Category Archives: Personal finance

This category contains information on how to deal with personal debt. It is based on the fact that I went through a serious debt crisis in the late ’90s. I was very close to filing for bankruptcy but I found another way, so I am always keen to pass on what I learned from that experience.

PAYDAY LOANS AND THE DEBT SPIRAL

Posted on by

0

“It’s not just the weak that can end up in a debt spiral”, wrote Simon Read of The Independent (London) a couple of weeks ago. I was reassured to read that, because I had ended up in that very spiral in the late 90s and I didn’t want to think that I had been weak. Oh no, not me.

The article was topical. Payday loans had hit the headlines again when R3, the professional association that represents insolvency practitioners, warned that up to 3.5 million people in Britain are expected to take out a short-term loan to tide them over in the coming six months.

First, the good news …

Simon Read says of the loans: “if you need emergency cash and know you can pay it back within a few days, then paying £20-£30 for the privilege doesn’t seem too bad, especially bearing in mind how much the charges and interest can add up to if you go into the red at a bank.”

Then the bad news …

But as Read says, and I have written in these pages before, the obvious problem is that if you don’t repay the loan quickly then it mounts up: it spirals, in fact. What’s more, you could end up paying bank charges and interest anyway, as well as the interest to the loan company.

Wonga boss explains

The most interesting part of the piece was this. Because of the negative publicity, Wonga’s boss Errol Damelin got in touch with the Indy to offer a defence of his business methods. He said: “If things go wrong we charge a one-off default fee of £20 and then stop any further interest at a maximum of 60 days.”

That sounds fair and it’s the kind of responsible business practice that Simon Read, and in fact all of us, would like to see, though I’d like to know how Wonga defines “when things go wrong”, i.e. when does this kind of “interest cap” kick in?

The Independent would like to hear from anyone who’s had experiences (good or bad, I trust) with Wonga or other payday lenders who claim to operate fairly.

Author’s payday loan spiral

The article concluded by recommending a book by Steve Perry, entitled When Payday Loans Go Wrong. It describes the author’s “descent into debt hell”, which started innocently enough with a £250 loan for a weekend away but ended 18 months later with 64 loans from 12 different companies totalling £15,000.

My own debt experience was not caused by payday loans … but the result was similar. My business started to go wrong, so I started funding it with personal credit cards. I ended up owing a total of £65,000 to 23 separate  creditors and narrowly avoided bankruptcy. Different cause but the same spiral, which I described in my book “Back to the Black.”

WANT TO KNOW MORE?

For the full Simon Read article click here: http://www.independent.co.uk/money/spend-save/simon-read-its-not-just-the-weak-that-can-end-up-in-a-debt-spiral-6275149.html

For information about Steve Perry’s book “When Payday Loans Go Wrong”, click here: www.saynotopaydayloans.co.uk

For information about my book “Back to the Black”, click here: https://michaelmacmahon.com/books/back-to-the-black-how-to-become-debt-free-and-stay-that-way/

MORTGAGE PAYMENT PROBLEMS? AN INDEPENDENT GUIDE

Posted on by

0

I heard recently about what seems an excellent source of independent advice for anyone with mortgage payment problems. My informant in this case was that much-hyped, but also much-maligned, social networking and microblogging service: Twitter.

Twitter the time-waster?

Many people (including many of my friends) are scornful of Twitter, calling it nothing more than a self-indulgent waste of time and / or a gossip-mill. I used to be one of them.

However, now that I use Twitter more-or-less regularly, I find it worth the effort of keeping up with the sure, there is some rubbish on there. But if I see that one of the people I “follow” tells me nothing more interesting than where they went for coffee or what movie they planned to see tonight, then I hit that useful button called “unfollow”. For those of you who find themselves swamped with “too much information” but who have never found the “unfollow” button, that’ll be because it is not obvious. If you are following sometone who flooding your timeline with dross, find their profile and you’ll see a large green icon with a tick, and the word “following”. Simply hover your cursor over  that icon and the green changes to red amnd the word “unfollow” appears. Simply click and hey presto, that person is now an ex-followee.

Twitter the information goldmine?

On the positive side, and I do like to be positive, the amount of useful stuff I have first heard about on Twitter has been massive.

Many (but by no means all) of the people I follow are financial journalists or related experts. Some of them are household names and they appear regularly on TV talking about the national economic situation, such as Paul Mason; some write for the newspapers; some are independent advisers.

YouGov guide for hard-pressed mortgage-holders

One of these very journalists recently recommended on his Twitter feed a very useful guide for hard-pressed mortgage-holders. It is published by those helpful people at YouGov (i.e. the government). So I think you’d have to agree it is free of commercial bias.

I have to admit that I can’t remember who recommended this guide, otherwise I’d give him or her a credit. And as it was a week or so back, trawling through my Twitter feed to find this particular recommendation would take too long. Moreover it would keep me from an important task; switching on the TV at 2 pm to watch Shane Williams’ last international rugby match:Walesv.Australiaat the Millennium Stadium. Bound to be an emotional occasion; however the famously competitive Australians are unlikely to cooperate by making it easy for him to cap his career with (yet another) try.

