So just what SHOULD mortgage borrowers be doing as interest rates tumble. I wish that it were that simple, but it’s a puzzling business for ordinary consumers watching interest rate movements in credit crunch Britain.

Cheers as the Bank of England slashed Base Rate to 3 per cent from 4.5 on the sixth of November, were quickly followed by jeers as most of the big mortgage lenders did precisely …. nothing.

We’ve all got used to a half per cent cut turning into a measly .2 or .3 of a per cent by the time it reaches us. Adding insult to injury, anyone who also has savings will find the banks only too quick to slash the rate on their savings.

The best advice for those looking for a new deal is to sit tight … for a while at least. Those of you lucky enough to be on a tracker rate (where the interest rate on your mortgage is pegged at, for example, 1% over base rate) are lucky. Your mortgage will automatically be following base rate down by 1.5% next month. That’s a nice early Christmas present to go with the half a per cent cut you got in November.

Those on standard variable rates have to trust the generosity of their lenders, and hope that they play fair and reduce their rate accordingly. All I can say to that is GOOD LUCK. The SVR is the rate your lender sticks you on once your fix or tracker lapses … it’s a kind of inertia selling, and the banks know most of us are rubbish about checking on this sort of thing. Those on the SVR tend to be the least financially aware – and so they tend to get the worst financial deal of all.

That meant that even after the base rate cut to 3%, the average SVR was 6.79% … more than twice the base rate, an astonishing markup for the banks. Admittedly, after Alastair Darling pulled the banks in and demanded they pass the cuts on, Halifax, Nationwide, Royal Bank of Scotland and NatWest, all said they would be reducing their standard variable rate by 1.5 per cent.

However, that means you’re STILL only getting 5.29%, which is a pretty rubbish rate when base is 3%. You SHOULD be looking for a better deal. But again, it’s been tough to find one. The lenders have been pulling most of the tracker deals – you can see why, as a tracker automatically cuts the bank’s margin as rates fall. And as for fixed deals … well even a day after the cut in interest rates, the cheapest fix was STILL around 5.25%. Those of us who are already on fixed rates can find the fall in interest rates a bittersweet experience. You are, relatively at least, losing out.

The BIG advantage of fixed rates is certainty of course. If rates go up, you’re protected. If rates fall, you at least have the security of knowing what you’ll be paying each month. But of course, we’re most of us greedy. And that lovely secure fixed rate can look a bit ropey when you’re still paying 6 per cent.

However, those on a fix should savour the security, and look forward to better deals in the coming months. Rates ARE going to start to fall as credit frees up, as free up it must. Beware though. The fall in house prices may have reduced your equity and thus increased the loan to value of your home. So if you had a £100,000 mortgage on a £200,000 home, but your property value has dropped to £150,000, then your LTV has risen from 50% to 66%, and that could mean a higher interest rate on your new mortgage.

If you can wait do. And while you’re waiting, here is some groundwork you can be doing to get the best deal. Make sure your credit history is rock solid before you apply. Check it with Experian or one of the other credit agencies and act to repair any problems. I’ll have more on repairing dodgy credit in a couple of weeks. Make sure you’re on the electoral roll too … it all helps.

Save! Ensure you can put down the biggest possible deposit. You’ll get a better rate, and you have a better chance of getting a mortgage full stop. Don’t change your job now if you can help it. A thick sheaf of payslips from the same employer will impress the lenders, as will plenty of healthy looking bank statements. And don’t move either … a long period at the same address is a big tick in the lending box. This last bit of advice may ring a bit hollow if you’re looking for the mortgage BECAUSE you’re moving of course!

Some of the best deals are back with brokers now … that wasn’t the case a month or two back. Get a broker who can sell from the whole market (not all of them do). Read the small print on the terms and conditions they send you. Read the small print on arrangement fees, redemption penalties, terms of the mortgage, the lot. Which is better, 6% but no arrangement fee, or 5% with a £1000 arrangement fee? Not sure? Then you haven’t done enough research!

Don’t ignore your current lender. You know what – they might just negotiate rather than lose you. Though don’t count on it, some lenders are muleishly stupid and shortsighted on this stuff. But most of all … keep checking! Deals are changing by the day and some aren’t around very long. A regular check on the best buy tables on moneysupermarket.com, moneyfacts.co.uk or godirect.co.uk will keep you in the picture.

Credit checks: Experian, Equifax
Mortgage rates: Moneyfacts, Go Direct, Moneysuperrmarket

Tags: Mortgage rate advice, Mortgage rate advice article, Mortgage rate advice, Mortgage rate advice article, Mortgages, mortgage, rates, personal financial advice

This is the horror scenario for many UK consumers. Your outgoings are stubbornly high (the declining cost of commodities shows no sign of filtering through to gas and electricity prices or the cost of groceries in the shops). You can’t raise your income (with recession biting over the next year or two, few of us will be in much of a position to ask for a pay rise). That leaves one avenue alone … looking for some money saving extras to make your weekly disposable go a day or two further. There are limits here – we can’t all live on grass and move to a cave, even if we wanted to, but here are ten quick tips to save cash.

Money saving extras top 5

1. Move onto a cheaper gas or electricity tariff … it still won’t be cheap, but if you haven’t changed for a year or more, you won’t be getting the best deal.
2. Check out cheaper mortgage deals. Again, the lenders aren’t exactly queuing up to lend just now, but if you are on your bank’s standard variable rate (SVR) you certainly AREN’T getting the best deal.
3. Shop around. LIDL, Primark, Netto … all offer good, affordable alternatives to the upper scale high street. A family could save hundreds of pounds a year by moving downmarket – and downmarket doesn’t have to mean worse.
4. Make do and mend. Don’t throw stuff away, fix it. And try swapping with friends and neighbours. Boot sales and jumble sales have never seemed such a good idea.
5. Buy less. You don’t have to refloat the economy single handed. Question every purchase …. you’ll be surprised how little you need.

Tags: money saving, cost cutting, economising

Related: Moneysaving articles

The point is of course that there isn’t one interest rate. There is the much talked of ‘base rate’, currently at 3%, and this is the rate (plus a small premium) that the banks borrow money ‘wholesale’. They then lend that money on to you, in the form of mortgages and other loans. And they make a margin on this – fair enough, they are businesses. Most of us are quite happy to pay this, when the banks are borrowing at 5% as they were a year or two ago and lending it to you at 6%. In fact, in the heady days of lending, you could often get a fix at below the then current base rate, as they would use this as a loss leader, to hook you in. After your term was up, they would rely on customer inertia to see you slipping unnoticed onto the standard variable rate.

But when they are borrowing at 3% and lending at 6%, we are not simply seeing an historically high gap between base and lending rates, we’re also seeing astonishing markups – 100% in the above case. There are a number of reasons for this. The freeze in credit means that it’s hard for the banks to borrow money from each other, and that makes the interbank lending rate (LIBOR) rise. So they are borrowing at much above base before they can lend to you. These illiquid and poorly capitalised banks are also trying to rebuild their balance sheets, get more cash on board in other words, so they are hoarding the stuff. Nobody wants to be the next Northern Rock and suffer a run on assets. All these factors make the interest rate rise. And all conspire to make that mouthwatering 3% or anything near it just a dream for ordinary borrowers. In answer to my friend’s question – the interest rate is the one you can get!

As ever, forward planning is the key. Don’t bury your head in the sand and don’t assume it can’t happen to you. Many of us wait until we’re already in trouble before we make a plan. It could already be too late to save your house by that point, and panic is never a good ally when you’re trying to be coolly strategic.

The second thing, in the words of Joe Strummer, is ‘Know Your Rights‘. Work that system for all it’s worth … you’ve paid enough tax into it over the years after all. Some statistics first. Around 1.8m in Britain are now officially unemployed. Though cynics will point to the number of long-term sickness benefit claimants in the UK, and say the number is already much higher. By the end of 2009, many are saying we’re going to have 3m on the dole.

Now your rights, and you have a major advantage if you work for a larger company. If the firm employs 20 people or more, it MUST consult the union before it gives anyone notice. This will be a staff rep if it’s a non-union organisation, but either way. Remember my redundancy advice UK readers – IT’S THE LAW! They can’t just ignore this. And they HAVE to give 30 days notice …. 90 days if more than 100 people are to go. You can’t refuse to go unfortunately, but they DO have to pay you.

Don’t get too excited, redundancy pay is a lot meaner than it was last time we had a major recession. If you’ve been there two years or more you’ll get half a week’s pay for each year of complete service if you are under 22, a full week up to age 40, and 10 days if you are 41 or over.

But CHECK your contract! You may find you’ve waived this right when you signed up (though you almost certainly didn’t notice, who does!) Conversely, your firm may offer better deals than the statutory minimum, and remember that the first £30,000 is tax free. So a tax rebate should be on its way to you. You won’t be surprised to hear that the taxman has tightened up on things though. To ensure you do get your cash tax free, you must be genuinely redundant. Getting sacked doesn’t count, nor does ‘gardening leave, nor does a pay-off in lieu of notice … Remember redundancy doesn’t mean YOU losing your job, it means the JOB has to disappear.

What if you get more than £30,000? Well lucky you. You can shield the excess from tax by putting it into your pension … and that also has the benefit of future planning. This is money you can’t now spend! Pensions may look like poison at the moment (blame the stockmarket) but the value of shares will rebound over time. So as long as you’re not retiring in the next few years, this could be a very good time to salt away a tax free sum.

Do you have unemployment or redundancy insurance? If not it may be the time to buy it. And check existing life insurance policies you ALREADY have … you may be surprised to find you’re already covered! It may not be much, but it could keep you afloat.

Now could be a good time to think laterally. Even if your employer is a two-man band, with you playing the trumpet, all is not lost. Try negotiating with your boss, as he probably wants to keep the show on the road too. Maybe he can cut you down to one day a week rather than killing your job altogether. That way, there’s less disruption to his business, and you keep SOME money coming in. In your new and unwanted free time, you can look for other part time work. The old irony. Just as it’s easier to borrow money from banks when you’re rich, it’s MUCH easier finding a job when you’re still in one.

Finally, planning ahead again. This could be a very good time to audit your skills. Portfolio working was a buzzword a few years ago, but it could be making a comeback. I’ll be looking at turning your expertise into hard cash in a fortnight’s time. And if you haven’t done it yet … construct that household budget! Saving money has NEVER been such a good idea. I’ll have lots of ideas for you on THAT one next week.

Tags: Redundancy advice, Redundancy advice article, Redundancy advice article, redundancy, redundancy advice free, redundancy advice UK, personal financial advice

How, you may ask, can this happen. Well there’s an old Scottish saying that Gordon will be familiar with ‘many a mickle maks a muckle‘. Many little things add up to a big thing, in plain English. And this half a billion quid is made up of lots of little things … money forgotten in moribund bank and building society accounts, old insurance plans, share certificates, and cash in National Savings accounts.

Typically the sums are small, a few pounds in some cases. Often the customer has moved on and not cleared their old current account. Sometimes the person has died and the account has been missed by their family. Now Gordon’s plan is to snatch those millions and use it as the core of a charity to do good works. We have no problem with that – better than using it to prop up the Exchequer’s flagging finances. But how much better if you could claim any of that cash that belongs to you, before it disappears forever.

