Money with John Rennie

Legal advice on your home or car insurance

Wed, 20 May 2009 10:42:00 GMT

An excellent piece of employment law/finance advice from one of my friends to another this week. Friend A finds herself in the midst of a dispute with her employer but has no trade union representation to fight the employment law battle for her. Enter Friend B, who does work for a union, and thus knows all about this stuff. His advice was to check their home and motor insurance policies, as these often have access to legal advice thrown in - it's a little sweetener to encourage people to buy policies, but one which people rarely take advantage of. This, ironically, is how they are able to throw it in for free of course. Friend A is now delighted to find she can afford a lawyer to take on the case.

Rises good, falls bad?

Sun, 17 May 2009 10:19:00 GMT

The BBC's 'Property Watch' this week made fairly terrifying viewing, as a succession of BTL investors were wheeled out to explain how they had borrowed millions of pounds at the top of the market, and now found themselves living under cardboard boxes while trying to sidestep the repo men. One remarkably cheerful woman had jacked in her local authority job to become a full-time landlord, borrowing Â7.5m to fund 50-odd properties, many arranged as HMOs (houses of multiple occupancy). It's all in the edit, as they say, but if the properties they showed onscreen are representive of her portfolio then even the rats would be packing their bags and leaving. Worryingly, the efferverscent 'investor' said that she was 'just waiting for the upturn' to refloat her financial boat - and that if she could get her hands on some cash she'd be getting back into the market. Arrrgh! There is a not very fine line between property investment and mental illness and I fear this woman had crossed it long ago.

So lots of horror stories of people trapped in negative equity and people struggling to get onto the housing ladder. But 'Property Watch' found itself with the perennial problem of what angle to put on the slide. Rising prices, a buoyant market are good right? We want our investments to grow, we don't want to owe more than the value of our houses. Yet it's just this buoyant market that cuts first-time buyers out - hence the bearish insistence by the likes of 'Money Week' and 'The Guardian' that this collapse is an adjustment or a correction rather than a problem. A fall may be painful, but it brings property prices back to affordable multiples. To hammer home this point we saw James, 27, desperate to get himself into debt so he could 'afford' to buy a Â159,000 house on a Â12,000 income. I apologise for the rash of quotes here, but irony feels the only recourse when you're viewing this sort of insanity.

Patrick Collinson in 'The Guardian' has no doubts. We've become brainwashed into seeing rising prices as a good thing, when what we need is a drop. He quotes a 'Property Watch' ICM poll which found that 64% of us want prices to stay the same or fall, with younger people wanting a fall. Well yes, and I'd quite like a lifetime's supply of free beer and my own private car lane around London but that doesn't mean I should have them, nor that it would be a good thing for me and the rest of society if I did. Price inflation got out of hand and put property at unaffordable multiples, but that doesn't mean deflation is better.

A growing economy needs a level of controlled inflation - it's a stimulus to further growth as people invest with a reasonable expectation of getting a return - not to see their house as an equity release cash machine, funding holidays and new cars, simply a reasonable return. You can have a deflationary economy if you like but it's also a dead economy - witness Margaret Thatcher's baleful effect on Britain in the early nineties before Nigel Lawson brought in his own bubble to get things moving again. And though young people may want house prices to fall so they can afford them, do they then want them to keep falling, thus finding themselves in negative equity and thus with more expensive mortgages or with a property they are unable to sell when they want to move up to a larger house (as they will). And where is the incentive for professional landlords to buy and invest in improving property when that asset is going to fall in price? To be fair, Patrick hates BTL landlords anyway, but they aren't going away and they do fill a necessary role in the UK housing market - all those people certainly aren't going to get council houses, Mrs Thatcher sold em off remember?

So enjoy the correction if you are trying to buy your first home, you may get a bargain. But don't pray for continuing falls. Ask instead why we don't have a policy in this country of building enough affordable homes (to buy, part buy or rent) for everybody who needs them. That alone would prevent the next property bubble from inflating.

We're in the money

Fri, 15 May 2009 07:27:00 GMT

Terrific article in today's Guardian, and one which scoured from me any vestiges of sympathy for complaining MPs. Written by Heather Brooke, who is largely respsonsible for the sea of ordure currently engulfing Westminster MPs. The Daily Telegraphy may have got the story (sometimes the chequebook is the only thing that works) but it was Brooke what set the whole process going with her FOI requests (persistently blocked by Speaker Michael Martin.

Yes, most of the MPs ARE clean, and much of the Telegraph coverage uses guilt by association (heâs a claims crook and an MP; this guyâs also an MP and he claimed for this; ergo heâs also a crook). I can also accept that the claims system is an opaque mess not even understood by some of the MPs, so some of them WILL have made genuine mistakes and misjudgements (though Elliott Morleyâs craven mea ex culpa of âitâs a really complicated system guv, so I didnât know you couldnât claim for mortgages that donât existâ is pushing it a bit). But this has been rumbling for years - how many of those who are now complaining were demanding more transparency when they started getting prodded through ROI requests.

Money with John Rennie podcast 5 March 09

Thu, 5 Mar 2009 12:13:00 GMT

Welcome to the imaginatively entitled 'Money with John Rennie' podcast. Today I ask Is Britain going to inflate away its debt problems? While you're pondering that one, I ask whether making stuff is all it's cracked up to be, and I look at the struggles of Guardian readers and writers to cope with the credit crunch. I kid you not, these guys are suffering and I'll be holding a collection at the end of the podcast.

The struggles of the Guardianista

Thu, 5 Mar 2009 09:43:00 GMT

The recession has created a whole new sub-genre of journalism at the Guardian and Observer newspapers (which these days are run out of the same stable). They are excellent titles both, and the natural home of liberal thought in the British press, but my god there's a self-satisfied middle class smugness about the writing at times. Now I may be on dodgy ground here. After all, any journalist is looking for good copy in the events of the day, they have to write their words knowing their readers, and these days they increasingly mine their own lives for material. However...

