset saving of switching to Economy Seven.
The biggest boon for us as a family has been the education received at high school by our children to save energy and conserve resources. This is great.
There are renewable sources for generating power, which I would dearly love to install.
I have looked at investing in solar power, but would require £12k to set up a system. This is not an option until I have the floating cash to purchase the system.

Overall, by using Economy seven, and assuming that I save 15% of my overall consumption, I estimate to save £180 on a £1200 annual bill. If I convert this to compounded payments into my pension, it works out at a gross figure of £4283, assuming 3% interest.
This saving is possible, but only if the times at which you use electricity are adapted to the Economy Seven period.

Thanks for reading and I hope these tips can help you to reduce power consumption.

Mumsnet and the new era organic baby

Having recently had the pleasure of being part of a baby-sitting trio for a relative, it got me thinking?

If I had my time over again, would I be able to do things differently and save money?

Certainly when my children were growing up, I did not have access to the choices parents have now, with the advent of online shopping. Nevertheless, we did a good job as parents in ensuring that our children got the best level of nutrition we could afford.

I noticed one of the meals that the baby was fed was organic. Which normally equates to more expensive.Certainly we could not afford organic products when our children were toddlers.

However, having done a cursory check on baby food prices, I find that organic products, certainly in baby food, are no more expensive.

I used the trusty Amazon site to find the best deal, beating even the supermarkets, if you can get free delivery, and buy in bulk, say 6 or 12 jars.

Prices ranged from £3.51 per kg for non-organic to £9.93 per Kg for the most expensive organic. a middle ground opportunity was in the form of an organic product that retailed at £4.64 per kg.

Now given that diced,lean beef costs £9.94 at todays' prices, then I would as a cost-conscious parent, opt for the middle ground organic product, satisfying price and personal preference criteria.

There are alternatives to even this clear money-saving example.
That is, for children to be weaned on home-grown, home-cooked baby meals. I guess with the right preparation, the right tools and storage options this would be a fun and satisfying way to feed your baby.

If I look at the organic example above, then to make your own from scratch I guess may cost around the same?

If I look at 4 vegetables from the Aldi 79p range, and some budget chicken then I could make 1kg of baby food for £4.2

Arguably, it would not be organic but you could be sure everything you were putting in was of good quality.

Roll on the grandchildren.

Thanks for reading

Sunday, 10 July 2011

when is cheaper better - shaving £16395 into your pension pot

Here is a debate that I recently heard on the radio. Can cheaper be better?

In my experience, yes. A typical example is the use of wet shaving goods.

I have tried many methods of shaving, foil, wet/dry electric and of course the traditional razor.

One thing that I have never done is bowed to advertising pressure and bought into the superstar brands. i.e. those that use high profile sport stars to promote their products.

The reason for this is simple: cost.
I can buy 10, perfectly acceptable, disposable razors for 99p. Possible, I could get them even cheaper.
These razors last for about 5 shaves. I  shave every three days thus the annual cost becomes £33.

If I were to buy a more expensive shaving system, then initial outlay is £30, with 14 blades, refill blades are £6 per 4.. Assuming that I can get 5 shaves per blade, the annual cost becomes £45.

Similarly, for shaving gel I can get shaving gel for £1 at the lower end or pay as much as £5, or £20 if I want mid-range designer???

Consumption of this product runs at about 1 can per month.

Thus, if I were to buy the heavily advertised brands, shaving would cost me £105, but to employ my cheaper brand variety, costs £45 at the outside.

A man starts shaving at 16-ish, with a life expectancy of 86 years, than 70 years of shaving would cost £3150 at the lower end, without inflation factored in, and £7350 at the top end.

A £4200 difference would mean that if I saved the difference, I could add £16395 to my pension pot....

Recognising that this is a hypothetical assumption based on my own experiences.

Thanks for reading.

Saturday, 9 July 2011

How extreme can you be in saving money? retire very early?

How early is early retirement? 18,21,25?

Having recently pored through the thoughts of Early Retirement Extreme, there are questions that can be asked which may be even more radical than the aforementioned model. My basic assumption is that before you can consider early retirement, you would need/I propose you would need £40k. This sum would allow you to live for a couple of years paying rent etc. whilst you establish your new lifestyle.