Banks reckon they have between £250 and £300m sitting unclaimed. This has accumulated amongst 500 British banks over the last century. Obviously there aren’t that many UK banks now. Most have been swallowed up by bigger and bigger banks down the years. There are now 42 banks and all are signed up to a scheme to reunite customers with their cash. This includes all the big high street names, which between them have access to all UK clearing bank accounts going back to the year 1900. If you think you or yours have a moribund account, contact mylostaccount for details on how to claim.

Building societies have consolidated even more furiously down the years. A century ago there were 1500 of them, now just 59. But all have signed up to mylostaccount. With an estimated £130m or more lying unclaimed in building society accounts, it has to be worth a pop.

Thousands of us buy life insurance and pension policies yet never claim on them. The companies reckon there is around £100m unclaimed on life policies and £300m on pension policies which have never paid out. Go to the Unclaimed Assets Register, or UAR, for more. The Pension Service should also be able to help.

And while we hear a lot about benefit abuse, the big story is the amount of benefits we DON’T claim. The Department of Work and Pensions reckons around £10bn of means-tested benefits go unclaimed each year, including pensions, council tax and housing benefits. Go to Citizens Advice or HM Revenue and Customs.

We looked at the supersafe haven of National Savings & Investments a couple of weeks ago. The problem is, loads of us pop our money into NS&I and promptly forget all about it. The figure unclaimed, including savings accounts, unclaimed premium bonds and their prizes, is staggering … over a billion pounds! Okay, the average balance in moribund Ordinary Accounts is a measly 19p … but even these accounts add up to £200m altogether. You’ll find the URL for the National Savings tracing service on the blog.

The plunge in share prices is bad enough without you simply losing your shares. But that’s what loads of us do. Buy them, then move without a forwarding address. Or simply forget we owned them. Many people die owning shares their families know nothing about of course. The total sum unclaimed is at least £12bn … and that’s before you factor in the dividend payments! The Association of Investment Companies (or AIC) can help you track down lost shares.

We’ve all heard about unclaimed Lottery prizes. After a while they lapse, though at any one time there are millions of pouns unclaimed. But this is dwarfed by the £31m of unclaimed Premium Bond prizes. There’s no point having this supersafe investment if you’re not checking your numbers! You can catch up on the winners at the National Savings website.

Related: www.mylostaccount.org.uk, www.nsandi.com, www.theaic.co.uk, www.uar.co.uk, www.thepensionservice.gov.uk, Citizens Advice, HM Revenue and Customs

Tags: Reclaiming dormant cash, Reclaiming dormant cash article, Reclaiming dormant cash features, Reclaiming dormant cash article, Reclaiming dormant cash, domant funds, dormant insurance plans, share certificates, National Savings accounts, personal financial advice

Yet you’ve been driving a car that, as far as you can see, is running absolutely fine. Now I’m not saying all garages are at it – the vast majority are probably decent and honest. And of course drivers like me, who don’t even know where the catch is to release the bonnet, aren’t necessarily going to know there is anything wrong.

But that’s just the problem. If we don’t know, we can never be entirely sure if the garage is playing it straight or just charging you for work that doesn’t really need doing. Even worse, you can’t be totally sure that the work was actually done.

What you need is a test centre without a vested interest in selling you parts.

And most people don’t realise that there is such as thing. In fact, local authorities across the UK run their own MOT test centres. The best way to find yours is to Google the phrase ‘Southwark Council MOT test centre‘ (obviously putting in the name of your own local authority here). Or simply find the website of your local authority, and get the link from there.

The great thing is that these centres DON’T do repairs, so they have no incentive to fail you unfairly and flog you parts you don’t need. They DO have a reputation for strict adherence to the Ministry’s testing standards though.

While you’re at it, think about your other regular motoring expenses. We’ve been constant supporters on this site of petrolprices.com. This marvellously simple website simply asks you to enter your postcode, and the clever database will quickly supply you with the cheapest petrol stations in your area, with prices per litre listed. If you burn a lot of fuel then it’s well worth signing up for their regular newsletter.

Don’t just renew your car insurance with the same company each year … you will NOT get the best deal. There are a host of excellent price comparison sites for insurance, including moneysupermarket.com confused.com and gocompare.com. Running a price comparison on all three should take you less than half an hour – a reasonable investment when you could save hundreds of pounds.

The same goes for breakdown cover. If you are buying it from your regular insurer then you’re probably losing out. Again, use a price comparison site to find the best deal.

Do the same for finance if you’re buying a new car, and learn the tricks on getting a rockbottom price on a new motor. That last one is an artform in itself …

There are fantastic deals to be had on new and nearly new cars at the moment. Take a look at the newspapers and you’ll see that all the big car makers, including Toyota and Vauxhall, are laying off workers in the UK, as they simply can’t sell enough motors.

It’s all part of the growing recession engulfing the economy, but there is a bright side – you should be able to really haggle hard for that shiny new motor you want, as the dealer is almost certainly desperate to sell.

But don’t just think new. We all know that a car loses a huge chunk of its resale value the moment it moves off the forecourt for the first time, so why not go for a nearly new car. Buy a three month old model with 2000 miles on the clock and you could save a third off the new price. And try the big discount brokers, such as jamjar.com, UKcarbroker.co.uk and dealdrivers.co.uk. These supermarkets offer great discounts against the regular highstreet dealers.

Related: www.jamjar.com, www.ukcarbroker.co.uk, www.dealdrivers.co.uk

Tags: Save with council MOT test centres, MOT, M.O.T., save money, MOT test, council MOT test, council MOT center, personal financial advice

Safe certainly, but the price you pay is rock bottom rates of interest. But even in today’s chaotic markets, some principles remain. And the prime tenet of ANY investment portfolio is to have a balance of risk. Your banker investments deliver security and minimal growth, while at the other end you want riskier investments that will multiply each year. So assuming you have some money you can afford to risk, I look at some alternative places you could be stashing it this year.

An interesting punt could be on zopa.com. This social lending website puts together those who want to borrow cash with those who want to lend it, cutting out the banks. This ‘peer to peer’ lender launched in March 2005 and allows you to lend from as little as £10. Since the website opened, more than £26m has been lent (and of course borrowed). Go onto the website and you’ll see people looking for loans and other people offering money to borrow. You decide the rate of interest you want and the level of risk you choose (higher risk goes hand in hand with a higher return of course). Zopa borrowers are graded by how risky they are. And between borrower and lender a market is made. Many people like to lend this way because they know they are helping borrowers out directly and quickly. And of course it’s a very efficient way to get money moving around. But self interest plays the greatest role, reasonably enough.

With the shortage of money available on the financial markets, interest rates on unsecured personal loans have been rocketing. And that’s meant that the average rate of interest on Zopa has rocketed from around 8% to 10% in the last year. Your risk is reduced, as loans over £500 are spread across at least 50 borrowers.

Gold and silver are traditionally seen as safe havens for cash, though languished rather until recent years. Uncertainty in the markets always sees people piling back into precious metals though, and gold hit $1000 an ounce this year. It’s fallen back a little since, though every blast of bad news sees the price spike a little. The argument against gold is that it has no intrinsic value. Then again … somebody will always buy it, which is more than you can say for some shares and properties at the moment.

However we’re not going to ignore shares. Who knows where the FTSE 100 will stop falling. I don’t and neither does anyone else. However it’s a fact that lying at its lowest level for four years, it probably has further to climb than to fall. The FTSE currently lies just below 5000 points, yet a year ago it was over 6600. I wouldn’t suggest putting all your money in a tracker (though with dividends reinvested it could give you a solid income), but the pressure down on the stockmarket means a lot of very sound companies have had their share prices artificially depressed. Do your research and buy conservatively and you will pick up some real bargains now. As one pundit said recently ‘Everyone was buying last year when stocks were obviously overpriced. Now they’re all selling when stocks are obviously cheap … work that one out.’

And then there’s the other toxic investment of 2008. Property. Don’t touch it with anyone else’s cash, let alone your own, according to the pundits. Some say prices will fall 25% or more … some say that it already has. But always remember that all property is not equal. Barratte may be slashing the price of its newbuild apartments in northern cities, but then it built far too many of them in the first place. Keep scouring property websites such as rightmove.co.uk and you will find people desperate to sell, and many of them very eager to slash prices. Do your maths, ensure you’ll get a rent that will cover all your mortgage costs, and you could bag some real long term rental bargains. Then forget about the selling price for the next five years and, next time you look, it should be worth more than you paid for it.

Finally, the best investment you can ever make in turbulent times is to pay down your debt. Reduce your borrowings on expensive credit cards for a start. Pay off any personal loans. But most of all, pay off as much of your mortgage as you can. With interest rates still low, it’s easier currently than it has been historically. If house prices do fall, then it’s important to get yourself out of the risk of negative equity. While if they rise (unlikely at present) you’ll be laughing … as you increase your equity.

Related: www.zopa.com, www.rightmove.co.uk

Tags: Safer returns on your cash, Safer returns on your cash article, zopa, safe investing, safe havens, interest, safe returns, returns on investment, personal financial advice

The nightmare vision in the City and on Wall Street is of people queueing up to withdraw their cash. It’s a nightmare because there isn’t enough to go round if everybody went to the cashline at once. But then what? Stick it in under the pillow? Joking apart, that’s a rotten idea for several reasons. Firstly there’s inflation. 4% and rising. Withdraw your £1000 from the bank and keep it in cash and, within a year, it’s worth just £960. The year after it’s down to £920. Second, it’s risky … get burgled and you’ll find it very hard to reclaim the cash under your household insurance.

The fact is, to protect your savings you need to be earning interest. And to earn interest you have to stick the cash in a bank of some sort. This week we look at Britain’s SAFEST bank, National Savings and Investments. Underwritten by the Government and with a cast iron guarantee. ‘There is no way you could lose your money,’ according to a spokesperson this week. Clear enough?

They don’t get any more solid and boring than NS&I, but solid and boring is just the ticket in these turbulent times. Check out the front page of the website and you’ll see the legend ‘100% security for your money‘. Sounds just the ticket and, unsurprisingly, savers have been piling into this safe haven over the past few weeks. Look at the website and you’ll see a checklist of what National Savings can offer, and they have plenty of products. There are instant savings accounts, children’s bonus bonds, fixed interest savings certificates and guaranteed income bonds. So whether you’re saving for yourself or your kids, locking away money for the long term or need to be able to withdraw at any time … there’s something for you.

What you WON’T get of course is a top rate of interest. There’s a solid principle in saving that the riskier the investment the better the return … And we’ve all seen where THAT has got the western financial system in the last year or so. The interest rates on National Savings start at just 1.85 per cent gross for the Instant Savings account, on deposits of £100 or more. You get a cash card, so you can make withdrawals at cash machines. But for goodness sake make sure they’re free cash machines, not the rip-off dispensers that you find in a lot of convenience stores.

You can also use the card to pay in cash at post offices. Rates do rise with bigger deposits, though even deposits of £50,000 or more top out at 4.4%. But you’re buying security not price.Rates are better on the National Savings Direct ISA, paying 5.3% and of course it’s tax free. You’ll need £1000 to open an account. Moving up, a good hedge against inflation is the National Savings Index Linked Savings Certificate. The product guarantees to rise in line with inflation and gives tax free interest – very good for higher rate taxpayers.