Suspect 1: Observer magazine, Sunday 1 March, How I learned to live with my frugal husband by Harriet Green (her real name). Harriett writes how she is having to forgo spa treatments and trips to Liberty because husband Jean-Paul is 'frugal'. Instead of taking the kids to Nando's, he's out foraging for nettle leaves and dandelions, reclaiming wood from skips that he can then knit into furniture, and repointing the house with his own excrement. This is a husband who cuts up his apple then saves each pip saying 'each one is a potential tree'. Leaving aside that the correct response is to wrest the knife from his hand and plunge it into his spleen, there are constant reminders that, actually, this couple aren't struggling in any way at all. Jean-Paul grudgingly visits John Frieda to have a haircut, accepts that the 'hugely expensive Paper Denim & Cloth jeans' that Hazza makes him buy are actually better than the ones he's made from old pizza flyers. The overall impression is of an affluent couple playing at poverty ... and isn't it all fun.

Step forward suspect 2: Graham Snowdon in the Guardian 'Money Blog' of Wednesday 4 March, who professes himself 'Dazed and Confused' by 'the heap of neglected bills, bank statements and other correspondence sits festering on my bedside unit. I stare at it hoping it might disappear â or at least get smaller â by sheer force of will, but it refuses to budge'. Graham witters on upon unopened credit card statements, a demand from his optician that he get his eyes tested before they 'release' his contact lenses and then the killing line - which shows that we're talking real poverty, not just your boring northern underclass, never worked, never will, malnourished stuff. Graham has 'two fee statements from my son's nursery'. Graham builds his bills into a Jenga tower and professes himself 'overwhelmed. Where should I start, any suggestions gratefully received'.

Pro bloggers will recognise this canny disingenousness as the come-on to generate user-generated content so beloved of the UK broadsheets. I seed the subject, you write loads of choleric replies, we get free content. We might even run some Adwords down the side to monetise the thing. And Guardian readers, bless 'em, respond in droves. Here's a tip Graham. Pay the bills and stop pretending to be poor.

Suspect 3: Guardian 4 March My Big Green Wedding. Full marks for eco-awareness here, as the Guardian recycles this headline from a similar piece in 2004. Here, five 'ordinary' women talk about how they are going to reduce the cost, carbon footprint, waste and enjoyability of their special day. 'Transport was a green priority and, fortunately, Fishers Farm Park were prepared to supply us with a Shire horse and antique hay wagon. After the wedding I crushed the empty champagne bottles and put them in our kiln to make cheese plates' writes Becci of West Sussex. Great tip Becci, and one people will be copying across Britain. Kristie and Anthony reduced costs and carbon by serving seasonal food 'wild duck, which we captured on site'. I'm off into my own garden with the catapult to 'source' some squirrels and feral cats for the kids' tea.

'Even the confetti was grown in my garden' writes Caroline Flint bafflingly. I scan my own garden for clues. So that confetti would be ... leaves? grass? dog shit? Let's move on. Melissa and Alastair of North Devon 'use organic caterers who promise entirely biodegradable equipment. The plates will be made of palm leaves, the cutlery of local wood and the glasses of corn starch. We're going to travel to and from the wedding on a horse which will help reduce our footprint. The cider is going to come from Devon's finest breweries. Wood burning fires will provide all the energy we need for the wedding.' Not sure about that last bit Caroline ... I'd check what the guests are inhaling in the toilets to give them that extra little burst of energy needed to carry them through to the early hours. Bewilderingly, Caroline refers to her honeymoon as 'relatively local' (ie not local) as they travel from Northampton to the Lake District, and boasts that 'all the home grown materials also helped keep the costs below Â10,000'.

What seems to have escaped our contributors and the Guardian itself, is that to most Britons, recession means fear of unemployment, tough decisions on how to feed the family, horrible uncertainty about the future and the realisation that their pension and savings nest eggs ain't going to hatch. Not marginal decisions on how to spend on luxuries such as Â10,000 weddings, children's nurseries and Â50 haircuts. Such stuff is not only laughable but weirdly out of tune with the times.

Is making stuff all it's cracked up to be

Wed, 4 Mar 2009 08:16:00 GMT

One of the lazy 'givens' of the post-Crash UK is that the country is sunk, in large part, because we don't make anything anymore. If we were a manufacturing heavyweight a la Germany, China or Japan, we would not have been laid so low by the dissolving of a candyfloss economy. But Margaret Thatcher swept away British industry in the eighties, after decades of post WW2 industrial decline, poor goods and appalling industrial relations. In she ushered the shiny new age of first the services and then the information economy. Our factories and jobs went overseas to countries unencumbered by old equipment and plant, moribund management ideas and, most crucially, redundant notions of decent pay and job protection.

There are a couple of problems with this thesis of course. First, that Britain IS still a manufacturing nation: indeed we are the seventh largest exporter of manufactured goods in the world. To put that in context, the UK is only the world's EIGHTH largest economy by GDP, so we are already punching slightly above our weight; we export more than Euro competitors France, Spain and Italy. And we export in greater quantity than countries much more obviously reliant on an extracting and manufacturing base, and less reliant on services (I'd point you at Russia and Taiwan for two).

So we make stuff and we sell it abroad. And that's the way out of this mess right? Well no. The clever countries, who have industrialised heavily on making stuff (see Germany, Japan and latterly China) are suffering because nobody is buying their clothes and cars. And Germany can complain as much as it likes that it has been hoist by a recession not of its making - much of those countries' booms have been export-led. A lot of those BMWs and Chinese fridges have been bought with money generated by the housing/credit booms in the UK, the US and elsewhere. Demand in their domestic economies has been lagging way behind output, as people have saved rather than spent.