The process for achieving early retirement, which can only be done if you are willing to address your spending habits and adopt a simpler life. A four stage approach as I see it is as follows:

I have looked at splitting your lifes' expenses down into 4 manageable chunks:

1) Living accommodation:

I haven't searched too hard but, I guess narrow boats and park homes are cheaper forms of accommodation than conventional housing. Your own home could be sold as capital to invest for a regular income.

Given that a park home is around £49k, narrow boats a similar purchase price, then we'll assume either is a possibility. I understand that park fees/mooring fees run at around £200 p.m.

Heating - I personally like the idea of obtaining your own fuel for a wood burning stove i.e. tree fallen, as long as you are not irresponsible, this should be free?

Washing - as the aim would be to break out of the cycle of purchasing consumer goods, I would hand-wash garments, minimising the amount of clothing used.

The furniture required would be less, and the only comforts that I would personally invest in is a computer.

This sets you up on minimum cost housing, with minimum cash tied up in assets.

2) I would ditch all forms of transport that require large capital outlay, except a bicycle, and utilise public transport for travelling further afield.This should release cash tied up in your vehicle(s) for investment
Shopping would be done locally, within walking distance.

3) Release all of your assets and turn them into cash, thus generating a capital amount that can be invested for income and growth. Dependant on your starting point, this rids you of the burden of ownership and should add to your cash pot in the early years

4)  Change the way that you approach life and what is valuable to you.As we are all (or at least seem to be) driven by an incessant need to buy the newest model or fashion/gadget, this habit needs to be broken in the early stages of your quest for freedom from slavery to the salary model. A more self-sufficient style is required to prevent out flow  of, what will be limited, cash flow.i.e.

Can I make it myself?
Can I fix it myself?
Can I learn a new skill to do the above?
Why do I need to purchase this item - will it enhance my life and achieve something or add value?
Can I get a better deal by shopping around?
Whom/what are my finances purpose, to support? me,my partner,my family? or the consumer goods providers and the banks?
Do I/can I account for all of my household income/expenditure?
Can I live on less?
How can I contribute to society and gain personal fulfilment?

I guess that this means that we have to turn our backs on the consumerist society and become more self-centred. It may be a wrench and seem abnormal for people to follow some of the practices (which are not original) that I preach, but from a personal perspective, I hope to consume less, create less waste and contribute more to society by following this approach to financial management.

I will work if I want to and balance my own needs with the financial needs of my dependants.

Follow the process above and you can make yourself an early retirement plan/escape from consumerism..

Thanks for reading

Thursday, 7 July 2011

credit abundance and its' perils

One of the main thrusts of my money-saving extreme model (M.S.ext.), is to 'only buy something if you can afford it'.
I guess most people may have outstanding loans or payments on the bigger purchases in life, i.e. a mortgage and the costs of financing a vehicle?

This I think is inevitable if you want to be a homeowner or own a nice vehicle.

For the rest of you/yourpartner/families spending, does it have to be on credit? and what is its' true cost?

For my own part, I rarely pay credit interest, unless it is very small amounts and it suits my cash flow position.

Hypothetically speaking, it could be posible to generate £40k instantly via credit cards.However, you may be charged around 17% a.p.r. for this credit.
This would take 35 years and 4 months to repay, with total interest and payments of £51784 over the period of repayment.(Calculated via MSE, on an MBNA card)

However, the M.S.ext approach would be:

Do't buy it if you can't afford it;
Why do you need to purchase unecessary consumer goods;
Can you do without and find a free/cheaper alternative;
Is it within your budgetary lifestyle, budget boundaries?.

For those lucky enough to get through the process of loaning £40k on a mortgage over a 35 year period, you would pay £154 per month on capital and interest,  have repaid the capital and got an asset (property) of £112k at the end of the mortgage repayment period, assuming 3% growth p.a.

I rest my case, credit for credits sake is a mill stone around generation X and Y's neck. we have to loosen the grip and break free from these financial constraints and liabilities..

It is in your hands, take action.

Thanks for reading.

Free of constraints - where will it take you??