You do have to lock your cash up for either three or five years, but it currently delivers 9.5% for higher rate tax payers. You can invest as little as £100 and up to £15,000 for each issue of these certificates. What you have to realise is that these long term products price in future interest rates – so the rate you get now anticipates the interest rate a year or two down the line. It’s a fair bet that, even with inflation on the up, interest rates are going to come down. With the US and Europe heading into recession, the central banks simply HAVE to cut rates to give the economy a nudge. So children’s bonus bonds that were giving 5.1% a year ago are now down at 3.7%. Again though … it’s all about safety. But even as the markets go into meltdown you HAVE to look to growth and the future.

Related: National Savings official site

Tags: National Savings, National Savings article, National Savings and Investments review, National Savings article, National Savings, personal financial advice

Of course, NOBODY should get to 18 not understanding money and how it works. It’s ridiculous that personal finance isn’t taught as a core part of the National Curriculum. A student can leave school with a ‘A’ level in economics, understanding supply and demand, GNP and money supply, yet not understand the fundamentals of money management.

The other problem is that parents of students don’t really understand the way it works these days. Thirty years ago, when I was a student, we had to struggle on a pretty miserly grant, but there was limited opportunity for getting in debt … banks just wouldn’t give you much of an overdraft. We could also sign on for dole money during the holidays.

Today, students have a raft of grants and loans available. Accommodation standards are a lot better too, and so students can live in a great deal more comfort than their parents did. That’s great … but of course it all has to be repaid at some point. As you could, conceivably, leave university £20,000 in debt, it’s important you take control of your finances from the start.

The crucial thing, and this goes for any of us trying to live within our means, is to draw up a budget, giving yourself a set amount of money to live on for each week. Otherwise, those on limited grants can simply run out of cash before they run out of weeks in the term. While those who do have access to more funds will simply see overdrafts spiralling out of control.

You need to have all your income on one side of the balance sheet, all your expenses on the other. The very act of making a budget tends to focus the mind and rein in excess spending, so make sure you’re fastidious about this. You don’t need to log every Mars Bar you buy … no one should want to develop an unhealthy obsession with money, and there’s really no need. You SHOULD allocate a set weekly amount for spending on comforts and luxuries – getting a fixed sum of cash out of the ATM on Monday morning and disciplining yourself to live within it is a good plan … what you spend it on is up to you.

But you DO need to anticipate EVERYTHING. People proudly show me budgets that have mysteriously missed their mobile phone bills, quarterly electricity bills, any contingency for travel, and so on. If in doubt, overestimate … better to have a little left at the end of term. Some people will breezily dismiss budgeting as a bore and tell you they aren’t that interested in money. Trust me, you’ll spend a lot less time dealing with, thinking about and worrying about money if you budget. The key here is ‘do it once and let the system take care of it’. Don’t budget and you’ll continually be firefighting and getting nasty surprises.

The choice is between spending a morning constructing a budget that will then run pretty much on autopilot, and serve you for three years. Or a nagging feeling that you don’t really understand your finances at all … and bank statements you don’t want to open. It’s your choice!

Of course, you do have to return to your finances every month or so to see how you’re doing. Again, the fact that you have a plan will make this a much easier and less painful exercise. And as things change, you can respond.

The key, you’ll not be surprised to learn, is to make income continue to exceed expenditure. If it doesn’t then you have two options – to raise the first or to cut the second. Now this may seem a stating of the obvious, but it’s apparently not obvious enough for most of us to graps (we Britons have the highest levels of personal debt in Europe remember).

So how to put money into the plus side. Part time working is an obvious option, and many degree courses offer ample time to do this. You don’t want work to be crowding out your study time of course, though ‘working your way through college’ is a tried and true American way of paying for a degree. As a rule, institutions tend to recommend you take on no more than 15 hours a week outside work. Consider selling your unwanted stuff too – ebay is the one everyone thinks of, but Amazon is great for buying and selling secondhand course books.

Back to the other side of the balance sheet, and how to save money. You may find you have to discard many of the luxuries you enjoyed at home – many vegetarians take up the lifestyle as much through frugality as for ethical reasons. For the same reasons, if you can’t cook then learn. And if you do your food shopping at Waitrose then it may be time to get acquainted with Aldi and LIDL.

But there are financial perks to being a student. Make sure you’re getting all the discounts and freebies you’re entitled too. Free banking is just the start – check the best buy tables at moneysupermarket.com for the best deals. But beware of people queueing up to offer you ‘cheap’ credit cards. 0% is great until it stops, but stop it will. Really, the only FINANCIAL advantage to a credit card is the month or so of free credit that you get when you take the card out … and you only get that once, the rest of the time you’re simply repaying last month’s debt. Better to learn to live within your budget.

The studentbeans.com website is a great source of student savings. An NUS Extra card will net you discounts at many big retailers, and check out our regular voucher code deals for big savings on just about everything.

And remember you’re not alone here. Find out if your college has a student finance adviser … your bank branch certainly should.

Tags: Student budgeting advice, Student budgeting advice article, Student budgeting, student, college budget, college, personal financial advice

Before we even get to insurance, breakdown cover, servicing and the rest, there is a huge amount you can do to save money on fuel, just by adjusting the way you drive.

Think about this statistic. Driving in fifth gear rather than third can cut your fuel consumption by a quarter. There is a right way to do this of course, and it doesn’t involve trying to pull away in fifth.

The National Energy Foundation says that you should change up a gear when you hit 2500rpm in a petrol car and 2000 in a diesel. Cutting your speed from 85mph to 70mph on the motorway will save you a litre of fuel every 20 minutes.

Also consider this, by driving safely within the speed limits, you’ll not only save money on petrol but on the inevitable speeding fines you will rack up. And if that doesn’t sway you, think about the planet. The RAC reckons that simply driving more gently could save Britons £2.2bn and prevent 5m tons of C02 entering the atmosphere each year.

What does driving smoothly mean? It doesn’t mean accelerating between the speed bumps and hitting the brakes as you approach them … a practice I’ve NEVER understood. Accelerate gently, let the weight of the car help you to slow down. In cold weather you don’t need to warm the car up for five minutes before you drive off … modern cars have automatic chokes and should spring straight into action.

Blow up your tires. Think about how hard it is to pedal a bike with poorly inflated tires. Now consider the extra work your engine is having to do to push your half ton of metal around town with under pressure tires. You don’t just burn more fuel, the tires will wear out quicker … more hassle, more expense.

Empty the boot. Your engine is having to work harder to pull the golf clubs and kids bikes that are littering up the storage space. And why are you still carrying the bike rack and storage box on the car when you got back from holiday six weeks ago? Get them off and start saving on fuel.

We don’t get our cars serviced regularly because it’s expensive. False economy. Your poorly tuned engine is burning up excess fuel, and the dirty air filters aren’t helping either. And your car will live longer and hold its value better with regular servicing.

The trick is not to go to the Citroen or VW dealer who sold you the car though … they’ll charge you top dollar for each service. Try to find a reputable independent garage. Recommendations from friends or community websites are the best bet here. Ensure you get your handbook stamped with the service history, as this will help you get the best price when you eventually come to sell.

Bit stuffy in the car? Why not turn on the air con? No! Open the window instead, that’s what it’s for. Air conditioning can increase fuel consumption by up to 10% according to the Institute of Advance Motorists, and it’s not doing the planet much good either.

One thing you can’t legally avoid is car insurance, and one thing you shouldn’t is breakdown cover. The first time you’ve had an expensive tow from a callout garage you’ll wish you’d bought the latter. But you must shop around. Stick with the same insurer year after year and you WON’T be getting the best deal. It’s called customer inertia and retailers grow fat on it. There are great price comparison websites out there for insurance and breakdown cover … USE THEM.

When it’s time to replace the car, NEVER buy new, unless you get an unbeatable deal. Going nearly new is much cheaper, as new cars depreciate sharply as soon as they roll out of the showroom. Check out the cost of leasing rather than buying, and even consider rental cars services if you only use the car occasionally. Their rates start from just £3.95 an hour.

And lastly, get out of the car for a change. I find it hard to imagine living without a car altogether, but I do replace a lot of my journeys with cycling and walking (again, not recommended for the supermarket shop). You’ll save a lot of money on fuel and wear and tear, and you won’t have to pay a fortune for parking (or parking tickets). You could even buy a foldup bike, such as a Brompton, that goes in the back of your car.

Tags: Save money on motoring, Save money on motoring article, motoring, save money, fuel saving, driving, cars

Now all of us who commute regularly will already be buying travelcards, getting the best price for our journey. But what about occasional travellers.

The trick with train travel is to book your tickets a long time in advance if you can – there are no discounts for last minute bookers here.

The train companies must release tickets 12 weeks before a train is due to run. So work out the exact date they go on sale, and contact either to thetrainline.com or the rail company you’re travelling with. This way you’re likely to get the best possible price.

Rail ticket pricing in the UK is a mess, with a myriad of different fares, often on two trains running the same route. It’s a joke. But you can turn this farago to your advantage. Rather than buying a single ticket for the whole journey, find the cost of buying individual tickets for the trains covering your route. This is called split-ticketing and it can be a lot cheaper. Mad yes, but perfectly legal, and the rail companies HAVE to oblige you. But watch out. Your train MUST stop at the connecting stations along your route. Simply waving at Rugby as you speed through will not impress the ticket inspectors. Similarly, it may be cheaper to buy two singles than one return. SO CHECK!

Are you entitled to use a railcard. The Family and Friends card gives you a third off adult tickets and 60% off children’s fares. The Senior railcard and the 16-25 card give you a third off most fares. That should soon repay the £24 cost of the cards.

And check out other moneysavers, such as the Rover tickets, which offer unlimited travel over short periods (the number of days varies) for a set price.

Think about when you’re going to travel. Shift your journey from 8am peaktime to 10am and you could halve your fare.

If you’re buying tickets online, watch out for the extras. Does the website charge a booking fee? Is there a fee for credit card payments? Both charges may be outweighed by the savings you make, but check it out.

Does it have to be the train? You may have waved goodbye to coaches in your student days, but these days the intercity coaches are both luxurious and seriously cheap. Fares such as £12 from London to Norwich, or £4 from Birmingham to Manchester can generally beat even the best the rail companies have to offer.

And though there’s only so far we’d want to travel on a coach, for trips to nearby European capitals such as Amsterdam and Paris, the coach beats the train hands down.

But watch out too for special promotions. National Express is currently running the ‘bums on seats‘ promotion, offering £1 tickets on 75 routes nationwide. You have to book (though not travel) by the 14th of September 2008. Unbeatable!

Bus travel is particularly affordable for the over-60s, who get free offpeak tickets, and with National Express offering half price on longer journeys too. A brilliant way to see the grandchildren or simply see more of Britain.

And as well as the big boys such as Stagecoach and NationalExpress, there is a host of new bargain operators, such as Citylink and Easybus.

Finally, it’s always worth checking the air fare. Not many of us think of jumping on a plane from Bristol to Newcastle, but the budget carriers such as EasyJet and Flybe compete very keenly on many routes. Of course you DO have to factor in the cost and time of travel to get to the airport … which may soon dull the allure of your bargain half hour in the air. Trains and buses do have the advantage of taking you right to the city centre.

And you may want to examine your eco conscience too. Personally, I think taking a plane between British cities is about as absurdly decadent and wasteful of the planet’s resources as it gets … and the view isn’t as nice as from a train window. But it’s your call.

Whether you’re traveling by train or bus, it’s worth paying a visit to the website, owned by the bus and coach company Stagecoach, actually undercuts its parent company’s prices. There are storming deals here, but at all costs avoid calling its highly priced 0900 phone booking number.