Come to think of it, the US is the world's biggest economy - buyer, seller and exporter, and is based not just on candyfloss credit, financial services and the rest, but on a huge (if eroding industrial base). GM, Ford and Chrysler don't look like digging the US out of the recession anytime soon. So the idea of 'making stuff' to haul us out of the red doesn't look such a sure thing. And that's leaving aside the ecological cost of increasing the broken earth and smokestacks.

So here's a heretical thought. Maybe, with its generation of expertise in banking, financial services, business services and all the other white collar, clean hands industries, Britain could be among the countries BEST placed to profit from the upturn. The world may be going to end during 2009-10, but at some point it will be back ... and at that point its going to be finance and services that will make stuff happen.

Is Britain going to inflate away its debt problems?

Mon, 2 Mar 2009 16:16:00 GMT

It's that time again - the first Thursday of the month is fast approaching, the day when the Bank of England's Monetary Policy Committee decides whether to twist or stick on interest rates. Many are predicting another reduction, though with the rate currently at 1% there is nowhere much to go - zero interest rates could at last be here. Appealing though 'free' money is (though borrowers always pay a premium above base rate, as I am painfully reminded every time I look at my mortgage payments) there is a price - inflation.

But hang on, wasn't inflation last year's thing. A spotcheck of the financial news surely confirms that the only pressures on the economy are deflationary (alongside deflation's baleful cousin, deleveraging or degearing). The Dow sliding below 7000 points for the first time in 12 years; the FTSE 100 plummeting below 3700 to levels last seen five years ago; AIG and HSBC announcing record losses; UK manufacturing output falling for the tenth month in a row. And not least, the continuing stagnation in the housing market, with selling prices dropping like a stone. Many observers worry that the enormous fiscal stimulus (both the UK and US governments pouring money into the economy through quantitative easing (printing banknotes in effect) and using the resultant cash to buy up debt and invest in capital projects), combined with monetary easing (the cut in interest rates) cannot be other than inflationary.

At the moment, the governments are merely trying to halt the decline, but the aim is of course to reflate the economy. The difficulty is, once the medicine starts to work, controlling the beast of inflation. Many countries have a visceral fear of inflation. From the Tory years of Margaret Thatcher it was seen as the great evil, eroding the value of savings. The Germans of course have the horror of 1920s' hyperinflation seared into their psyche. But nobody seems too bothered about the poor old savers at the moment. Despite being the prudent souls who saved their pennies while the rest of us lived on credit, and borrowed to fuel the property bubble, they are now getting punished, by seeing the interest on their savings slashed - to nothing if the Bank's MPC does cut again this week.

But maybe there is a sinister method to the madness. If inflation does kick in, it will not simply be a sign of the economy getting moving again, it will also handily deal with the asset bubble. All those overpriced properties sitting on the market will soon look a whole lot more affordable as a healthy dose of inflation cuts the real cost of a Â200,000 apartment. Price falls will do their bit to bring sellers and buyers back to a meeting point - but maybe our governments are relying on inflation to do the rest.

Money with John Rennie 2 March 2009

Sun, 1 Mar 2009 15:59:00 GMT

A roundup of financial news from around the UK this week, with a look at Gordon Brown's attempt to emerge well from the recession, a fatal flaw with credit card protection, the return of the carpetbagger and a Council Tax whammy for landlords.

Council Tax whammy for buy to let landlords

Fri, 27 Feb 2009 11:28:00 GMT

I'm not sure the 'buy to let party is over', as one UK national paper had it this week. Serious landlords have always been into property for the long haul, and that means troughs as well as peaks, not my idea of a party! And the ten-year bull market in residential property was never going to continue. But news this week that rents are on the way down adds to a triple whammy for anyone who bought in over the last three or four years.

During last year, many were glibly asserting that as nobody was buying, they would all be renting instead. Pressure on rental properties would thus mean prices rising. Except of course, many of those who couldn't sell were simply dumping their properties onto the rental market, these 'accidental landlords' raising supply and so reducing rents - simple supply and demand. Then, there is the more nebulous element of reduced economic activity. The economy is slowing, deflating, with fewer people taking on new jobs and moving to new cities to do so - all this can only depress demand for rental property, and of course those who do want to rent have smaller salary deals, so will pay less or move downmarket.

Now if you bought into the market late, and so are operating on sub-5% yields, any reduction in rents can take you into a monthly loss. If you're on a fixed rate mortgage (or if your lender is tardy about passing interest rate cuts on, as we know they have been) then there is no equivalent cut in costs to offset lost income. Bad enough for you yet? Now to pour water on a drowning man. You're less likely to smoothly reduce rents to meet the new equilibrium rent than simply find that your flat stands empty for a while at the end of its tenancy - price in the rental market is inelastic like that. So no smooth adjustment of finances but a sudden hole punched in your monthly balance sheet. And to add insult to injury, you're now having to pay the Council Tax that the tenant previously paid. On a one-bedroom London flat that might mean the loss of Â1000 pcm rent plus an additional Â100pcm in Council Tax.

The smart move? Cut rents to get that void filled as soon as possible.

Gordon Brown ... you have to admire his front

Sun, 22 Feb 2009 13:19:00 GMT

Poor old Gordon Brown, caught in an impossible situation of trying to fix the UK economy without actually admitting it was all his fault in the first place. Gordon of course is not the only culprit, but he is certainly guilty of encouraging the credit bubble, based on residential property, that is now so painfully deflating, with grim consequences for the UK economy. But one thing you can't fault Brown for is his barefaced nerve in attempting to exculpate himself. Clear away much of the wreckage and we have a dual problem, with one root.

