Do you find that if, by the end of the month, you have some money left over, then you just can’t help but spend it? If your debts don’t require clearing immediately, then it can be difficult to put money to one side for when they do. If you have trouble doing this, then it can be a good idea to think about investing.

There are a number of different places in which you might choose to place your investments, although some may be more beneficial than other for those who are in debt. One of the most straightforward options, of course, if to simply place your money into a savings account. If you don’t mind placing your money within a bank or building society, but would rather it was somewhere that meant you were unable to spend it, then you may want to think about putting your money in an ISA, or other type of savings bond which does not allow instant access

If you want to earn more than basic interest rates on your investment, then you might want to think about putting your money in stocks, shares or commodities. However, for money of these options, it can be worth having some previous experience in investing, as well as the time to monitor any trading opportunities. Alternatively, investing in a commodity such as gold can be done online via sites like Bullion Vault, and is ideal for those who may not have and prior knowledge of the investment process. This is also a good option for those who may need to withdraw their investment at any point. Whilst funds cannot be access used a debit card, for example, they can be withdrawn at at time.

Lastly, you may also want to consider investing in property, or other such assets. For example, if you own your own business, then you may want to make investments which will somehow enhance the services which you offer. However, you will want to make sure that such investments do not also involve accruing further debts and expenses.

• Dig Yourself Out of Debt: Cleaning Up
• 10 Economic Predictions for 2010
• The Importance of Redundancy Planning
• Dig Yourself Out of Debt: Know What You Owe
• A Guide to: Individual Savings Accounts (ISA)

A Preponderance

If you’ve been reading my blog from the beginning you may recall my continual struggle with the idea of whether to continue renting, or to look to buy a house. I’m still no further forward with that internal argument 2 years later,  but my girlfriend planted the seed again yesterday, opening up the whole can of worms all over again.

Essentially we are looking for somewhere to live together that is close to our respective places of employment (perhaps so we can get rid of one car, then?), that isn’t hugely expensive, that is nice, and is relatively quiet. A tall order in a big metropolitan city. We have been half-heartedly looking around for a couple of months now and we have seen a few places that would tick those boxes. Unfortunately every time we have enquired, the property has already been let.

A Spanner In the Works

Last night my girlfriend mentioned her parents have put away some money for her to use as a deposit (trust fund style) to buy, rather than rent. This has thrown the discussion and plans into disarray somewhat. Do we rent? Do we buy? Do we rent somewhere now together, and look to buy after that?

Looking back (1) at some posts (2) I’ve made before on the subject, I’m coming round to the idea that buying may not be such a bad idea any longer. The economy is faltering once more, and there are some desperate sellers out there. We both have excellent credit ratings, and my pre-approved mortgage offer still exists with my bank – although what value it is now at requires a personal appointment to discover.

Do Your Sums

Hundreds of thousands of people are no doubt in this exact same position. The path to clarity is to do your sums as a couple. What are your outgoings (read ‘Know What You Owe‘ for a good starting point in working this out), and what are your employment prospects like? This is a challenging economy; would a drastic change in one of your income streams cause you pain later on? Even with a mortgage, are you certain you’d still be spending less than you earned – even if interest rates increased? Remember in the 80′s recession interest rates shot up to 15-odd percent, causing pain up and down the country.

If you find you will still be comfortable, then what is to stop you? Ultimately house prices may be over-inflated, but there is nothing to say or evidence particularly that this will ever truly resolve itself to the levels I and others have previously predicted. Even during the recession and the years following it, house prices have remained essentially unchanged (but they haven’t increased much either).

A Watched Pot Never Boils

I’m not suggesting you throw caution to the wind. But with careful planning and the right property, you could escape entirely unscathed. I have previously advocated waiting for the massive market correction I and many others feel is long overdue – but 3 years later, it still shows no sign of coming despite conditions being ripe for it to do so.

Sometimes, despite all financial sense, you just have to go with what ‘feels’ right.

My girlfriend and I will look to buy at some point. For now (for speed more than anything), we will continue to look to rent initially. Are you in a similar position? Or have you recently had a similar discussion with yourself? I’d love to see you in the comments!

p.s. on an entirely unrelated note, for anyone who is resident in Sussex and likes photography, you might be interested in the photograph I took a few days ago of Hove’s West Pier during Stormy Tuesday!