The final option is to rent an auto. With a boat-load of locations you can find rental car coupons and vouchers if “by-road” is the means of transportation you prefer.

Oh, and whether you’re traveling by train or bus, take your own sandwiches and tea (or if you’re feeling particularly decadent, a nice chilled Muscadet). You’ll find it considerably cheaper, and much nicer than the on-board snacks and refreshments.

Related: Family and Friends Railcard, The Train Line, National Express, City Link, Easy Bus, Flybe, Stagecoach Bus, Easyjet, Megabus

Tags: How to save money on travel, How to save money on travel article, How to save money on travel features, How to save money on travel article, travel, save money, train travel, bus travel, coach travel, air travel, personal financial advice

It doesn’t seem so long ago that you had to shell out around £20 for ANY DVD, let alone the classics. The stock of classic movies is rather lower these days, with many of the Saturday and Sunday papers giving away classic films with each edition. Recent freebies include Brassed Off, Educating Rita and a raft of classic Dr Whos.

Of course it may not have occurred to you to watch Ring of Bright Water or Carry On Christmas, but think of it as a chance to widen your viewing horizons! I reckon it’s worth the price of the Mail on Sunday for the freebie, and you can always hide the newspaper under your coat on the way home!

There are rather more A-list offerings from the Free DVD Club. Sign up, choose your free DVD, complete a questionnaire, and it’s sent to you free of charge. No scams, no catches, and current titles include The Matrix Reloaded, The War Bride, Chopper and The Shawshank Redemption – more at www.free-dvd-club.com.

We’d love to bring you voucher codes for free mobile phone calls, but I’ve yet to see one. You can get free topup vouchers for the orange, o2, T-Mobile, Vodafone and Virgin networks though. Go to www.myfreerewards.co.uk. You earn points for playing games online, signing up for free offers and taking part in online promotions. You then spend your points on everything from those £10 phone top up vouchers to free Sony PSP handhelds.

Now we have to say that you’d have to take part in a great many promotions to earn enough points for the PSP … but it’s a bona fide offer. For any of these signup schemes, I’d recommend you set up a new gmail or hotmail account and apply from there – otherwise you could find your inbox filling with spam email.

I’m a big fan of www.last.fm, an online radio station which has revolutionised the way music is delivered. You tap in ‘Bach’ or ‘Arctic Monkeys’ and it will deliver a stream of tracks by or similar to that artist. They offer some 200 free downloads every week … a great way to expand your listening and your collection. And if you like classical music, it’s worth checking out your local concert hall, town hall or even library, as there are often free lunchtime concerts by up and coming musicians.

If you’re having trouble getting there, sign up for www.liftshare.org, which is an online database of people around the UK offering free lifts. It’s green, it’s sociable and it’s free … and it’s the modern safe way of hitch hiking.

www.silverjewelryclub.com offers free silver bracelets, earrings and more. All you pay is a shipping charge of $8.99. Again, it’s a loss leading promotion, and you can expect a raft of promotional emails to follow your application, inviting you to spend more money. So again, use that free email account as a receptacle for all the rubbish.

You’d be amazed what you can get free if you just ask for it. Test drives seem to have gone out of fashion, but car companies are desperate to shift their products at the moment. If you fancy borrowing a flash motor for the weekend, it’s worth asking your local dealership for an extended test drive. Now obviously this isn’t going to work with Fred’s Secondhand Motors, but we have friends who’ve blagged test runs of Saabs, Mercs, even a VW Camper Van for weekends recently. You’re practically getting a free holiday!

www.asda-photo.co.uk and www.photobox.co.uk are just two of the photo printing services offering you free prints when you register with their websites, a generous 50 prints with the latter. It’s well worth signing up to get your holiday snaps printed even if you never use them again.

And on the subject of holidays, how about a free stay in somebody’s Parisian apartment of New York loft? Check out homeswap websites such as www.homelink.org.uk. You pay a small fee to sign up and you could save hundreds on your vacation.

Finally, why not trust to luck. I’m not a betting man, but William Hill always has free bets for new accounts, currently a £25 online bet, and other bonuses such as £50 to play in its online casino – more at www.williamhill.com.

I’ve merely scratched the surface here … there is a HUGE amount of free stuff online and elsewhere. You just have to use your imagination and Google it.

Related articles: How to save money on shopping, Free haircuts and makeovers, Free dental treatment, Free tickets to attend TV recordings, Get free trades from Paddy Power

Tags: How to get free stuff, freestuff online, free

To clarify – negative equity is when the amount of your house is worth less than the mortgage on it. It’s an obvious risk with so many lenders offering mortgages that exceed the property value in recent years. The gifted deposit racket was one face of this, though Northern Rock’s infamous 125% ‘Together’ mortgages weren’t much smarter … being an instant turnkey introduction to negative equity. The insanity of these deals was easy to hide when prices were rising, but come the fall it all starts to look less clever.

But actually, negative equity doesn’t really matter unless it coincides with a need to sell. You may be left rueing the fact that you overpaid for a property that’s now fallen 10% in price … but unless you put it on the market, it’s irrelevant. Give it five or ten years and the surges and dips in house prices are forgotten. In fact, forget all about the putative market value of your home – it’s somewhere to live in, not a piggy bank.

But what if you ARE forced to sell. That could arise if you start missing mortgage payments, and some lenders are turning the screw after just a couple of missed payments. That’s because they know that things don’t miraculously just get better – the first missed payment is just the top of a very slippery slope.

So what should you do if you start getting into problems? Contact your lender before it gets out of hand. Although we all love to bash the banks, they generally don’t want to repossess homes – it’s not that they are softhearted, it’s simply an expensive business. The first month you THINK you may miss a payment, let them know first. It may be that they can offer a payment holiday, or put you temporarily on an interest only deal … though bear in mind these make the mortgage more expensive in the long run. Have a plan for repayment when you approach your lender – Financial Services Authority guidelines say that they SHOULD listen.

If things get really bad, you may have to sell. Better if you initiate the sale then have your home repossessed and lose the lot. But however you slice it, selling now could see you in negative equity … so take our preventative measures first. Type ‘avoid repossession’ or the like into Google just now, and you’ll find dozens of companies offering to solve your problem by taking your house off your hands for cash. Be VERY careful here – you are far better turning to Citizens Advice first. Short term cash fixes are unlikely to get you anything but a rock bottom price.

Assuming you’re not at this desperate pass yet … What pre emptive measures can you take? Good mortgage deals are hard to come by just now of course, but that shouldn’t stop you searching for the best possible deal. Amid all the angst about borrowers coming to the end of their fixed deals and having to go onto lenders’ Standard Variable Rates, many observers have ignored the fact that a lot of borrowers are on Standard Variable Rates anyway. Many of us are incredibly cavalier about overpaying for our mortgages, loans, credit cards and the rest. If you have a £100,000 mortgage at 6%, and you re mortgage at 5.5%, you’ll save £500 a year.

And don’t pay for mortgage advice. There is great free advice from brokers such as John Charcol and London & Country, and the web is full of best buy advice – see moneysupermarket.com or moneyfacts.co.uk for current best buy mortgages. Indeed, you may not even HAVE to re mortgage. Try your lender first, asking them what is the best deal they can offer you … it’s always worth a try. If you DO have any spare cash, overpay your mortgage as much as possible. You may have cash on deposit in savings accounts earning miserable rates of interest. Put it to work reducing your mortgage and getting you out of negative equity and into the black. People usually don’t realise how much they can save over time by doing this. For instance, overpay by £100 a month on a £150,000, 25-year mortgage and you’ll save more than £38,000 over the term. You’ll also pay it off nearly five years early.

And when you re mortgage, switch to a repayment from an interest-only mortgage if you can. Interest only become very popular when house prices were rising in double digits each year – after all, why worry about a debt that never went down if the equity was constantly rising? But stick with interest only in a flat market and you’ll just be servicing debt that never goes away – get it paid off. There’s another point about these hitherto unfashionable ideas of paying more each month. It’s the old saving principle of ‘paying yourself first’. Reduce your mortgage by £200 each month and you’re effectively saving that £200. After a month or two of higher payments you probably won’t even notice that you have less spending money after the mortgage is paid.

Cut the contingent costs of your home. Shop around (moneysupermarket.com again) for the best deals on buildings and contents insurance. Most of us just take the same deal from the same lender year after year. It goes without saying that you should slice any unnecessary fat from your monthly expenditure … do a budget now! But also consider making some money from your house. The ‘Rent a Room’ scheme lets you earn £4250 a year tax free for doing just that.

Related: Money Supermarket, Council of Mortgage Lenders, Rent a Room scheme, Financial Services Authority, Citizens Advice, John Charcol, London & Country

Tags: Negative equity and avoiding repossession, Negative equity, avoid repossession, repossession, mortgage, housing

So big is the increase that everybody missed the fact they also put up electricity by 9.4 per cent … which at any other time would have been headline news. It means anyone on a dual fuel deal will see prices rise by 25 per cent. And this comes just six months after BG raised dual fuel prices by 16 per cent. Fuel prices have now more than doubled over the last four years, and there’s more to come. Analysts reckon there is likely to be another 20 per cent rise at the beginning of 2009. And while British Gas are the current villains, they are likely only to be the first of many this summer. EDF Energy has already announced rises of 22 per cent, and there is sure to be more.

Okay, that’s the bad news … so what can you do about it. Well there’s not much point switching just now – though that would be our usual advice. As the other companies are going to be upping their prices you could end up with a worse deal. Far better to go for a fixed or capped deal. It may well cost you more in the short term but long term you are protected against further price rises. Head to uswitch.com where you can compare the best of the fixed and capped fuel deals. But we’d advise you to hurry as the relatively cheap fixes are starting to disappear as the companies anticipate future rises in the price of wholesale gas.

At time of writing, the cheapest fixed tariff on the market was from EDF, though this is likely to change fast. This fixes the price you pay for electricity and gas until October 2009. British Gas, meanwhile, is offering a fix until 2011, though at a slightly higher per unit rate.

It’s also worth looking at switching to a dual fuel deal if you don’t currently have one, as some suppliers offer incentives to switch. Moneysupermarket.com pays you £30 to switch to dual fuel and Energyhelpline.com pays £15. Bear in mind though that these discounts will be dwarfed by the actual size of your bill – it’s important that you look at the overall cost, rather than being seduced by signup incentives.

The other side, of course, is simply to use less of the stuff. We’re horribly wasteful of domestic energy in Britain – all those twinkling LEDs on your TVs and computers at night represent energy being burnt away. Turn off all those standby lights and you could save around 5 per cent a year on your electricity bill.

Remember to run the washing machine at 40deg rather than 60deg. And to save on gas heating bills, turn the thermostat down. Knocking it down 1 degree C can save an astonishing 10 per cent on your bills. Set the heating to come on later in the morning and click off earlier at night. Ensure your loft is adequately insulated, and investigate grants for cavity wall insulation. And finally, to take my old mum’s advice. Don’t turn on the fire, put on a jumper! It could be the easiest way to save money you’ll find all year!

