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!

• Petrol Hedging - Update
• Cash ISAs vs. Regular Savings Accounts
• Dig Yourself Out of Debt: Spend Less Than You Earn
• Cash ISA Allowance Increased for Over 50's
• Frugal Friday! 5 Easy Ways to Spend Less

It has been a long time – particularly in blogland – since my last post. To the small but dedicated readership I had built up in the couple of months I was posting in the beginning, I offer my humble apologies for my abrupt disappearance. In mitigation, I had a lot going on in my life, and there just wasn’t enough mental powe left to blog as well.

But now things are coming back to a sense of normality, and I am extremely pleased to be able to share this with you all.

My job is safe

At least, as safe as it can be in the current economic climate. I am not ashamed to have made the preparations I did, as I think they provided an amazing insight into how a financial disaster can be handled, even when it seems hopeless to even try. I’ve even had a small pay rise since my last post, courtesy of a 3 year pay deal agreed before the credit crunch hit.

I am debt free*

On the 19th November 2009, I sent in the last debt payments to my remaining two creditors. £7,858.63 to Barclays Bank for the consolidation loan I had taken out to combine the debts left to me by my ex-wife, and a whopping 11p to my credit card provider BarclayCard.

This settled the loan 2 years early, and cost me £80 to pay it off, than if I had just let it run. But it was worth it.

*I am now using the credit card again, but sensibly. It is paid off in full every month, and as it is a cashback credit card, I now put all my spending on it. That way I technically get a 1% discount on everything I buy! I have no debt that I cannot repay instantly if required with cash savings.

I am divorced*

The judge stamped my Decree Nisi and the Financial Consent Order I applied for at the beginning of January 2010. This means that I’m all but divorced now. The Decree Absolute (the final part of the divorce procedure in the UK) was due to be signed by the judge last week. This will hopefully bring to a close a very bitter and expensive part of my life.

*I am waiting for my solicitor to forward the Absolute to me. Until I have it in my hand, I won’t actually believe it is over! I still need to pay my solicitor for his work, and the bill should be arriving some time this month. I can’t say I’m particularly looking forward to it.

I have found new love

It’s funny how life works. I was on a residential training course for 16 alternate weekends as part of my profession. After 3 or 4 weekends, I was finding myself drawn to a particular girl who was also on the course. We got on so well, liked the same things, laughed at the same things and loved spending time together when we had finished for the day.

Towards the end of the course we acknowledged that we were ‘in a relationship’ (thank you Facebook for making the lines so clear cut!), and we’ve been spending a lot of time with each other ever since. Each of us has done the ‘meet the parents and family’, We’re going on holiday together in July, and we are looking for places to move into together eventually. Although she still lives at home with her mother, her mother is happy for me to stay, and so I have done just that countless times since January.

Some people were concerned the age gap would be our undoing (I’m 26, she’s 19), but there is no sign of it being an issue, and long may that continue.

I have savings

Being single is considerably cheaper. Being in a new relationship has put pressure on my preset targets for 2010/11, but can you put a price on happiness? I don’t think you can. I am saving at a minimum 50% of my income each month still, and sometimes way in excess of that, but doing things as a couple (dinners out, clothes shopping etc) isn’t something I’d budgeted for when I originally wrote my plan!

All said though, I’d rather be happy than rich. I am debt free, I am all but divorced, my life plan will happen (just a few months delayed thanks to extra expenditure), I am blogging again, and I am 110% in love with someone very, very special.

Life doesn’t get much better than that. I love you Catherine.

• A Fundamental Question
• Patience is a Virtue
• The Credit Crunch Has Positives
• My Final Credit Card Payment Coming Due
• Beware The Balance Transfer Cheque

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: Spend Less Than You Earn
• My Final Credit Card Payment Coming Due
• 5 Things I Will Do When Debt Free
• Savings Roundup - September 2009
• Cash ISA Allowance Increased for Over 50's

My regular readers (or those who have delved into the archives) may recall an earlier post about my recent employment insecurity. The concern was imminent redundancies were afoot, and although we are an organisation of over 5,000, my “doom and gloom” tendencies took over and I assumed the worst.

I began preparing for redundancy as if it were going to happen the very next month. This is not a bad idea even if you are not at risk; Fully identifying your financial position, and preparing a plan in advance of such a disaster can mitigate its affects. Identify all your actual and potential sources of income. What are your obligations in terms of mortgages and other debt payments? Do you have savings? How quickly could you obtain government assistance, and what kind would it be?

I am in the fortunate position of living at home with my parents again, following my marriage breakup. The government, if I were made involuntarily redundant, would pay me £64.30 a week as Job Seeker’s Allowance, or £257.20 a month. As it stands, this would be of no material use whatsoever. My loan repayment alone is £413 a month, and that doesn’t even begin to take into account essentials such as food. The loan is insured against such an event, so it wouldn’t be a total disaster for me – but what about you?