• 10 Economic Predictions for 2010
• Personal Recessions
• Frugal Friday! 7 Tips to Reduce Your Grocery Bill
• My Financial Meltdown: Part 1
• Dig Yourself Out of Debt: Spend Less Than You Earn

If like me, you had a vague recollection of something happening about automatic credit limit increases at some point in the recent past when you read the title of this post, you’d be right. But what was it that changed, specifically? Can you remember?

Good. It’s not just my memory that is failing in my mid-20′s old age then!

I had a letter from Barclaycard today sporting the bold headline “Important news about your Barclaycard credit limit”, which immediately filled me with a minor sense of dread, and a great deal of curiosity. Were they moving it down? Why would they do that (other than “because they can”, of course)? Not that a reduced credit limit would annoy me for any particular reason other than a feeling of them casting a minor slight on my character.

My Assumption

I didn’t think they’d be moving it up, because they weren’t allowed to any more, were they?

But it appears I was wrong; both in my assumption that they’d be reducing my credit limit and in they can’t just put up your limit randomly. The next line (in considerably smaller print I might add) quietly whispered “Good news, from 2 September 2011 your credit limit will be increased from £x,xxx to £xx,xxx.

After I had picked my jaw up off the floor, I began a Google hunt with ideas floating through my mind that they couldn’t do this. I remember Martin Lewis over at Money Saving Expert campaigning to ban just this very practice. And I further recalled, or so I thought, that he’d been successful?

So just what were Barclaycard playing at?

The Reality

Having done a lot of digging, the result (taken from a leaflet PDF published by The UK Cards Association) seems to be that I was half right. Credit Card companies can still randomly increase your credit limit if they choose, but they must notify you separately from your usual statement letter, and give you at least 30 days in which to decline the offer. This is still therefore an “opt-out” method rather than “opt-in”, so far from ideal.

Currently they can say “Hey, you… your credit limit is going up. Well done! If you don’t fancy it though, ring our premium rate number”. Who will bother to not accept it? I think I’d prefer them to write to customers and say “Hey, you… you’re eligible for a credit limit increase. If you want it, give us a shout”.

But I suppose in the grand scheme of things, this wouldn’t earn them nearly as much profit and that’s what credit card companies are all about at the end of the day.

Remember, credit card companies are not your friend! But thanks for the increase anyway.

• The SCRAM Plan
• Say Hello to Kublax
• Credit Card Analysis: From Hell to Heaven
• Reclaim Bank & Credit Card Charges
• Dig Yourself Out of Debt: Avalanches and Snowflakes

Shocking news out today from multiple sources suggests us poor motorists are already paying over 120.9p/litre and could be paying upwards of 150.9p/litre by the summer. Taking average family consumption of 200 litres a month for a 2 car household (2 fill ups for each car a month), that’s an annual bill of £3,620 compared to £2,900 today at 120.9p, or an additional £60 a month.

Depending on how your financial situation is, this will either go largely unnoticed in your spending, or could land you and your family in a world of hurt.

There are essentially 3 kinds of drivers in the UK: Those who couldn’t care less what the price of petrol is as their income permits them to absorb it without batting an eyelid; those, like myself, who can absorb it but object to doing so because it impacts on other personal financial goals; and those that simply cannot in any way shape or form find an extra £6 a month, let alone £60.

If prices do go that high (and given the reasoned argument for the prediction, I see no reason why they won’t), then some of the earlier frugal driving tips I posted about simply won’t cut it. Yes, they will help, but even if you implement all of them and achieve a 20% efficiency saving, it still won’t absorb the entire increase.

So what can you do?

Firstly, despite the paragraph above, do read over the tips and implement them. Just reading them and agreeing they are a good idea won’t actually save you any money! Get off your butt and away from the computer screen for a few minutes with the list in hand and go do them.

Secondly, if you have a gas-guzzling monster, it might be time to consider downsizing. My 2003 Ford Focus 115bhp TDCi diesel motor lends itself to fun and frugality in a heartbeat. Push the pedal to the floor and you’re launched off into the distance, but use a light foot and she will gladly carry you along at the national speed limit and cover 65 miles a gallon. Some smaller newer petrol and diesel vehicles claim upwards of 70-80mpg, but without the “get out of dodge” punch when you put your foot down. And given the desire to save money, downsizing to a 2003-2005 vehicle is more financially astute than shelling out for a brand new slightly more mpg-friendly vehicle.