Whilst growing up, I thought that to live a carefree life would only be possible if you were to have an excessive amount of cash/property/assets. This seemed a Utopian vision that was achievable by hard work, being enslaved to the corporate model and a little luck?
As I quickly found out, greed and avarice fuel the consumerist society and it takes a hard-nosed, slightly tainted and immoral persona to succeed in business, IMHO.
Additionally, unless you follow the path through to higher education, which I didn't, it becomes clear that whatever your talents, it is sometimes who you know, not what you know??

However, as we all mature and get a grasp of what our raison d'etre is, and how our lives are shaped, there are choices we can make that allow us to be more independent of external influences.
As it turns out, less is more. A more frugal lifestyle is easier to manage and maintain than the black hole of progressive spending.

The things that I have personally been able to do whilst living under the banner of M.S.ext is:

To spend more time with my, now, grown up children,  better late than never is better than not at all, as you cannot put a value on the precious time spent nurturing your family, nor indeed the relationship with your partner;

To have more time to pursue hobbies and actually enjoy them without the possibility of 'burn-out' through being over-tired and stressed balancing work and home life;

I am healthier, there is a lot to be said for taking control of your own lifestyle and dictating the pace at which you live;

I have the time to makes clear and conscientious choices and can decide where I invest my time, energy and money based on my own values and experiences.

I hope every-one has the opportunity to sample this heady mix, before they are 66.

Thanks for reading.

Wednesday, 6 July 2011

Living on a meagre income... it's easy

The current economic climate means that we seem to be in a double dip, if not a flat lining, depression of economic activity. This means that we are seeing another round of cost-cutting by all companies. This has forced me to look again at the management of my household finances, but as I  have posted before, this is an opportunity, not a hardship. This is the scenario where M.S.ex comes into its own as we battle economic forces.

I have to make a creative method of generating cash whilst maintaining the income flow from my part-time job, which keeps me semi-retired.

The way in which I will look at this is as follows:

Assess all finances to the nth degree, ensuring that income can cover expenditure;

Generate ideas for cash creation without having to resort to further, paid employment.

Assessing my finances has become easy over the years, as I have only one bank account, shard with my wife, and she has her own.
This makes it easy to check all outgoings, as all non-essential outgoings have been removed.

The figure I would use to ensure a very modest standard of living is £7000 per annul.

This means I have to have an income of £7000 x .25 to cover taxes, i.e. £8750

If I look at my current situation, I can easily cover this.

This may seem rather extreme, but if my income improves, then I Will have more cash to invest for my early retirement goal. If it doesn't, then I know I will still be able to cover my families expenses.

The purpose of money saving extreme, is  to indicate how everyone can get into this position, and protect themselves from market forces/ the consumerist trap.

Thanks for reading.

Tuesday, 5 July 2011

Your Pension Pot - is it enough?

I have always, as discussed in a previous post, tried to take a very simplistic approach to financial arrangements and written things down in order to better understand my personal situation.

When I first paid into a pension, I was working for a company who had no pension scheme, and it came at a time when the second state pension could be opted out of and the regulatory market had changed dramatically.

It gave more personal control over pension arrangements, and possibly like me, many people relied on advice from Independent Financial Advisers (IFA).

This advice was/is not always in the individuals' best interest, only in the interests of the IFA and his/her commission.That is how it seemed to me on reflection of the dealings I had.

The point here is that 'if I had my time over again', I would do things differently. However, not every one makes the correct financial decisions all of the time. So I am stuck with what I have got and have to make the most of it.

In order for everyone to maximise the information available to them regarding pensions, I suggest the following:

Check your state pension entitlement and request a 'state pension forecast from HMRC;

Clarify your company pension status and check if this is going to give you enough in retirement for your projected income (I need to set mine) at retirement;

Include a health check of other pension provisions, such as personal or self invested pension plans and any associated Additional Voluntary Contributions.

This should then give you an overall figure of your worth, in pension income terms, at retirement.

If their is a shortfall consider the following:

Make additional N.I. contributions to gain full qualifying years state pension;

Pay more, if funds will allow, into your company scheme to guarantee maximum entitlement;

Pay more into your personal pension scheme to guarantee maximum entitlement;

For all of the above, I would do the figures first, check your understanding and take this to an IFA for advice.

