A British Man's Take on Debt, Saving & Investing

MBNA Launch Best Credit Card Balance Transfer Deal Ever Comments Off on MBNA Launch Best Credit Card Balance Transfer Deal Ever

Posted on September 04, 2009 by Lee

If you are carrying credit card balance(s) of any significance such as Mr Bunny above, you might well be interested in the brand new offer only available direct from MBNA that launched yesterday.

Instead of the usual offer along the lines of  “0% for 6 months with a 2% transfer fee” or similar, MBNA’s new Platinum Plus card offers 1.9% on the transferred balance for 12 months, and NO fee. If you transfer £3,000 onto the card and paid off the entire balance within the promotion period, you’d only pay about £30 in interest.

Caveats: After the 12 month promotional period, the rate rockets up to 17.9% for your remaining transfer, and 15.9% for purchases so unless you are confident of getting another good deal after, or know you can pay it off inside 12 months, be cautious. You can only initiate a transfer under this deal within 90 days of activating the card. As always, you cannot transfer a balance from a card under the same umbrella to this one, so Virgin Money, Play.com and other card types cannot be shifted on this, because they’re already MBNA cards. Check your paperwork carefully or phone and ask if you’re in any doubt.

If you can deal with the caveats, then this really is the credit card ‘deal of the year’ for balance transfers.

Applications are only being accepted direct at the MNBA website.

The Credit Crunch Has Positives Comments Off on The Credit Crunch Has Positives

Posted on September 02, 2009 by Lee

A downturn in the economy isn’t always bad news; there are the obvious negatives such a job losses, less easy access to credit and that uneasy feeling of general insecurity. But a lot of people are using all those as a catalyst to better themselves financially. Some statistics have recently been released by FDS Social Research that a newfound financial learner like me finds comforting and interesting and worrying, all at the same time.

34% of households are paying off debt or reducing mortgages – Over a third of the country are making concerted efforts to reduce what they owe. I’m a proud member of this statistic! This will have short-term consequences to their perceived standard of living, but the long-term benefits will be well worth the effort. Interest rates are currently at an historical low, with many ‘height of the boom’ 2 year fixed rate deals coming to an end if they haven’t already, resulting in dropping onto a providers Standard Variable Rate which tracks a few points above the Bank of England base rate. For those in this fortunate position, they would find their monthly repayments dropping by hundreds of pounds. Use this time effectively to be paying off masses amounts of the principle sum borrowed without any extra effort.This is further backed by news yesterday that mortgage repayments are outstripping new lending by £418 million and that personal debt has dipped for the first time since records began in 1993.

What are the other two-thirds doing? I will assume half of the remainder do not have debt or a mortgage, which leaves 33% of the country still spending more than they earn and doing nothing about it.

28% have stopped using credit cards altogether – This depends ultimately on the context, and sadly, FDS didn’t elaborate further. We could conclude that 28% of households, having paid off their balances, have returned to the old-style way of saving for what they want instead of returning to the ‘buy now, pay (much more for it) later’ culture of the last decade. Alternatively we could conclude 28% of households have simply maxed out their cards, can’t get new ones, pay the minimum balances and so have been stopped from using credit cards altogether. I suspect the truth is somewhere between the two.

There are negatives to this though if they have stopped using credit cards out of their own choice: MBNA currently have some good reward card offers, and both Egg and American Express have good cashback cards for those who know they’ll be spending more than £4,000 a year on plastic. The important thing though is to ensure the balance is always paid in full every single month, otherwise the interest charged will dwarf any cashback deal.

23% of households who don’t currently save plan to start within the next 12 months – This is a pretty good statistic from my point of view. Everyone should be saving something out of their take-home, even if it is just a few pounds. The very first step to getting out of debt is spending less than you earn, paying off your highest interest borrowing first (I was shocked to see someone paying 53.95% on a credit card yesterday!), and then keeping going until you are debt free. At that point, you can begin saving in earnest. This statistic could therefore be viewed that 23% of all households in the UK who are currently in debt, with good planning and willpower on their part, will be out of debt inside the next year. I’m included in this statistic.

34% of households are saving more than they did a year ago – Perhaps even though you may be in debt, you had it drummed into you as a child to ‘always put a little by for a rainy day’. It’s good to know that again, over a third of all households in the country will be putting a little more by each month than they did last year.

Of course there are economic knock-on effects to this. Money saved is money not spent. When the economy is generally in good shape, that’s a good thing. Interest rates are stable and worthwhile and other peoples’ spending keeps things ticking along. When there is a downturn, sometimes the only way to get the fires stoked is to spend. If more families are saving, then the recession could be prolonged.

Despite the different ways these statistics can be interpreted, in general I believe they’re a good thing. It shows our country is waking up and smelling the coffee. I just hope that when things begin to improve, access to credit eases and people start getting raises or find employment again, that as a nation we don’t gravitate back towards our old ways.

Are you a statistic? Share your views in the comments!


My Financial Meltdown: Part 1 13

Posted on August 22, 2009 by Lee

This is Part 1 of the story of how this blog came to be.

It wasn’t all that long ago (as recent as December 2008 in fact) that I hit rock bottom in my life. Aged just 25, my wife left me, I had to give up the lovely house I’d called home for 3 years, and I didn’t have a penny to my name. I also didn’t have anywhere to live. The two things I did have was mountain of debt, and a job.

For 4 years I’d been in a relationship that viewed money a bit like water; We didn’t mind dripping taps, and didn’t think anything of leaving the tap running. While we were living at her parents house at the start of our relationship, and paying minimal rent, this wasn’t much of an issue. Virtually all of our combined income was disposable. We ate out regularly; bought whatever we liked; and didn’t think anything of living the ‘spend spend spend’ lifestyle. Afterall, it’s what everyone else was doing, right?

In 2005 we got married and decided to get a place of our own. This is where it all started to go terribly wrong. We moved 30 miles away from where I worked, increasing my commuting costs significantly and worse, she had to leave her job for us to do so. She found a new job soon enough, but it paid less than what she had been earning before. We were also unaccustomed to the sheer expense of living outside of a parental environment. They don’t teach frugality in school, or how to balance your finances, or how to manage debts and run a household. We bumbled along, making the best of it that we could.

By the time we had paid all the rent, utilities, insurance and commuting costs, we didn’t have a great deal left. She decreed she would take care of all the household and personal finances, and this suited me just fine: I hated thinking about money and wasn’t very good at it anyway. I was comfortable with someone ‘older and wiser’ taking care of the mundane parts of running our financial lives! But unbeknown to me at the time, she began taking out loans to cover our lifestyle. Credit cards topped up our day to day needs.

It seems absurd writing it down now. How stupid can you be?

For those who haven’t guessed, the end result of 4 years of that was total emotional and financial meltdown. Between us we had accumulated around £50,000 of unsecured debt, and it had taken its toll in terms of our relationship. Her request for divorce followed in November 2008 and she moved out 2 weeks later.  I wept that night. And for many, many nights that followed.

After arranging with my landlord to hand back the keys early, I sat taking stock of my life. At that moment on an icily cold winter morning, with no heating on, in an eerily empty, cold house that a few short weeks previous had been a happy place, I seriously contemplated suicide.

Continue to Part 2…

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