Problem 1? Much of the fuel of our banking system over the last decade has been funds generated by securitised loans, the sliced, diced, repackaged and sub-prime mortgages on overpriced properties 'owned' by under-capitalised punters who from 2006 on have increasingly been defaulting on their mortgages. Result? Confidence in the products disappears, swiftly followed by confidence in the banks, meaning a drying up of trading. Result? Liquidity disappears.

Straight on to Problem 2. As liquidity disappears, so Joe Punter can't refund his mortgage as his fixed rate deal comes to an end. Or new buyers find that the super multiples of 5x earnings and 100% loans aren't there to haul them up to the elusive first rung of the ladder. So the market disappears and so prices tumble, exacerbating the problems with negative equity, and making it harder to hit the new, tighter loan-to-value requirements of the banks. You may have bought a flat at Â200,000 on a Â150,000 mortgage, but as the market price plunges to Â175,000 you find you miraculously have an 85% mortgage rather than a 75% one.

And so the market and the wider economy deleverages and thus deflates. Now Brown has to work the impossible balancing act of trying to encourage people to spend their way out of the recession (for we truly have no option, whether it's you and I buying new cars or banks and companies buying financial products from each other, which is what our shift to quantitative easing is all about), while simultaneously urging prudence and frugality. Brown this weekend told banks they shouldn't be offering 100% mortgages anymore. That is, firstly, comical - has he looked in the marketplace for a 100% mortgage recently? If he can find one he's doing well, they've disappeared by default. Secondly, he is instructing the banks to remove the fuel that he needs to get the economy motoring again. And if he can resolve that conundrum, he's a smarter chap than the last 12 years of economic mismanagement would suggest.

But it goes deeper. Brown's lecture is staggeringly hypocritical when you realise that his 'economic miracle', the NICE decade that came in with Labour, was driven by a determined creation of the property credit bubble, masking the fact that apart from financial services and personal debt, Britain was increasingly not generating products, sustainable wealth or anything very much at all. For a superb and readable critique of the Brown timebomb, read Graham Turner's The Credit Crunch.

Credit cards not as safe as they seem

Sun, 22 Feb 2009 10:40:00 GMT

An interesting piece on the Radio 4 programmed 'Moneybox' yesterday (Saturday 21 February) on the protection (or not) afforded by buying on credit cards. The assumption we all make is that our purchases are insured if you buy on Mastercard or Visa - making the card issuer and retailer equally liable for meeting your loss if goods are faulty or simply don't turn up. A listener who bought on Amazon, but crucially from a Marketplace (ie third party) vendor rather than Amazon itself, made a claim as the goods were faulty, only to be told by his card issuer that the transaction WASN'T covered under the normal card insurance.

I'm loathe to say don't buy from Amazon Marketplace. It's an excellent system which I use myself both to buy and sell, and it accounts for an increasingly large part of Amazon transactions - the bringing of Marketplace vendors into the tent has also allowed Amazon to grow so quickly in turnover but more importantly in the range of stuff it sells. I make all my purchases on Amazon using the Amazon credit card - that's because it earns me bonus points rather than any insurance cover, but it does have the added bonus that Amazon (it's actually an RBS card) is unlikely to refuse to make good losses bought from itself using one of its own products. To anyone who doesn't use this card (which is most of you of course) I'd say caveat emptor and whip out your reading glasses to scan the small print.

Want some free money?

Tue, 17 Feb 2009 15:14:00 GMT

Carpetbagging isn't nearly such big news as it was a few years back. In the early nineties it became very popular to open accounts with a host of building societies, confident in the knowledge that they would be taken over by bigger societies or demutualise to become banks. There would then be a nice little payout for members as the assets of the society were broken up. Though a lot of us have been looking wistfully at those passbooks, and there hasn't been much demutualisation action of late, there's still money in them there friendly societies. Many of us have dormant building society accounts we haven't touched in years. It's well worth having a dig through your drawers (and the older you are the more likely to have a moribund passbook mouldering away) and seeing if you have forgotten cash or, more interestingly, a demutualisation payment coming your way. Names to look out for include the Newcastle, Portman and Leeds building societies.

Tags: carpetbagging, building societies

Something for nothing part 1

Tue, 17 Feb 2009 14:54:00 GMT

5 January 2009
On the fifth day of my year of living frugally (the aim, you'll remember, is to save Â10,000 during 2009) I turn my attention to the lovely, lovely free stuff at freecycle.org. There is no such thing as a free lunch, as we're often told, everything has its cost. But a couple of things here. First, I'm not after lunch and second there's a lot more ways to measure costs than the purely financial. In this case, the cost of getting my secondhand sewing machine from the Elephant and Castle to East Dulwich is my getting into the car and going to get the thing ... plus I put my back out in the process. These are prices I'm happy to pay. There's more than one way to measure benefits too - I get the massive boost of getting something for nothing and feeling I've slightly reduced my carbon footprint rather than increasing it.

The sewing machine's not for me by the way, it's for the wife. Who swears she is going to make curtains, tablecloths and perhaps even run me up a suit. (Perhaps not). So assuming she ever gets it out of the box, there are further savings in store. But for now I'm happy to have saved the Â50 which was the price of the cheapest alternative online.

Day 5: saved Â50: yearly saving so far Â538

Burn baby burn

Sat, 14 Feb 2009 21:40:00 GMT

4 January 2009
Feeling very good about saving several hundred pounds yesterday merely by switching my fuel bills to online tariffs and paying by direct debit, but there's more. Last year, in an attempt to cosy up the house, we had the coal-effect gas fire (very 1970s) removed and a real fire put back in. My naive assumption that we could simply chuck some wood in there and start burning was quickly dispelled by our very efficient, if rather glum, chimney sweep. Not only must the chimney be cleared but a little hood put on top, lest homeless ravens attempt to build nests in there. Then there was a dinky metal windmill to increase the draw of the chimney. Finally, I had to have a hole drilled in my wall to install an extractor, lest their be a dangerous build up of gases and we all suffocate while enjoying 'Ant and Dec's Saturday Takeaway'.