Be careful to use more than one IFA for guaranteed impartiality. It is as well to read the small print and understand how your pension is being invested.If the vehicle for growth is not rewarding, then consider changing this, i.e. the investment funds, property, markets,bonds,cash etc. You can be part of the decision making process.

For myself, it is a case of following my own advice above and trying to free more of my 'disposable income' to go into my pension pot.

The main challenge for me is to find a method of generating income to fund my retirement with modest levels of income and capital.

my goal this financial year is to add £3500 to my pension pot.

Here goes..

Sunday, 3 July 2011

sound investments... I think

When this M.S.ex has disposable income, spare money, it is invested. I haven't really got past the cash ISA/TESSA stage to be able to invest significant amounts of money in the stock market.

I have savings products in friendly societies (tax free products, maximum investment £25 per month), that have yielded an average return of 4.8 %.
In comparison, the current Cash ISA products have yielded 3% average, but you can invest for 5 years at 5%, on current rates. I am actually wagering at the moment that base rates will rise in the near future IMHO.

So, if these savings are at least maximised, then you will match the friendly society products with the Cash ISA rates, making the most of your tax free allowance.You would be at the mercy of interest rate improvements, so if possible, maximise both.

So, it is safe to say in just comparing 2 products that investing in the stock market is better.
However, family society unit trusts are run by expert investors, who have many years experience of balancing risks versus returns.Thus, even though I follow the mantra of ERE, I am really not a confident investor and would not expose myself to the risk of the stock market unnecessarily. So how do I get confidence?

I have completed a basic fact-finding on investment and it looks like a 'fund supermarket' may be better for the cautious investor, i.e investing in a balanced, medium risk basket of shares.

I have used the guide from Which?, the link is shown below:

Type of ISAValue of £1000 ISA after 5 years
Best-performing UK All Companies sector fund£3000 £3,000
FTSE All-Share Index
£2050 £2,050
Worst-performing UK All Companies sector fund£1450 £1,450
Best Buy instant access
cash ISA
£1250 £1,250

Table notes

Figures taken from 31 December 2002 to 31 December 2007 and include charges. Source for stocks-and-shares Isas and FTSE All-Share Index data: Lipper Hindsight

So, it looks like investing in a basket of shares, if the Cash is available, is the better option.

So, I have to find £10500 to take advantage of the full potential of the UK ISA allowance.

Here goes, I have just found 8p, so only £10499.92 to go....

Friday, 1 July 2011

Save money, wash a car - save £1800 p.a.

There is an argument that if you were to cease doing the menial household chores, then you could pick up more entrepreneurial or profitable pastimes to ensure your time is well spent.

I agree that to spend time making money is better than saving money, perhaps...

Listening to a show today there was a debate about employing domestic cleaners versus doing the housework yourself? I have been raised to only buy what you can afford, and to be self sufficient as far as possible.

Well, I believe that maths is always the best way to prove a point. i.e. make your decisions based on fact.

The cost of reducing household chores i.e. pay someone to do it
Cost of cleaning a car = £6
Cost of cleaning your house = £30
Assuming this is done each week then the sums are:

£36 x 50 (2 weeks on hols) = £1800.

So, to create £1800 clear salary/profit you would have to:

Work for 188 hours at £12 per hour (25% reduced for tax etc.) or:

Generate £18000 turnover -  if the mark-up profit was 10% and to pay salary for the time spent generating the turnover, say £10 per £1000 turnover would be £180.

If you were to invest in shares/stocks, then the £1800 needed to pay for the chores would mean that you would have to own £60000 with a 3% yearly dividend, just to clear this payment.

So it is not quite as easy to say that contracting out your domestic chores is a no-brainer if you look at my figures.

The additional benefits of the examples above are that whilst doing your own chores you are expending energy, thus probably staying fitter.
Consumption is reduced by not having to travel to the car wash, zero conveyance for the contract cleaners.

The final point is that if your house is populated by more mature children as well, then the labor normally comes for free??

Thanks for reading