Tags: Protect yourself against rising energy prices, Energy prices, rising energy prices, how to save energy costs, lowering energy costs

1. Price comparison sites
   Of course you don’t have to rush round comparing prices yourself. That’s what price comparison websites such as pricechecker.co.uk, kelkoo.co.uk and pricegrabber.co.uk are for. The way to use them is this. Find the product you want to buy and be specific about what you’re looking for – it’s crucial that you’re comparing like for like – prices of Duracell AA four-packs, or the iPod nano in baby blue. If you’re looking for the Pirates of the Caribbean two-disc set you don’t end up with the one-disc set. Then type your spec into the comparison site and let the clever robot go off and search for you.
2. Be a late adopter
   Of course early adopters aren’t bothered about saving money, they want the new Playstation or the latest iPhone before everyone else … that’s the point for them. It does mean they occasionally end up with a LaserDisc system or a Betamax video, but hey. But for the rest of us it pays to wait. In fact, you don’t even have to wait these days. Technological change is so quick and so relentless, that you can simply buy the state of the art product from six months ago … and you’ll get a hefty discount.

   Take the example of the Canon EOS400 digital SLR camera, the market’s best seller. In July 07 it was selling for £700; this summer it’s literally half the price. There ARE newer and more expensive SLRs now of course … but ask yourself. How much SLR do you need to pay for?

3. Always haggle
   Brits hate doing it but haggling works – another reason to buy instore rather than online of course. I’ve got to admit I’m terrible at this, but I have an indefatigable sister in law who argues the price of everything … and she invariably gets a deal. Cars, electrical goods and other consumer durables are prime targets. In fact the salespeople are often given permission to knock 5% or 10% off without even speaking to their manager. Give it a go.
4. Travel to the shops
   And barmy as it may sound to fly halfway round the world to do your shopping, consider this. Americans generally pay less for jeans, cameras, iPods … in fact just about anything. Factor in the current strength of sterling against the dollar and the US is one big bargain bin just now.

   A great idea is to combine a shopping trip with a holiday – because your hotel room and eating out will be cheaper too of course. By the same token, we wouldn’t advise anyone to go shopping in the eurozone just now, as the euro is horribly expensive against the pound. In fact if you can avoid going ANYWHERE that uses the euro in the next few months you’ll do your wallet a favour.

5. Buy online … with care
   You can’t haggle on the internet of course, but the other side of the coin is that online shopping means you’re under no pressure to buy, with no pestering sales people. Compare prices, go away, have a cup of tea, come back to the screen and then push the ‘buy’ button. But do watch out for the online tempters. I’m not Amazon bashing here – they’re brilliant at what they do. But their little buying hints, the ‘if you liked that why not buy this’ are deadly to your bank balance. Again, buy at leisure, never on impulse.

   It might surprise regular listeners to know I have my reservations about online shopping. For CDs it’s great … for cauliflowers not so good. I know what I’m getting if I order the new Bob Dylan album or the Wall-E DVD, but I don’t know if those tomatoes are ripe when I order from Sainsbury’s. There are other downsides too. Delivery charges can rack a huge amount onto an online ‘bargain‘. Check that prices aren’t quoted net, with tax then added on (a killer with airfares of course).

   And if time IS money, then I’ve spent a fortune waiting in the house for deliveries to arrive – not to mention having to head off to the UPS depot to reclaim my stuff because I nipped out to the shops. Sometimes it’s just cheaper to get stuff at the store.

6. Voucher codes
   We had to mention them eventually. No matter how good a deal you’ve already snared for yourself, you can frequently get an extra 10% off, perhaps free delivery, or extra freebies, by tapping in a voucher code at checkout. A huge variety of retailers are using voucher codes now. The trick is to go to Google and do a search for the product you want, add a PLUS sign and then type in the phrase ‘voucher code’. You’ll be pleasantly surprised.

Tags: How to save money on shopping,  save money shopping, save money online, smarter shopping

If you haven’t changed providers for a while, you could almost certainly save money. But first you need to figure out what you want from your internet connection. Remember, there’s very little point paying more for superfast download speeds if you only use the net to check your emails once a day. Similarly, there will be no point paying more for a larger download limit. If you’re a light user you should, with some reservations, go for one of the cheaper deals.

Conversely, if you’re a keen user, and love downloading movie clips or music, then it’s worth paying more for one of the mid range deals. And if you’re never off the net, and download loads of movies and music, then you don’t want to be worrying about your monthly bill. You also don’t want to be sitting there watching stuff download painfully slowly. So consider going for one of the unlimited download deals, and with a speed that allows you to download stuff as fast as you can.

Finally, check on the customer service from the various providers. It’s all very well boasting loads of features, but that’s no use to you if your connections down for most of the day. Talk Talk may have made a great success of telephone services, but they’ve found being an ISP a lot tougher. They’ve got some rotten reviews from users. They have a deal costing £3.25 a month, but I reckon it’s expensive at the price. In fact, beware the rock bottom deals out there. Tiscali are among the cheapest on the market at £4.49, Virgin have a deal offering free set up and unlimited use for £3.50. But you really do get what you pay for. It’s value for money you should go for, not simply saving the price of a couple of pints each month! So here are the deals we think you should go for.

One of the deals we really like at the moment comes from O2, which has managed to move from phones to computers with few apparent problems. They have three packages, for light, medium and heavy users, and have been getting good write ups for service and reliability. These packages are particularly good value for existing O2 customers. There are no usage or download limits or setup fees. The 8Mbit deal is £12.50 a month, or £7.50 for existing O2 customers. The 16Mbit deal is £15, or £10 for O2 users. The 20Mbit deal is £20 or £15 for O2 customers.

And you may not have heard of PlusNet but their customers seem to love them. Setup is free, download speeds are a standard 8Mbit, and you pay £9.99 for a monthly download limit of one gigabyte, £14.99 for 15 gigs, which should be something to keep everyone happy.

Tags: Broadband best deals, how to shop for broadband, best deals with broadband

I always think optimism is the best approach but there’s a difference between optimism and wishful thinking. I must have spoken to half a dozen people (mainly estate agents) over the last month who’ve said ‘I wish journalists would stop talking up this so called credit crunch‘. Optimism? That’s more like a child sticking his fingers in his ears and talking loudly so he can’t hear you telling him it’s time for bed. Denial in other words. So let’s remove our digits, look coolly at where we stand with our money, and how we can prepare to survive the downturn.

First the bad news. We’re being hit by a horrible combination of economic blows.

Number one: there’s excessive debt in the form of credit. Loans, overdr afts, credit card balances – Mr and Mrs UK have been living beyond their means for a decade, and that was always going to have to stop sometime. The credit crunch hasn’t changed this, it’s merely been the catalyst that’s sent many of us over the edge.

Number two: collapsing house prices you know all about. It’s real and contrary to what you might read, it’s been happening for years. Ask any property investor in London, and they’ll tell you that prices began stalling a few years ago now … that’s why a lot of smart investors stopped buying around 2003. Unfortunately a lot of us have used easy credit to buy property at inflated prices. Not so bad if it’s a house you’re going to live in for years to come … pretty awful if you saw it as a solid, capital growth investment.

Which leads us to number three, the turning off of credit. The catalyst for the big turnoff was a rise in defaults on US ’sub prime’ mortgages. This tipped a panic in the markets about the number of these high risk mortgages on the banks’ mortgage books.

Lots of grief for the banks here, but you don’t really care about that. The problem for the consumer is that confidence falls and the banks stop lending each other money. Which means they stop lending you money. So it’s hard to remortgage, and when you do, rates have soared.

So to the horror of Number Four. Inflation. Just as the mortgage on our overpriced house goes through the roof, the price of our groceries and our petrol soars. It’s partly down to increased demand from China, India and the rest. And that’s largely because their economies have grown strong on exports. Exports of all the stuff WE’RE buying with that credit and equity release. And it’s also down to traders piling into oil and commodities because other stocks look so weak. The global economy is all connected you see.

Oh, and the final whammy … inflation is eating away at your savings. Enough bad news? I thought so. But it’s never unreservedly bad. What you need to do now is look at how you protect what you have, and put investments in place that will emerge stronger. First the safe bets:

Reduce your spending: do a household budget now, and cut any you don’t need. A day spent doing this could save you hundreds a year.

Cash: It’s a tricky one, because inflation is the silent killer, eating away at your cash reserves. You need a savings account that exceeds inflation at least, so we’re talking tying up your money in a long notice account. Halifax’s Regular Savings Account is offering a whopping 10% just now – keep searching the web for best deals.

Bonds: they don’t offer spectacular returns, but they’re designed to give solid long term protection as markets and currencies wobble.

Next the medium risk:

Gold: the classic defensive buy down the ages. I’m not suggesting you go out and buy an ingot of the stuff, but there are exchange traded funds or ETFs that let investors buy into this market collectively … rather like the investment funds you might own.

Stocks and shares: they’ve dropped and they’ll probably fall further, but DON’T try to time your purchases unless you’re an expert. Dripfeed money into a shares ISA, as much as you can each month up to your £7200 yearly limit.

This fixed spend means you buy fewer shares when they’re expensive, but more when they’re cheap (like now). It reduces the risk of buying overpriced stocks, and means you buy more with potential to grow. It’s called pound-cost averaging.

Finally, the most risky:

Property: If you’re a potential first time buyer, frustrated by ever rising property prices, then step back … for once the market is on your side.

Be grateful you DON’T own a rapidly depreciating asset. If you can, start squirreling away cash for the bargains that will emerge in the next months. My bet would be those overpriced city centre developments on the books of the big UK builders – you know, the ones who are laying off staff and ceasing building. I wouldn’t think of buying during 2008 though. I’ll be looking at some likely developments in the weeks to come.

Value shares: a lot of share traders would say there is value in shares right across the board now. It might not be a brilliant time to buy Bradford and Bingley, but some of the bigger and more solid banks, such as Barclays, have seen their share prices halve in a year. They will still be around in a decade and their share price will be right up their again.

Related: All about ETFs, Halifax, ISAs

Tags: Safe havens for cash, Value shares, Stocks and shares, property investing, Halifax, Bonds, Gold, credit crunch, credit, safe cash havens, safe havens for cash, recession proof savings, personal financial advice

And that means many of us are paying big extra charges as we go over our pre agreed limits. And many of us change our phones way to often. But instead of simply going for the latest model, stop and think how you could save money.

Don’t just upgrade your phone, there are some fancy new models coming out this year, including the new Apple 2.0 3G iPhone. But rather than buying the model on a 12-month or 18 month think about buying a cheap contract mobile phone in the UK, very frequently you’ll be better simply buying the handset as a standalone purchase and then buying a SIM card only contract.

That will invariably make the contract cheaper, as it’s based just on the SIM (of course) rather than on the inflated cost of a new phone. SIM only contracts exists on all the big networks, and you can still get your free talktime and text deals… but your notice period is likely to only be 30 days rather than the whole 18 months or whatever.

Ask your provider for details. Even better if you don’t want a new handset – you can slot the new SIM into your old phone. What’s the point of that you ask? Well the advantage is that there are appealing new contracts appearing all the time. For example, T-Mobile, has a £20 a month deal, giving users 500 minutes talktime plus unlimited texts. All you have to do is buy the SIM card. And as well as the SIM only deals, there are lots of other ways to save money on mobiles. If you ARE changing handsets, then don’t just throw away the old phone.

We’ve talked before about getting cash for phones. The Carphone Warehouse offers trade ins against new purchases, while mobilephoneexchange.co.uk will buy your old mobile off you. Alternatively, you can donate your phone to charity, where it will be recycled and sent to a developing country.