"You're joking," I said. "This is a rickety Victorian semi. When the wind blows the curtains move. Even the floors let in a draught." The sooty-faced gloomster was unmoved. Several hundred pounds later I could light my fire safe in the knowledge that my children could watch Sky safe from physical, if not moral and spiritual, pollution. As I found out though, solid fuel ain't cheap. You burn bags of logs, coal and kindling each week, especially in winters like this one, and an open fire isn't very efficient either - 90 per cent of the heat goes up the chimney not into the room.

So a dream for later in the year is to buy one of those sealed, solid fuel burners, which are hyper efficient. But in the meantime, I have found a regular source of wood, in the skips of East Dulwich. Myself and Rennie minor go out in the van and pillage. Today we found a marvellous stash of tongue and groove (excellent for kindling), old rafter beams and oak worktops (lovely burners). The boy was very excited and asked if he could use the chainsaw once we got it home. As he's only seven, I think this unwise. But anyway, I consider this green (I'm a big reduce and re-use guy, but very sceptical about much recycling) and we got around Â30 worth of firewood at a rough reckoning. The skip-waste of East Dulwich won't have to be shipped off to landfill in Essex or China and we're keeping things local. And I love using that chainsaw.

Day 4: saved Â30 on firewood: yearly saving so far Â488

We've got the power

Sat, 14 Feb 2009 21:26:00 GMT

3 January 2009
Okay, so I'm trying to save Â10,000 in a year, with the added discipline of saving something different every single day. I'm well aware that by December I may be getting a little desperate for ideas - I'll probably be prising ear wax from the kids to make festive candles. But in this first month I reckon I can rack up some big ticket savings. I'm thinking insurance, energy, the car, the mortgage ... I should be able to chalk up some hundred pound plus numbers before I get into the nickels and dimes. Don't get me wrong, I love the little stuff, and I get extraordinary satisfaction from saving Â1.80 on my daily paper and going to the library instead - just call me cheap.

But today I tackled the energy issue, and it WASN'T as straightforward as I'd hoped. My assumption was I'd be able to tart my account around to one of the big suppliers (Npower, E.on, EDF and the rest) and they'd be able to knock 10 per cent or so off my bills. After all, their spotty salesmen are always knocking at my door telling me they can slash my energy bills. No such luck. The problem is, it's just too bloody complicated at the moment. The energy market is in a complete state of flux, with dozens of different tariffs. If you are with Npower in London you could easily be paying a different tariff to a customer in Scotland. Added to the confusion is that prices ARE likely to drop in the coming months. Wholesale prices are down by around half from last year, when all anyone talked about was that commodities were the new gold. (Remember oil at $140 a barrel?)

Truth is, the power companies have been as miserly as the petrol companies in reducing prices, but that's likely to change over the next months - firstly because prices generally take a scandalously long time to feed through to the consumer, but secondly because the general slowdown in the world economy is reducing demand for power, and thus its price. So my decision was to do nothing for now. BUT there are savings. To my shame we were still paying quarterly by post for energy and moving my Npower tariff to direct debit got me a 10 per cent saving. I also moved to the company's online tariff and this got me a further 10 per cent off.

A 20 per cent saving on the heinous fuel bills for this drafty Victorian pile, is a biggie, Â300 a year in fact. Now that does give me a warm glow. And I'll be going back in search of a cheaper tariff later in the year ... it's up to you to keep my business Npower!

Day 3: saved Â300 on fuel: yearly saving so far Â758

On your bike Rennie

Wed, 11 Feb 2009 20:52:00 GMT

2 January 2009
Flushed with success at my first day's saving - Â456, or 4.56% of my yearly target of Â10,000, I relate my triumph to the wife. 'But of course you're going to have to do that every day now aren't you ... or you'll feel like you've failed.' Is this what you call tough love? Hard motivation? She may, in her unique way be trying to raise my game, but I think a reality check is needed here. My quest is to save Â10,000 over the year, with a combination of little tweaks and grand gestures.

Yesterday's was the grand gesture, today I go for the little tweak. I am due in the pub at noon to watch the football with my brother in law and a few friends. I'm not drinking anyway as it's January and would normally take the car. I think carbon footprint, problems with parking ... expense! I reckon I can save a couple of quid by taking the bus. Bus, schmus, I haul the fold-up Brompton bike from under the stairs and try to remember how to unfold it. This was the bike I bought for Â500 three years ago to 'save me money' and which has seen so little daylight that I swear it blinks when I get it out the front door. You know the way the newspapers calculate the price of big money football failures with the old 'three million pounds a goal' routine? (Liverpool fans just need to think about Robbie Keane here). Well these guys have nothing on the cost of each journey on my Brompton - it would have been cheaper to have a cab on standby.

Finally got the thing together, and only missed the first five minutes. It's free (I've not yet got into the madness of costing the calories that I'll have to put back into my body to pay for the exercise) and I'm getting my day's exercise too. Now that gives me an idea for tomorrow's saver.

Day 2: saved Â2 on bus fare: yearly saving so far Â458

The year of living frugally

johnrennie@gmail.com — Tue, 10 Feb 2009 18:11:00 GMT

1 January 2009
The last year has been tough, we all know that. And, having already lived been a working grown-up during a couple of recessions, I can say this is the worst yet. Of course, the more you have the more you have to lose, and this one has been a stinker. Lucrative freelance work disappearing; first-hand experience as an online retailer (holidays and travel) of people keeping their cash in their pockets; and an estate agent who managed one of my properties going down the swannee and taking Â1500 of my cash with them.