My goal was to be debt free by New Years Day 2010. The employment panic set in around August, which gave 4 months until my target – and I was not convinced, in the slightest (courtesy of my “doom and gloom” attitude!) that I would make it. So, I began a frenzied attack on my already pared down budget, and began working myself into the ground grabbing all overtime possible.

How am I doing? … tired.

I have taken a step back now, and calculated my legal position. By virtue of UK employment law I am entitled to a weeks pay (a statutory minimum of £380 a week, if no higher is paid at the discretion of the employer), for every full year of employment. I am also entitled to a minimum of a weeks notice for every full year employed, or pay in lieu.

The interesting point from this little mental arithmetic is that I would be due either 4 weeks full pay and 4 weeks statutory minimum pay (if not more), or 8 weeks notice and 8 weeks statutory minimum pay (again, if not more) depending on my choice to work the notice period or not.

Bottom line, if I had bothered to look back in August, is my target would have been met no matter what. What my little journey to exhaustion lane has done though, is bring forward my debt freedom date somewhat, and I know that I can go into next year without any major concerns of sudden instability.

I have also read the Head Cheese’s budget report for the next financial year, and my department appears unaffected. So it appears things are good until April 2011 if nothing else!

Good times!

• Beware The Balance Transfer Cheque
• Catching A Perception Shift
• Two Steps Forward, Three Steps Back
• My Adult Life in Graphs
• One in Four Households Struggling

As I wrote several months ago in my Financial Meltdown series, I took out a consolidation loan in January 2009 to pay off 2 higher-rated loans, and get in return one, cheaper, lower rate loan. The two old loans were with Barclays (my banking provider of choice), and so was the new loan.

I made an appointment with a Personal Banker in January, and proceeded to spend over an hour with her. I was open and honest, and she really spent time with me. I discussed my goals, where I was financially, and she talked through the options open to me. I left feeling very, very happy. I had finally taken steps to securing my financial future for the first time in my adult life and left with an even more positive view of my bank of choice.

The first of the two higher-rate loans was settled without complication. The other – due to the loan being created on the ‘old’ system but settled using the ‘new’ – refused to close in its entirety.  I was advised to “not worry about it” and it would resolve itself eventually.

The account remained attached to my online banking with a balance showing. I phoned every few months to check all was in order, and each time I was assured: all was in order. During each call, the balance remaining was described as simply the PPI refund that I had not had to pay during settlement. The ‘new system’ would get bored with it eventually and close it off.

On the 3rd July 2009 I received a ‘Loan Account Statement’ covering the 1st October 2008 to 2nd July 2009 listing a ‘Closing Balance’ at the end. No further correspondence was received and I took this to mean that the settled loan was in the final throes of being removed from my account. A little cheer was given, and the letter filed.

Fast forward to this month, and a Direct Debit for £7.83 bounced from my current account (as the instruction had been canceled by the branch when the old loan was settled). Curious as to what this amount was for, I phoned my branch. The lady I spoke to advised – after considerable digging – it was an attempt to take payment for the old loan still showing on my account. Due to limited information available to counter staff, she could not offer any further information.

Perplexed, I phoned the Barclays Loan line and spoke to a lending specialist, who could not answer why the payment attempt was made. Nor could she answer why it had taken over 10 months to attempt it. All she could tell me was I now owed Barclays £8.29 – courtesy of daily interest. I paid this with her by Fund Transfer, but she could not guarantee me that it would not be registered with the Credit Reference Agencies as a Late Payment.

In a letter to Barclays Customer Relations I penned:

“I find this incomprehensible and indefensible. Not only have I wasted most of this evening reviewing correspondence, bank and loan statements, and telephone records, but now fear negative reporting to my credit rating. Ostensibly, the payment is some 10 months late, but not due to any action or inaction on my part. When you settle a loan and receive repeated reassurances that everything is in order, is it unreasonable to believe that this is the case?

Currently, the loan account is registered as Satisfactory with no late payment markers. I want to ensure that this loan account is now marked as Settled without detriment to my credit history – for what is either a Personal Banker error; a computer error; or a combination of the two. I would also like to discuss the matter of compensating my time for having to be writing this letter in the first place.“

I love Barclays. But a relationship where they have treated me very well over the last 14 years is in danger of falling apart from a silly error on their part. The outcome of this complaint will very much determine where the remainder of my adult banking is conducted.

Tread carefully, Barclays. Very carefully indeed.

Have you ever been in conflict with your bank?

• 7 Reasons My Friend is Poor
• My Financial Meltdown: Part 3
• Dig Yourself Out of Debt: Avalanches and Snowflakes
• My Net Worth Update - Sep 2009
• Patience is a Virtue