If you buy a contract mobile phone online it is often cheaper than in the shops – look out for contract mobile phone sales on those sites too. Find out about family call plans, as all the big providers now offer these. You’ll save money and you can ensure you always have a tab on the kids… as you’ve got their number. Ask to change your contract mobile phone tariff. Say you’re going to move unless they switch you to a cheaper plan. Just like banks, mobile companies entice you in with a plan and then leave you languishing as better deals arise… demand to be switched. Consider whether you’d be better switching to pay as you go. If you are one of those people who just want a mobile to be contactable .. and make very few calls yourself, then it’s almost certainly a waste of money having a contract. Buy the most basic phone. Because even the most basic phone – and I’m looking at my sad and b attered four year old Nokia now, has a camera, and a video camera and, for all I know, a teasmade.

Fact is you don’t use most of the extras… So don’t buy them. And the fewer fripperies there are on a phone, the less there is to go wrong. And don’t go for the free gifts… the only thing that matters is how much your contract will cost you each year. Refer a pal and get a bonus. 3Mobile offer £30 to both you and a friend if you refer them and they sign up. Find out how much various things are costing you. How much are texts. Are calls to landlines ludicrously expensive. Is it cheaper for you to ring other people on the 02 network for example. How much are you going to get stung for ringing home from abroad… people get VERY nasty shocks on this one.

And check that tariff. Some of the cashback monthly tariffs are hellishly complicated. The lender quotes £25, but you have to pay £35 and then you claim it back at the end of the contract, and so on. They could have been designed to confuse us… or am I just being a sceptic?

Related: www.moneysupermarket.com, www.mobilephoneexchange.co.uk

Tags: mobile phone, contract mobile phone sale, best contract deal for mobile phone, contract mobile phone tariff, personal financial advice

But first, let’s be clear what inflation is. We define inflation as a rise in prices of goods or, to put it another way, a decline in the value of the pound.

What was the inflation rate last year? Last year your £1 bought you a half pound of butter, but this year butter’s gone up to £1.50… the current inflation rate price has lowered the value of the pound in your pocket.

Why does inflation occur and what are the causes of economic inflation? There are lots of reasons for this – too much demand chasing too little supply, a rise in the cost of raw materials, even the Government printing too many banknotes.

But what it means to you is prices have gone up. The Government has measured this for years, rather quaintly taking a basket of goods, including staples such as shoes, bread and eggs, heating and lighting, and seeing how much it increases each month. They used to call this the Retail Price Index or RPI.

This though is where we get into murky waters. A few years back the Government switched from the RPI to the Consumer Price Index, the CPI – changing thee definition types of inflation.

This supposedly representative measure of inflation inexplicably excludes council tax, mortgage interest payments, the cost of buying property… a huge part of what we spend our money on in other words. Perhaps more tellingly, it’s a lot lower than the RPI, currently nudging 3.3% to the RPI’s 4%.

How does inflation affect the economy and what are the effects of inflation on money? The Government trumpets that this is a good, wide ranging measure of inflation across the economy (though omitting housing costs as we’ve seen) but that’s partly the problem.

The vast majority of our spending goes on a smaller number of core goods – petrol, butter, bread, heating the house – and we all know that these have risen a lot more than 3.3% this year.

A consultancy, Capital Economics has calculated that the average middle class family in the UK is seeing inflation of 6.3%. A higher rate taxpayer would need a pay rise of 10.5% this year just to keep pace.

And it gets worse for lower income families. They spend a higher chunk of their disposal cash on food and power – the very commodities that have seen the biggest inflation. Some newspapers have estimated this ‘REAL‘ national inflation rates at closer to 10%.

So inflation limits your spending power, but its more quietly destructive effect is upon your savings.

You may think you’re being prudent tucking away your money in a high interest account, but with inflation at 3.3%, a higher rate taxpayer needs to earn 5% gross before they break even. And as we’ve seen, inflation’s a lot higher than that.

Okay, now I’ve got you thoroughly depressed, let’s look at a little damage limitation. The big risers are going to be gas and electric bills, soaring again this winter.

The best methods of fighting inflation are disappearing fast but, if you haven’t changed already, go to uswitch.com to find a cheaper tariff and switch now. Capped deals are a good bet, as though you may pay more short term you’ll save long term.

Conversely, phone and broadband are among the few costs actually to have fallen over the last year, so looking for a switch there should save you money straightaway on your current tariff.

As I noted at the start of the show – fuel stocks are one of the few actually performing well just now. If you must pay a fortune to fill the car or heat the house you might as well take a share of the profits at least!

And if you are firmly risk averse, then an index linked Bond from National Savings and Investments will at least protect your savings’ real value. Their five year bond pays a guaranteed rate of RPI plus .35%… not spectacular but safe.

However you do it, these methods of fighting inflation are damage limitation. We can at least be glad we don’t live in 1975. Recent additions to the Retail Price Index then included coffee powder, dried mashed potato, cod in butter sauce and hardboard. Ah how we lived in the seventies! Oh, and the rate of inflation? 27.9%. With real coffee, real spuds and inflation at below 10%, things don’t look so bad after all.

Related articles: Britons living standards will fall

Related links: National Savings and Investments, Best buy credit cards, Price comparisons, Capital Economics, RPI and CPI

Tags: inflation, methods of fighting inflation, protect against inflation, why does inflation occur, effects of inflation on money,  inflation rates

No, we’re heading far away from UK stocks in search of growth, to the markets in Brazil, Russia, India and China – BRIC for short. Now this may sound a bit exotic for many of us, but many investors, spooked by the relentless downward march of the London and New York stockmarkets, have been quietly salting away funds in Sao Paolo, Moscow, Bombay and Shanghai. These are four very different countries (and indeed are very diverse within their borders) but they are also very different from the currently faltering UK and US markets. There are a number of reasons why professional investors think the BRIC countries offer greater potential.

Firstly, these are swiftly growing economies. We all know about the retreat from state socialism of Russia and China in their different ways, while India and Brazil have huge amounts of investment going in. They are giant countries, with giant populations, and so companies doing well in one of the BRIC nations have huge markets for their products and services. Think about a mobile phone company becoming a market leader in India, or an oil pipeline manufacturer winning state contracts in Russia.

Secondly, these countries tend to have what we can politely refer to as flexible labour laws, meaning they can drive down the cost of production – one of the reasons we in the west have enjoyed ever cheaper consumer goods in the past few years. Gordon Brown might be more honest if he took less credit for his ten years of low inflation and admitted that much of it was down to imported cheap goods from China, India and the rest. The less palatable side of this is that somebody’s paying for your cheap Primark sweater … and there is strong evidence of exploitation not just of adult workers but of children too.

But most of all, these countries are growing and growing fast, the Chinese racing to fast track 200 years of industrial revolution, and that means companies, and their share price, will grow alongside. But of course there are risks. Huge winners and big losers. You may back the pipeline company that wins the big deal … or it may go bust. How do you know that Rio company is well or even honestly run? And though there is much talk of these economies being ‘uncoupled’ from the woes of the UK and US retail and stockmarkets, they depend on us to sell many of those cheap goods … PLUS they are building up inflationary problems of their own.

And you’re buying in a foreign currency, with exchange rate fluctuations, greater charges, it may be difficult to sell your shares.

Okay, stop right there. The way to get exposure to emerging markets (should you wish to take that risk) is not to directly buy shares at all. Arguably the best way in is an exchange traded fund or ETF. They came about in America in the mid-nineties as a way of tracking an index without having to individually buy stocks. The fund buys the stocks and you, effectively, buy shares in the fund so, in theory, you’re getting a tiny piece of all the shares on the Beijing or Moscow stockmarket. ETFs have been set up to track individual sectors, commodities and currencies too.

The advantage of this tracker fund approach is that charges are lower. Put bluntly there isn’t so much work involved in a fund manager simply buying across the sector as there is in investing in individual companies. So you’ll probably pay closer to 0.1% in charges than the usual 1.5% or 2% per year. There are disadvantages too of course. Because they aren’t looking for high performers, you’re unlikely to do better than the index you’re tracking. The upside, of course, is that you also shouldn’t do worse.

And not all ETFs are equal. There are hundreds of these things now, and some may concentrate their buys on the bigger companies in the market, or they may cut out the tiddlers. So there will always be a slight divergence from the average performance of the main Brazil Bovespa Exchange, the Shanghai Stock Exchange or whatever.

So what’s on offer if you want to get into BRICs? Big players include the iShares FTSE BRIC 50, which as the name suggests is quoted on the London Stock Exchange.

Related links: Best performing BRIC ETFs, Main BRIC ETF quoted on the London Stock Exchange

Tags: BRIC markets, BRIC markets article, BRIC markets article, BRIC, markets, stock markets, shares

First off … do you REALLY want to buy a house? And do you really want to buy one now, in a falling market? Nobody knows how bad things are going to get in Britain, but people are now seriously talking about a 25% drop in prices.

A good idea might be to put it off … rent for a year instead, because prices certainly have lower to go.

If you can put off purchasing for a year … Save hard … there are some great savings rates just now that DON’T demand you put your money away for years. This is because the retail banks are desperate to get deposit cash in to finance their lending … because of course if banks can’t lend, they can’t do business.

Eye popping deals at the moment include 10% from the Halifax. If you can tighten your belt and salt away a few hundred each month towards a mortgage (or toward paying down your current mortgage) you will be in a much better position to buy when the market starts looking healthy again.

And the more you stash away, the bigger your deposit. That means you’ll be ahead of the pack – with so few mortgages available it’s much easier to get a 60% mortgage than a 70% one say. We can wave goodbye forever to the 100% and 110% deals that were on the table until recently. Further, the more you put down, the less your risk of getting into negative equity.

But you probably don’t want to hear ALL that … especially if you’ve been renting for years, watching your first time buy recede ever further out of sight. And anyway, providing you’re happy to swallow a further drop after you’ve purchased you can nab a very good deal. After all, if the flat was £200,000 last year and you get it for £150k, who cares if it drops another £10k … long term the market will rise again.

The two things you need TO MAKE A PURCHASE OF COURSE, are a property to buy and a mortgage to fund it.

The good news is that this is definitely a buyer’s market and the one group that unequivocally benefits in such a market is the first time buyer … because they don’t have a depreciating asset of their own to sell. And there are mortgages out there – current standard variable rates are around 6% (that’s 1% over the Bank of England base), while you can get slightly under if you’re prepared to tie yourself to a fixed rate for 2, 3 or even 5 years.

This is the time to drive very hard bargains. Make a silly offer for the property you want … they can only say no. And if they say no, remember there are plenty more properties on the market. NEVER make the mistake of getting too attached to a property you haven’t bought yet. I’d stop short of gazundering … which is a nasty trick to play on anyone, but never be embarrassed at paying as little as you can.

And if you have understanding parents, then this is a good time to borrow. No, not in order to pay over the odds, but to snaffle some of the great current bargains around. The bigger the deposit you can put down, the better your chance of getting the best deal mortgage.

And always remember. There isn’t a single property market, there are dozens. Think laterally again … which are the parts of the market that are REALLY distressed. It’s not lovely Victorian conversions that always hold their value, it’s the by the thousand city centre one and two bed new builds. Builders cannot get them off their hands quickly enough. But they’re not going to knock them down, they HAVE to sell them. Find a development that you think has potential – in a good site, near a station and shops (all the fundamentals in fact) and put in a silly offer.