Okay, so enough of the sob stories. The bottom line is that money in the Rennie household is not quite so plentiful as it once was. This made me think. Though I lecture other people on how to save and, most especially, how not to waste money, am I really walking the walk here. I reckon I've got into some lazy habits. So this is the task. Every single day for a year I'm going to do something to save money. My aim is to save Â10,000 by the end of the year. I'm going to do it either by cancelling something that's currently costing me, replacing something with a cheaper good or service, or finding a new way to make cash.

A few ground rules. I can't simply cancel my morning paper and use that one for every day bar Christmas (they don't publish papers on Christmas Day, I know, I used to work on them). I can't say 'I fancy buying those Â100 shoes ... No, I don't. There, I just saved Â100'. And I can't simply take a job (and in any case I will never work for anyone, ever again). As my wife kindly pointed out to me just today 'Nobody would give you a job. At your age, and with your background, you are now unemployable'. Thanks Jane. So genuine savings.

And we begin today by cancelling that daily paper (it's the Financial Times by the way). That has immediately saved me Â456 (I already got a reduced rate as a subscriber if you're wondering). I do NEED to read the FT everyday of course, but that's fine - I have all the papers I need in the local library, which I already pay for via my grossly overpriced Council Tax, the rest of which Southwark Council seem to spend on 'parking attendants' to ensure that I and my neighbours can't park anywhere in South East London. I shall be in the library at 8am tomorrow, with the rest of the old folk seeking a free, warm place in which to while away the endless days.

Day 1: saved Â456: yearly saving so far Â456

Financial predictions for 2009

Mon, 5 Jan 2009 13:31:00 GMT

Financial predictions for 2009

I don't actually have a crystal ball and if I did I'd probably be out on the golf course right now, smugly congratulating myself on the success of my investments down the years, rather than tapping away at a computer keyboard. But now we've got that one out of the way, let's consider what the financial world has in store for Joe and Joanna Public in 2009. The old Chinese curse 'May you live in interesting times' has rarely been so apposite. Yet for Gordon Brown, who in his decade as Chancellor of the Exchequer was in large part to blame for making 2008 quite so interesting in Britain, it seems the curse has become a blessing. In a remarkable stroke of luck, Mr Brown now finds himself lauded (if the opionion polls are to be belied) as Britain's financial saviour ... for working at clearing up the mess he helped create. But such luck cannot last, which leads us to our first financial prediction for 2009:

Financial predictions for 2009

1) Interest rates to hit zero. Bank rate that is. The attempts to unblock the flow of credit, first by pumping billions of pounds into the banks, secondly by lowering the cost of borrowing, have so far stubbornly refused to work. Governments get twitchy as rates approach zero, as they don't have many tools left to work with. But they are MUCH more nervous about deflation which, once entrenched, is hard to shift ... just ask the Japanese. Rates will fall further, and there will be pressure on the banks to pass on those interest rate cuts. A base rate of 0% with mortgage holders paying 6% pa is morally and politically unacceptable. So there will be arm twisting of the banks. Which takes us to point 2.

2) Expect further injections of cash into the banks, which inevitably means further nationalisation, as Government takes shares for its (our) cash. By the end of the year we could have an effectively nationalised banking system in the UK. Yes, the dream of socialism has (irony of ironies) been achieved by the ineptitude of the capitalists themselves. Of course that could just be the dialectic working. The Government comes under increased pressure to show UK taxpayers some bang for their billions of bucks poured into the banks, but how to force them to lend in quantity and at reasonable rates when they find it hard to borrow themselves? Onto point 3, quantitative easing.

Financial predictions for 2009

3) You'll hear a lot about quantitative easing this year: it's a euphemism for printing money essentially and is shock therapy for getting credit moving. The Bank of England will print more bank notes and use them to buy Government bonds (effectively shares in the future performance of the UK economy) back from the market (the banks in other words). Thus the banks swell their reserves of cash, which they then use to lend in the markets. Voila, out of thin air we have increased the money supply and thus freed up credit. In case you're thinking their must be an eventual price to be paid for making money out of nothing ... you're right. It's a price we'll be paying for years to come. But the UK Government has little choice but to use this tool now. When you're drowning, you clamber in to any lifeboat ... you don't ask what port it's headed for.

4) House prices to stabilise ... eventually. It's a long-time bugbear of mine that people talk about 'the property market' as if it were a homogeneous whole. There are dozens, hundreds of micromarkets in the UK. The crystal ball gazers in the newspapers are almost all saying that the market will lose 35% in total, but a little caution is in order. This is 35% off the notional top of the market in spring/summer 2007, when asking prices for property were laughable and thus not being taken seriously by longtime investors (of whom I am one). When an estate agent told me a one-bedroomed flat I own in East Dulwich was worth Â280,000 I shook my head in disbelief, and wrote Â230,000 on the spreadsheet. Anyone who has bought in the last year or two has probably lost money, but for most of us, 35% of thin air is not so bad. Which is a long way of getting to saying that the last puff of overinflation could be out of most of the property micromarkets this year. I know a number of people who are cautiously heading back into buying - having done their sums first. This is the year when investors go back to the fundamentals, such as looking for a yield (rent expressed as a proportion of buying price) of 7% or more. Value hunting is back in other words. Which brings us to point 5.