Thirdly, it’s seriously time to start looking into lift-sharing. If like me you work a distance from where you live (and moving isn’t presently an option – see my earlier post!), then see if you can lift share with other colleagues. I work 30 miles from where I live, resulting in a 60 mile round trip every day. However, less than 6 miles from me lives another colleague who I will be hooking up with to share the burden of driving to work. After all, even with the additional weight of another passenger, driving 12 miles is more fuel efficient than driving 60.

Lastly, use the car less. This doesn’t necessarily mean inconveniencing yourself by having to use other modes of transport – of course, if you don’t mind walking or cycling, this is a great motivator! – but simply taking the time to plan out your miles. I kicked myself the other week when I drove the 2 miles into town, did a thing at the bank, drove back, then found a letter I had meant to post recorded delivery. This involved driving another 4 miles back down town to do so. Had I taken a minute, I could have shaved 4 miles off that day. If I’d had the time and energy, I could have walked down the town and saved 8! It might not sound worth the additional effort, but if you do that 3 or 4 times a month that’s 144 unnecessary miles travelled a year.

Do you have other ways to beat the rise? Share them in the comments!

• Could You Live on Half Your Income?
• Frugal Friday! 5 Easy Ways to Spend Less
• Frugal Friday! Cutting Electricity Bills
• 6 Mistakes That Doubled The Price of My Car
• 10 Economic Predictions for 2010

Deciding between an ISA and a Regular Savings Account – what should you do?

When comparing an ISA and a regular savings account there is one main benefit that an ISA can offer you. That benefit is that you don’t pay any tax on the interest that you earn.

But how does this work in practice? This comparison guide to savings accounts and ISAs is brought to you by moneysupermarket.com, the price comparison website.

The best regular saving accounts available offer the highest rates of interest. If you were basing your decision entirely on the interest rate on offer then a regular savings account would be the choice for you. However, as with all regular saver accounts, the interest you earn will be taxed. If you were to save your money in an ISA account the interest would be tax free.

On top of this, there are plenty of other catches. You have to put money into the account regularly, which may not always be possible. You cannot put in a lump sum to start with either and the maximum amount you can deposit each year is also kept relatively low as well. Interest is paid after 12 months. It’s not always easy to withdraw your money from regular savings accounts with some accounts you must give a few months notice and with others you can’t withdraw your money during the first 12 months at all, this is not suitable for everybody.

If you do not like the idea of having your money locked away then you might find it easier to open a cash ISA account. Cash ISAs are tax-free, which makes them an attractive option to many people. Although you can get some regular saver cash ISAs amongst other types of Cash ISA, most are easy access meaning you can transfer money out whenever you need it.

Like regular savings accounts you can still only deposit a fixed amount per year, but the two main advantages are that you can add the same amount each year and you can do it as a lump sum if you find it easier, so you benefit from the interest on the whole lot for a full year. Also, unlike regular savings accounts the money isn’t transferred to an account with a worse interest rate after a year, although you should keep an eye on rates to make sure yours is still competitive.

Overall easy access or regular savings accounts are like easy access cash ISAs, except you pay tax. The interest rates are similar to ISAs, which means after tax you do in fact lose out.

The number of reasons to invest in a cash ISA rather than a regular savings account are growing all the time. Currently most adults save up to £7,200 in ISAs every year. The whole amount can be invested in a stocks and shares ISA or you could split it and put up to £3,600 in a cash ISA. In October 2009 everybody aged 50 or over was allowed a higher annual limit of £10,200, of which up to half can be saved as cash. In order to take advantage of this, you will need to be 50 on or before April 5 this year, to benefit in the current year. On April the 6th 2010 this is set to change; the limit will be increased to the same amount for everybody, regardless of age.

Interest rates are up and down in the current financial climate which means that some savers could benefit from changing who they bank with. Changing account providers for an ISA account is not quite as easy as switching a standard savings account as once the money is taken out of the account, the holder loses all the tax benefits they would have had. This can be prevented by insuring that your old provider and new provider pass on all the information about your account history.

It is worth comparing providers before deciding to open a Cash ISA. Cash ISAs can make a dramatic difference to the amount you save, so choosing the right one for you is important. Compare cash ISAs at moneysupermarket.com to get all the latest deals.

• Dig Yourself Out of Debt: Know What You Owe
• 7 Reasons My Friend is Poor
• Frugal Friday! 20 Ways to Cut Your Annual Vehicle Costs
• Frugal Friday! Cutting Electricity Bills
• 10 Economic Predictions for 2010