Now how to get the mortgage best deals. Forget the brokers … I would always have advised a borrower to go to a broker, as these guys could cut through the thousands of mortgage products on the market, finding the best deal for YOUR situation. The chances of you finding the lowest interest rate were a needle in a haystack job.

But the number of mortgage products on the market has dropped by more than half over the past year (a huge number being withdrawn from the market in the last couple of months alone). And banks simply aren’t putting their best deals through brokers any more.

As the banks themselves are finding it hard to borrow cash on the wholesale markets, which means they haven’t got enough mortgage cash to supply customer demand, then why would they pay commission to a broker to hook in new customers?

Instead, they’d rather customers walked through their doors and THEY kept the commission. They also figure they can sell you all the add-ons that make them the REAL money if they’ve got you in the branch.

By all means go to a broker to see what he can come up with, then use that figure as a baseline to shop around.

There are LOADS of good finance sites with the latest and best mortgage deals, but start your search for the best rates with moneyfacts.co.uk. You WILL have to spend more time than previously on researching a deal, but that’s no bad thing.

Brokers will tell you that you should use them because they can offer expert advice. But … how much advice do you need?

You DO need to assess the full cost of the mortgage after lock-ins, arrangement fees, early redemption penalties and the rest are factored in, but then educating yourself about this stuff isn’t a bad idea anyway … If only MORE of us had educated ourselves about the real cost of our credit, Britain might not be in such a financial mess now.

In summary then … get a big deposit, hammer the seller on price, and ideally don’t have a property of your own to sell. Happy hunting!

Link: Mortgage Compare, Mortgage deals

Among the definitions I found in a quick search for ‘blue chip shares’ are ‘Shares of a company known for its ability to make profits and which pay a dividend in good times or in bad.’

Then there is ‘shares in quality, stable companies that have paid regular dividends in both good and bad years’. We’re talking about the giants of the stockmarket, companies that have been around for decades, like BT, British Airways and Marks & Spencer. We’re talking BP, Barclays, Royal Dutch Shell and Vodafone, companies with market capitalisations in the billions of pounds, and with share prices not in the pennies but the pounds.

And these are the shares that the penny share buyers avoid. Why? Because you’ve missed the boat, they will say. There is no way that BT or HBOS is going to rocket in value in the way a new company will. These are solid, dividend yielding shares, and people make them the bedrock of their share portfolios for just that reason … they will deliver slow and steady growth over the years.

That’s not to say that blue chips can’t be volatile. Anyone looking at bank shares at the moment, particularly the hapless Royal Bank of Scotland, might figure that the gig is up.

RBS is down From around 530 pence a year ago to around 250 pence a share now. Venerable Barclays down from more than £7 to less than £4. BT Group has dropped from 320p to around 220p in the same period, while Vodafone has seesawed from 160p up to around 200p to end up … well pretty much back where it started a year ago.

So why bother buying them? Well first of all you’re not buying M&S or BT shares to sell them a year later – you’re buying them to hold, to give you that slow and steady growth we talked about. And over time all those little (or even large) blips in the price graph will even out – you’ll forget all about them. You also won’t waste time checking the share price each day and you won’t waste money on trading commission, beacuse you won’t be buying and selling them.

The FTSE 100 index, the hundred companies quoted on the London Stock Exchange with the largest capitalisations, started in 1984 with a value of 1000p.

It’s soared and plunged from time to time and is going through a rocky period just now. Nonetheless in June 2008 it stands just above 6000p.

And while there have been a number of companies ejected from the FTSE down the years, the collapses have been few and far between. There was the infamous Railtrack failure and the collapse of British and Commonwealth. Generally though, these giant companies have been swallowed up by even bigger ones – Bank of Scotland into HBOS, Enterprise Oil into Royal Dutch Shell, the biggest of them all.

So failure is rare, and even if growth is slow and steady and boring, that’s only half the story.

Maybe your stock is only climbing 5% a year, but these blue chip shares will pay a dividend – give you an income in other words.

The super rich, those fortunate souls who inherited a couple of million in stocks from their grandpa, may never buy or sell their shares but simply live off the income from dividends. Because even if the share price drops, the blue chip companies are almost certain to still pay the dividend each year.

If you, rather than spending that income, simply invest it in more stock, then that’s where REAL growth kicks in. And over the past century, the markets have delivered around 9% a year … ASSUMING investors reinvest their dividends.

NOW … that 9% compounds each year. That would mean that if I popped £7,000 (which is the current yearly ISA limit) into shares at age 30, and ignored them till I retired at 60, I would pick up around £90,000. More realistically, pop 7k into my ISA for each of those 30 years and my £210,000 investment will be worth 1.1million. I haven’t bought or sold, as these are shares to hold, so I’ve minimal dealing costs.

Many successful investors have profited from this ‘buy and hold’ policy, not least Warren Buffett, who obviously knows a thing or two.

There’s more to it than that of course – with Buffett also being a past master at value investing, looking for shares that he believes are fundamentally undervalued.

But after that, it’s buy, hold and watch yourself grow rich. Rather than chasing the dream of penny shares you could do much worse than making dividend yielding blue chips the bedrock of your investment portfolio.

In future editions of Walletwatcher, I’ll also be looking at how to find value shares, and how to identify high yielders … to make the pot grow even faster. Next week, as credit gets crunched harder I’m going to be looking at some creative ways to raise the mortgage you want.

Links: Stockmarket overview and live prices

Tags: Blue chip shares, Dividend shares, Financial budgeting, Stockmarkets, shares, personal financial advice

In fact, I’m looking at an advertisement for a tip sheet now which talks about penny shares they have punted over the last year, some of which have doubled, even tripled in value… they mention 10 shares which have risen by an average of more than 200%, against the top ten shares on the FTSE rising by an average of just 67%.

It’s certainly appealing to those of us wanting to make money from shares. And it’s all undoubtedly true… but CERTAINLY not the whole story.

First… what are penny shares. These are stocks that have an ultra low price, often just a few pence apiece, as opposed to the typical share, with values in the tens or hundreds of pence.

The appeal is obvious. They offer a cheap way in to the market, and they apparently have lots more potential to rise – after all a 5p share has to have more growth potential than a 500p share, right?

This totally relies on people’s perception that they have ‘missed the boat’ with big blue chip shares. That it’s now too expensive to get into BT, Cadbury, HBOS, M&S and the like. Why buy at the top of a market when you can get in at the bottom.

And it’s true that all blue chips started as penny shares, some not so long ago. Microsoft and Cisco Systems were penny shares within fairly recent memory… so why can’t you get in on the next big surge.

A big problem here is lack of information. These shares are generally of companies that aren’t listed on the major exchanges, such as the FTSE 100.

They don’t have to disclose the same data on directors, performance and the like as the Blue Chips. So not only will researching them be hard, but misinformation can be rife.

In short, many of the tipoffs so beloved of small investors – that Inahole Mining is just about to strike the motherlode, or that Hadja Chips has just developed a miracle new microprocessor that Intel wants to buy – are nonsense. Lies, made up by pump and dump merchants.

Pump and dump works like this.

A person buys a stack of the worthless company stock, and starts spreading a rumour to PUMP the price.

The rumour attracts naive punters, on whom the pumper then DUMPS his stock at the inflated price… And swiftly exits. Unethical and sometimes illegal, but very hard to prove. Boiler Room share operations specialise in pump and dump.

Another big problem is lack of liquidity. These shares are cheap, in large part, because nobody is buying them. And if nobody is buying, then you’re going to have a big problem selling them if you need to. Prices are just nominal until somebody actually buys – if nobody will trade with you then your stock is worthless.

It’s also a nonsense just to value on price. I know the ersatz Mars Bars from LIDL are much cheaper than the real thing… I also know to my cost that there’s a reason for that. Price means nothing without measures such as earnings per share, assets per share and the like. VALUE in other words.

And talking about earnings per share – these guys aren’t going to be paying you a dividend, unlike blue chips. Remember, it’s not JUST about share price, it’s earnings too.

Ask yourself WHY this stock is a penny share. It may be on the way up, but it may be on the way down and out.

Also recognise that a low share price is invariably a reflection of a small cap (a company with small amounts of capital). Many of these small cap companies are newly formed and many new companies simply go bust (not a likelihood with BT or M&S).

And smaller companies, with smaller capitalisations and thus reserves and options when things go wrong, are fundamentally more risky than the big guys. They are likely to have a less solid infrastructure, and not to be so well run.

All of which sounds a horribly unadventurous and negative approach, I know. SOMEBODY has to take a punt on the future stars. But if you DO want to do that, don’t take shots in the dark. You might just as well start putting money on the dogs… any dogs, ignoring form and odds.

Find a sector you like or are interested in – it can be computers, green technology, retail, commodities, anything – and read, read, read. Educate yourself.

If somebody offers you a wonder tip on a new internet startup price comparison website, you’d ask yourself how likely that is to survive and make money in an already crowded market, wouldn’t you?

But say somebody has just won the contract to supply tracking technology for the London area congestion charge system. And you know that it’s a system likely to be copied around the globe. You might think ‘there are possibilities here’ might you not. Think about what will be big… the tipsters almost certainly don’t know any more than you. If they did why would they be telling you after all?

Sure you want to pick the next winner but ask yourself… how are you going to separate the winners from the dogs. How likely are YOU to get it right. Next week, I’m going to the opposite extreme. Blue chips and dividend shares. Less exciting but possibly a better idea. And my tips will be on putting your finances on autopilot… to save you time.

Tags: Penny shares, Penny shares article, Penny shares features, Penny shares article, penny shares, , personal financial advice

But an unsolicited letter that dropped through my mailbox this weekend reminded me that nothing has changed. Here is my credit card lender, the Halifax, sending me a sheet of credit card cheques – inviting me to start writing them against my Amazon credit card account.

We’ve had the Office of Fair Trading, which has been telling the banks to ‘crack down on irresponsible lending’. The Citizens Advice Bureau has criticised ‘banks lending money to people who unlikely to be able repay their debts’. Even Bank of England governor Mervyn King has slammed banks for ‘risky’ lending.

And it doesn’t get much worse than borrowing cash against your credit card, for this is what we’re effectively being asked to do here.

Am I being unfair? After all, the covering letter tells me that ‘this is a service that many customers find useful’ and that ‘they are particularly useful for times when you are not able to use your credit card’. Although the come-on to use them ad lib is plainly there when I’m told ‘credit card cheques can be used to pay for just about anything’.

But WHY would I do that? If a company or individual won’t accept a credit card, and I DON’T want to pay cash, then why not just write a cheque against my bank account? That, after all, is free – the only possible cost to me is a few days’ loss of interest on the sum leaving my account, and that’s in the unlikely event that your current account DOES pay interest. It certainly won’t be very much.

The ONLY possible reason is that you don’t have sufficient funds in your bank at present (in which case you CERTAINLY shouldn’t be buying credit at over 20%), or you don’t HAVE a bank account and cheque book.

Certainly there are some people in Britain in that boat, but anyone in that shaky a financial state ALSO shouldn’t be borrowing money at over 20%.

In fact NOBODY should be borrowing money at over 20%. Anyone financially astute just wouldn’t do it, which means the only people these dodgy products are aimed at are the financially illiterate or, bluntly, the poor.

Either way, it’s not right. But as we’ve seen time and again, it’s the poorest that pay the most interest. So the financially sussed pay off their credit cards each month, while the lower tiers of society are borrowing at sky high rates – as those are the only rates they can get!