Financial predictions for 2009

5) A bounce in the sales of classic investment tomes by the likes of Benjamin Graham and John Maynard Keynes. Two giants who (unusually) were both top economists AND successful players of the stockmarkets. Players is perhaps the wrong word. Both were long term investors who became superb at sniffing out value in a company. No hunches, no magic, both men's success was based on assiduous reading and analysis of balance sheets. And this will be a perfect year or two for value investors - with the ebb tide of recession lowering all boats, some really solid companies have seen their share prices clobbered with the flight from the market. BG? Barclays Bank? There are a number of companies whose share prices look set for a bounce.

6) An increase in TV programmes, books and magazine articles on living frugally in hard times. Could we even see a return to the ripped jeans of early eighties 'hard times' chic? I hope not, if it means reissues of early Spandau Ballet and Funkapolitan singles, but people will at least be aspiring to more sustainable ways of living. It also chimes neatly with eco concerns about lessening the carbon imprint of our homes and lives. I was bought a machine for Christmas that involves, with some mess, recycling newspaper into briquettes to burn on the fire. Expect a shift away from recycle to reduce and reuse. This could be our greenest recession yet!

Best savings rates UK

Sat, 3 Jan 2009 11:48:00 GMT

Best savings rates UK: Banks are rather adept at sleight of hand when it comes to interest rates. A favourite trick is to offer headline rates to hook new customers and then withdraw them at a later date - they rely on our laziness and inertia to stick with them regardless. We all know about their tardiness in passing on base rate cuts when it comes to mortgages - anyone on a tracker just now is rubbing their hands with glee. While those of us on variable rate mortgages are wondering just how a bank can justify borrowing from the Bank of England at 2% and lending the cash on to us poor punters at 5% or more ... a handy 150% markup looks like VERY good business for the lender. And last week 'Britain's biggest building society' (the Nationwide gets the title by default only because all the bigger building societies became banks and set off in search of riches on the markets) announced that its tracker wouldn't ... wouldn't track that is. Nationwide has said it will not not pass on further cuts in interest rates to tracker mortgage customers. You can kind of see its point, as some of Nationwide's tracker customers are currently paying an interest rate of only 1.24%, as they have deals giving them rates of 0.76% below the Bank of England base rate. Any more cuts and the Nationwide will be paying customers to take the money away, but trackers are meant to be a calculated risk for borrowers - and will Nationwide be refusing to track interest rate rises when they eventually come? I'll leave you to figure out the answer to that one. As ever, it smacks of a bank wanting to have it both ways.

Best savings rates UK: But one of the most painful experiences for the poor bloody customer is the widening differential between borrowing and savings rates. Now there IS a liquidity crisis. Money IS relatively expensive for banks to borrow. But pity the UK consumer trying to operate frugally and sensibly, paying off their mortgage while tucking away money in savings for a rainy day or retirement. Over the Christmas period, while most of us were enjoying an extended break and planning how to cope with the financial exigencies of 2009, the Abbey, Lloyds TSB, Halifax, Barclays, NatWest, Alliance & Leicester, Nationwide and Royal Bank of Scotland donned their pantomime villain costumes and slahed rates on variable savings accounts by 1% or more. Egg, Ipswich Building Society and the Yorkshire Building Society have also withdrawn fixed rate offers during Christmas. The timing is no coincidence - the banks know that fewer of us are reading the papers and gossiping around the water cooler: the Christmas holiday is a great time to bury bad news.

Best savings rates UK: From this week, anyone with less than Â500 in the Halifax Extra Income Saver gets 0.1% a year, so do those with less than Â50,000 in Abbeyâs flexible saver account. It's a remarkable turnaround from early 2008, when the credit crunch saw banks offering eye wateringly high deals in an attempt to entice in depositors and increase their liquid cash. Some of those were not so clever in retrospect - Ice Bank was offering around 10%, and I to my subsequent shame recommended it as a good deal. Since then of course, Iceland and its banks have gone south, and risk taking my football team (West Ham Utd) with them. But even rock-solid UK institutions (for what that's worth these days) such as Barclays, Bank of Scotland and Lloyds TSB were offering rates of 7% or more. It's inevitable with the plummeting base rates that savings rates must fall. But Joe Public, paying 6% on his mortgage while getting 0.1% (or nothing in other words) on his savings, might wonder just what he's getting for the billions the Government have pumped into our bankrupt banks.

Time to balance the books

Fri, 2 Jan 2009 17:50:00 GMT

New Year's Resolutions have long fallen into disrepute. Indeed somebody said to me on New year's day 'Resolutions ... aren't they made to be broken?' Which kind of sums it up. But even if you have dumped the diet by the middle of the month and are back on the booze by the first weekend in January, there is one resolution you should keep - to take responsibility for your finances and to live within your means. Going into 2009 it's never been so important, because if you thought 2008 was a financially challenging year you've seen nothing yet.

The phrase we're hearing a lot at the moment to describe the economic situation is 'perfect storm' ... essentially that means everything goes wrong at once. So we have plunging property prices and a collapse in stock markets. We also have falling interest rates hitting our savings. We have inflation as the preoccupation (some would say obsession) of the European Central Bank, while the rest of us are worrying about deflation. We have sterling in collapse. Which should help exports ... except nobody's buying anything very much, and in any case Britain doesn't make anything very much anymore. Above all, we have confusion, uncertainty and a chronic lack of confidence.

In short, we have a financial mess the roots of which nobody has quite figured out just yet. I even heard the mighty Warren Buffett this week stating that even he wasn't sure why everything had gone so wrong, so quickly. Sure we know that property has been overinflated for some time, and we know that the sudden failure of confidence in the ability of suprime borrowers to repay their mortgage loans was a catalyst for the collapse, but the size of the failure has been stunning.

And if we don't know quite how it happened, we have less idea how it's going to shake itself out. We have the UK Government encouraging us to spend to help the economy get moving again ... yet simultaneously they are accepting that the roots of the credit crisis lay in our borrowing beyond our means. Think of the logic of this ... we got in a mess because we borrowed in order to spend. We can't afford to repay our credit card debts. What should we do? Spend more!