How do credit card cheques work, and more importantly why credit card cheques are a rotten idea?

• You don’t get the interest free period, typically 56 days, that you do with a credit card (that’s assuming you pay off your bill in full and on time). Interest starts racking up from day of purchase (or at best from when the cheque clears). And it gets worse.
• My credit card rate is zero, and when my interest free holiday ends, the standard rate is 15.94%. But these cheques are charged at 21.95%, only marginally less than the rate on cash withdrawals of 22.95%. Horrific! I’d remind the Halifax that Bank of England base rate is 5%. Even with the interbank lending rate a couple of percent above that, this is a startlingly high rate of interest.
• Many recipients will whack on a handling fee, and some banks operate a minimum charge on these cheques. This is often another 2%.
• My covering letter tells me that these cheques ‘do not provide the same level as consumer protection as a normal credit card purchase’.

So one of the BIG pluses of a credit card, that your goods and money are insured, are summarily removed. You’re buying stuff from a company that refuses to take credit cards (odd enough nowadays) and the bank is removing your insurance against faulty goods or getting ripped off? I don’t think I will thanks.

So great was the chorus of disapproval about these dreadful pieces of paper, that there were changes made to the banking code THREE YEARS AGO to say that banks MUST offer customers an opt out.

But get this – the opt out option in my case (and that of my wife who received the same offer, on the same day) came in the letter accompanying the first sheet of cheques. So we couldn’t opt out without receiving them first!

And here is the real security horror. Credit card cheques are sent out unsolicited. Credit card cheques may be in the postal system, with your name on them, and you have no idea they even exist.

Post goes missing, and anyone stealing these can quite easily write a cheque and pay it into an account set up for the purpose. No PIN required, no signature check.

And if they are used to buy goods from an individual it’s a nightmare, as the vendor has lost his goods and you have lost your money. Try clearing that mess up. The first time you realise you’ve been a victim of fraud can be MONTHS later when you have a debt recovery outfit chasing you down.

So do yourself a favour. If you haven’t received CC cheques, call your issuer and tell you NOT to send them to you. And if you have – build a bonfire.

Related: Credit card cheques article, Office of Fair Trading

Tags: credit card cheques, credit card cash, uk banking codes

1. Shop in LIDL, Netto or Primark … for many of the basics they’re just as good and a whole lot cheaper.
2. Grow your own – supermarkets charge you a mint for herbs, and growing your own fruit and veg is satisfying, healthy and green too – more at RHS Gardening
3. If you live alone, get a water meter. You use less than the average household, so pay less than the average household.
4. Put your regular bills on direct debit, you’ll get a discount from the utility companies such as gas and electricity providers.
5. Switch to a new power provider if you haven’t done so for a year or more. Check out uswitch.com for the best current deals.
6. And check out your phone tariff too … they change all the time, so make sure you’re getting the best deal.
7. Pay down credit card debt, or transfer it to a cheaper loan or overdraft.
8. Consolidate debt into one lump … there will be fewer management costs and it’s easier to get a TRUE picture of your financial position.
9. Get free stuff. Sites such as Freecycle is a green way to get rid of your free stuff and get free stuff in return.
10. Get free stuff from the shops. No, not shoplifting, check our regular pieces on free stuff online, typically promotions from big companies.
11. Check our voucher code archive too. Everyday companies offer money off if you type in secret voucher codes at the checkout.
12. Barter your talents with your friends. If you can do electrics and they can do gardening, then help each other out.
13. You can even barter online, with websites such as www.i swap.co.uk.
14. Save, whether it be in a pension or high interest account, property or investment trust. You curb your spending and your investment will grow and reap the benefits of compound interest.
15. If you’re approaching retirement age, give your money away to your family … a bit at a time. It’s tax efficient.
16. Get an ISA … not what they were but still the best tax free savings vehicle we have.
17. Haggle. Brits aren’t very good at it, but if you ask for a discount you might just get one.
18. Use your skills to teach others. Piano lessons, copy editing, those electrics again.
19. Check your tax code at Direct.gov.uk. Loads of us are on the wrong one. It could save you hundreds each year.
20. Buy travel insurance once a year, not for each trip … it works out much cheaper.
21. Pump up the tyres on your car. It stops wear and can knock 10% off your fuel costs.
22. Get your home insulated and save money on heating. And get your local authority to pay for it. Find out about grants at www.homeinsulationgrants.com.
23. Reduce your home insurance by fitting better locks.
24. Don’t reinsure with the same company year after year, you don’t get rewarded for it. Find the best deal at http://www.moneysupermarket.com
25. Sell unwanted stuff on ebay or Amazon Marketplace
26. Buy online, you can save money and save time.
27. Challenge those swingeing bank charges.
28. Cash in the attic? You may have antique gems among the dust. Check out what you’ve got and get it valued.
29. Turn down your central heating thermostat. Dropping it by 2 degrees, from 20C to 18C can save you hundreds a year.
30. Do your washing out 30deg instead of 50deg. Again, you’ll save a packet.
31. Rent out a room. The room that gets used only at Christmas could be helping you pay off your mortgage early.
32. Pay off your mortgage early … this does depend on you having spare cash, but compound interest means that relatively small amounts paid in now can make much bigger savings years down the line.
33. Check out offset mortgages such as the Virgin One account. Rather than earning rubbish interest on your savings (and getting taxed on what little interest you get) these pay off your mortgage quicker by giving you tax free savings.
34. Not been to the gym for more than a month? Cancel gym membership and save money.
35. Share your car, whether it’s giving and getting lifts or simply pooling with a neighbour.
36. Sell the car and sign up for one of the local car clubs such as citycar.com, or pickup and dropoff car schemes.
37. Remortgage. It isn’t the easiest time at the moment, but if you’re not in a fixed deal then you WILL be doing better by remortgaging.
38. Check all your direct debits and cancel the ones you never use.
39. Stop smoking … you’ll pay less for your life insurance.
40. Use Skype instead of your regular phone, especially for international calls …it’s free!
41. Don’t spend your supermarket loyalty points at the checkout … you can sometimes quadruple them by cashing them in different ways, such as redeeming them for goods or tickets.
42. Get an interest free credit card. Then the money you aren’t spending can be earning interest on deposit for you.
43. Shop around for the cheapest petrol.
44. Make a shopping list. That way you won’t be swayed by impulse buys. Two for ones are no use if it just means you have two guavas rotting in the larder instead of none.
45. And buy own brand, not named brand. Is Domestos REALLY any better than Tesco bleach? I doubt it.
46. Use price comparison sits such as pricerunner or kelkoo.
47. Tired out? You need a holiday. But shop around for cheap summer holiday deals, don’t stick to the obvious dates and fly at quieter times … you’ll save a fortune.
48. Just say NO! You don’t have to kickstart the UK economy singlehanded. Stay in, eat in, buy fewer papers and ice creams … but remember to treat yourself every so often.
49. Use debt creatively …All debt ISN’T bad, so borrow cheap to invest for profit.
50. Learn the difference between capital (or principal) sums and interest. It will change the way you view money and it will make you rich if you let it.

… that’s it. I’ll be bringing you another 50 moneysaving tips in a few weeks time.

The biggest player is Skype. Their software offers free computer to computer calls, and you get massive reductions on calls using your phone too. As someone who makes daily business calls from London to Italy … and pays nothing for the privilege, I can hugely recommend the Skype service.

I’m assuming you’ve got a reasonably new computer and a broadband internet connection. You’ll also need a cheap headset, with earphones and a mic. Then, You simply go to the website of any of the hundreds of VOIP providers and download the software. I won’t go into the technicalities here – we’re interested in saving you money, not grappling with complex new technology, so if it isn’t as easy as peeling an orange I won’t recommend it.

For this reason, I’ve stuck with Skype. A lot of computer geeks don’t favour it, as there are simpler and cleaner packages out there, but it’s easy to set up and lots of people are already using it – so you’re going to find it easy to find other users to make PC to PC phone calls to if you use Skype. You will find a VOIP phone call a slightly different experience. You can occasionally get time lags and ‘drop outs’ of dead air time, as the ‘packets’ of information that are being sent don’t quite deliver properly. Though this improves hugely with the quality and speed of your broadband connection. But the actual quality of sound is extraordinary, like moving from a crackly old vinyl album to CD. You suddenly realise how poor the average landline (and especially mobile) call quality is. Wearing headphones, it does give the slightly creepy sensation of having a conversation with someone inside your bed, but you soon get used to it.

Of course you don’t want to converse just from your computer, or only to people who also have computers running Skype. Luckily VOIP telephony solutions abound nowadays – there are now a host of VOIP providers in the UK. No problem. You can call from PC to phone too, or indeed phone to phone. With more and more phone calls being routed over the internet ANYWAY, this technology is increasingly LESS about new technology and MORE about new and hungry firms smashing the price models of BT and the rest. VOIP phone software is now easy to set up and easy to use – in some cases you don’t even need software. Take a look at one of the biggest providers, jajah, and you see a link for Jajah Direct, phone to phone VOIP.

You simply dial a local number (a London number in my case) and when you reach the automated switchboard you then dial your friend’s number. It’s a slicker version of those phone cards you see on sale in markets all over the world, targeted largely at people ringing home to Africa, the States or wherever. And you can use your regular landline. And that should give you pause for thought when you’re on holiday. Don’t use expensive hotel phones (and certainly not rip off mobiles). If you take your foldaway headset, you can use a VOIP service to make your calls free from the hotel computer.

A service such as Vephone doesn’t even demand that you download any software, as it’s web-based, so everything is happening on the company’s servers. You get a ‘real UK telephone number’ that anyone can call, and all you have to do is log in to an internet enabled computer. Services like this, where you get a proper phone number, could be the answer for those of us who are unwilling to dump the expensive landline and just use a mobile.

Of course, making phone calls from your computer doesn’t have to mean you’re stuck at your desk. Think about it – with the growth of mobile broadband, handsets that surf the web, and the Blackberry of course, we’re increasingly carrying our PC in our pocket anyway. It’s a short hop to turning your mobile phone into a webphone. Mobile is, of course, one area where VOIP has lagged behind, as we tend to buy our mobile with a call-plan attached, whether it be Orange, O2 or whatever. This will, inevitably change. Check out the voipproviderslist website for some interesting stuff on the future of mobile VOIP.

Price comparisons are notoriously tricky. The phone companies change their tariffs even more regularly than the gas and electricity providers, with BT recently slashing the cost of weekend calls to users.
And the VOIP providers too have a bewildering array of tariffs. Some will be free to the USA, some will be cheap for PC to phone, others better for phone to mobile calls, and so on. The best advice is to figure out WHERE most of your calls go (a bit like setting up your BT friends and family list) and then head to voiproviderslist.com, where you can match a service to your needs. One thing is sure – you NEVER need to pay for PC to PC calls, and Skype really comes into its own for my company making conference calls, sometimes between the UK, Italy and the United States. With an attached instant messaging service, you can even type in notes, references, URLs of handy websites etc, during your conversation. It’s a terrific business tool – and it’s FREE.

Of course, VOIP provisioning is quickly going mainstream. In a couple of years time, this will all look different, as we dial VOIP direct from our landlines, and big players like TESCO are already in the market. But for now, take the plunge and get VOIP’d. You’ll save a small fortune.

Links: VOIP providers list, Skype, jajah, Tesco internet phone

Tags: voip phone system, voip telephony solutions, voip