A couple of things here. It's not your responsiblity to spend Britain out of the recession. It IS your responsibility to get your own finances in order.

Over the next year around 1 in 10 of us could lose our jobs, and over the next few months a lot of major high street shops could disappear. Things in Britain are set to get very tight indeed. Now I'd have to have swallowed the entire works of Norman Vincent Peale to snatch a silver lining from this, but ... it is an opportunity for Britain to return to sanity. A first move would be for Government to force banks to tighten the lending criteria for individual borrowers. The lack of available credit is currently causing this to happen by default. As banks and building societies have very little money to lend, they're not in any position to dole out 100% mortgages at 5 times income anymore.

But don't take that as a sign of prudence or a lesson learned. It's the job of the banks to push as hard against the rules as they can in the pursuit of profit - so as soon as credit frees up they will be pushing to rebuild cashflow and profits. The last decade has proved that self regulation doesn't work: e need a return to some form of credit control on private borrowers.

We could also do with tighter rules on the leveraging madness indulged in by the banks. It's an old saw that all banks are technically bankrupt as the amount of money they have out on loan in the form of personal loans, mortgages and the rest, far outweighs what they have out back in the safe. But then it's their job to lend out the money they take on deposit - this is the oil that keeps the capitalist machinery humming. By necessity, very little of that cash actually sits in the vault at any one time. That's why runs on banks are such terrifying things - the whole system of banking is a rather marvellous, though delicate confidence trick. It works beautifully ... until your remove that magic ingredient of confidence.

Similarly, most of us need to borrow from time to time. Sometimes it's a necessary evil: we need a new car now, as the old one just gave up the ghost, so we pay for it over five years. Sometimes it's a positive virtue, if it allows us to buy an appreciating asset (as property normally is) which we certainly couldn't buy for cash. And sometimes it's plain stupid, as when we borrow against the value of our home to buy a 40in plasma telly. Sucking capital from our main asset to purchase an immediately depreciating geegaw we may want ... but don't really need.

Which is a very long winded way of getting back to my initial point. It's time all of us, individuals and banks alike, learned to live within our means. Which certainly doesn't mean no investing and no speculation ... because you want to get richer don't you? Not simply rub along Mr Micawber style, avoiding misery but never quite reaching happiness. And in that spirit, being a sceptic who doesn't believe that "something will turn up", I'm going to assert that you'd better make it turn up. Do it yourself finance starts here, and in our next podcast I'll be looking at the recipe for financial happiness ... balancing the books.

How to get voucher codes

jrennie@gotadsl.co.uk — Wed, 31 Dec 2008 09:32:00 GMT

How to get voucher codes: Voucher codes, key codes, call them what you will, these are a terrific way to save money on stuff you were buying anyway (note the proviso there). They work like this: a retailer (be it Asda, Pizza Hut, Amazon, B&Q, practically everyone uses them now) publishes a promotional code that you then use when you buy stuff, usually online. Notice next time you check out at an online store that there will probably be a box on the form for 'promotional code here' or similar. Tap in your voucher code and you get your 10 per cent (or whatever) off the price.

Great, but how do you get voucher codes? Well this is one thing the internet is VERY good at. While the web may be rubbish for buying your next pint or a loaf of bread when you've just run out, it is extremely good at disseminating information. Hence cyberspace is thronging with voucher codes for just about anything you're going to be buying. The web's also great for searching of course, so you can simply go to Google and search 'Le Creuset voucher codes' or whatever. The disadvantage here is that you spend a certain amount of time searching for stuff that won't be there, and finding voucher codes that have expired.

The second approach is to check out the host of websites that do the job for you. Sites such as vouchercodes.com, myvouchercodes.co.uk and vouchercodes.co.uk save you reinventing the wheel each day by throwing up a list of current hot codes. You can be reasonably sure they haven't expired, and there are peer recommendations (basically people saying 'yes it worked' or 'no, don't bother, it's dead'). Updated each day, with lists of expiring codes, this is a great way to cut straight to the good stuff. Disadvantages? It doesn't take you straight to that Le Creuset griddle you were searching for and it does encourage 'Sales' disease. You know, 'I didn't want one, but as it's 50% off, I'll get one to save money.' Don't pretend you've never succumbed!

I'll be updating regularly on how to get voucher codes, though with a bit of wit and the stuff I've mentioned here, you've really got all you need. To whet your appetite though, here are three hot items for Hogmanay. Happy New Year!

10% off everything at buyagift.co.uk with code 023478, expiring 10 January 2009.
Â30 off all orders over Â60 at littlewoodsdirect.com with code ZG872, expiring 1 January 2009.
25% off when you spend Â20 or more at pizzahut.co.uk using code HSR2411PL. Expires 4 January 2009.

Bye bye Walletwatcher

Tue, 30 Dec 2008 15:28:00 GMT

Hello to everyone who has been following my posts on the Walletwatcher website for the past year. The site is now no more, much to the chagrin of myself, my bank manager and several hundred daily visitors. I, like so many of you out there, have been on the receiving end of the recession ... credit crunched. But, in the great tradition of turning negatives into positives, what better place from which to start dispensing personal finance thoughts, education and related trivia. I'll be posting on a daily basis on things which catch my eye in the news, and from next week we'll be starting a series of 'made easy' features, in which I'll attempt an idiot's guide to negative equity, deleveraging, deflation, pound/cost averaging, you name it, in 300 words or less ... We'll see how it goes. There will also be a weekly podcast for all of you who are visually impaired, who love the sound of my voice, or are simply too lazy to read the stuff. See you tomorrow.