PS: the result went against Wales, in the event. As a keen supporter of that country’s rugby, I have to admit that the scoreline flattered them slightly, because the aforementioned and surely legendary Shane Williams skipped out of a tackle and ran in for a try in the final minute (in fact the 81st) of his final match for Wales. You couldn’t have scripted it better and from the crowd’s reaction you’d have thought that Wales had won the World Cup at that moment.

Citizens Advice Guide

Finally: I would suggest that this YouGov guide should be read in conjunction with the excellent information and personal advice available from Citizens Advice (the CAB).

WANT TO KNOW MORE?

For “Mortgages and repossessions: a YouGov guide”, go to:

http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/Mortgagesandrepossessions/index.htm

Topics covered:

Struggling with your mortgage payments? Put together a simple action plan to help you keep your home

What you can do to avoid repossession – a guide

What you can do if you are facing repossession to make sure you keep your home

Mortgage advice – who to see and what to take

Where to get advice about managing housing costs and how your lender may be able to help you manage your mortgage payments

What to do if your mortgage lender takes you to court

What to do if your lender takes action to repossess your home, and how repossession can be postponed

Housing advice – how to get free legal help in court

Make sure you attend your court hearing and find out how to get free legal help on the day

Mortgage Rescue scheme

This scheme may help if you are having difficulties making mortgage repayments and are in danger of becoming homeless

 

For Citizens Advice (CAB) AdviceGuide:  

http://www.adviceguide.org.uk/index/your_money/money_management_index_ew/mortgage_problems_index_ew.htm

CREDIT CARD DEBT: FACING THE WORST OR BLISSFUL IGNORANCE?

Posted on by

0

In my last post on the subject of debt, I quoted an article by Simon Read in The Independent, where he urged people to “ditch the plastic” before they were “forced into distressed borrowing”. I think his story was repeated over several editions of the paper, with the most memorable headline being “Maxed-out Britain.”

Case study

What I didn’t say was that there was a case study attached to the article. It was the story of Catherine Hughes, who had major surgery that left her too ill to work, so that she and her husband – with four children – lost 50% of their household income.

[The case study isn’t available online, so you’ll have to take my word for it.]

Catherine was a freelance writer, her husband a heating engineer; because the family income fluctuated a lot, they had been using credit cards to finance the peaks and troughs.

Card providers unhelpful

They had debts with three credit card companies; that’s a relatively prudent and small number, compared with some people, e.g. yours truly when I went through my debt crisis ten years ago.

Two of those companies had cut off credit and all three have been very unhelpful, says Catherine.

Facing the worst?

Catherine went on: “They hold all the power. We try to stay positive and are doing the best we can but if I were to sit down and add the debts up, that would probably reduce me to tears.

“If the card companies would look at our situation on a more personal level [that would help]. We’d welcome a reduction in the interest rates.”

“Banks and card lenders should be more willing to work with people instead of … coming down on them like a ton of bricks [when they can’t meet the payments]. There should be a middle ground; but our experience shows that there is not.”

Interest rates: all-time low for whom?

Catherine mentioned interest rates. This morning on the radio I heard Mark Hoban, who is Financial Secretary to the Treasury here in the good old UK. When challenged about how he could counteract the slump in consumer confidence, he pointed to the fact that his Government had been successful in keeping interest rates at an all-time low.

If you talk of the base rate, that is true: 0.5% for a long time now. (Although some would say that because the rate is now set by the independent Bank of England Monetary Policy Committee, the Government can’t take credit for it)

Rate inflation

Now I don’t know what rate Catherine and her husband were paying on their cards but I know for sure it wasn’t 0.5%.

It was probably 15% or more; much more than 15% if any of them were store-cards. Go figure, as you guys say, I think, on the other side of “the pond”. Admittedly, if they were owner-occupiers their mortgage would have been much cheaper than before. The paper didn’t say whether they were home-owners or tenants. If the latter, the knowledge that our base rate is only 0.5% would be a sick joke for that particular family.

Can you face the facts? Should you?

Catherine had said that she’d be reduced to tears if she sat down and added up the debts. Well, I don’t want to bring more tears into her life but I do advise in my book “Back to the Black” that it is generally helpful – and I stress generally; no two cases are identical – to do exactly that. I found this out myself, when I owed money to 26 different creditors at the height of my money problems. I had a rough idea of the total but it was only a rough idea and there was a very heavy Sword of Damocles hanging over me. When I eventually bit the bullet (sorry about the mixed metaphors, lethal-weapon-wise) and sat down to make a detailed list of amounts, credit limits (many of which I had already exceeded) and interest rates, it was therapeutic. I felt much less stressed when I knew the worst.

It worked for me; I don’t say it works for everyone but if you think you can handle it, it’s a step I recommend. After all, you can’t start to make plans about how to solve the problem until you know the scale of it.

Debt-free Christmas?

In my last post I mentioned the US blogger Brad Chaffee and his “Debt-Free Christmas” discussion. It seems an impossible dream … but I plan to write more about this very soon.

 

WANT TO KNOW MORE?

For Simon Read’s article in the Independent, 6 Nov 2011:

http://www.independent.co.uk/money/spend-save/simon-read-ditch-the-plastic-before-youre-forced-into-distressed-borrowing-6257400.html?origin=internalSearch

For info on my e-book “Back to the Black: how to become debt-free and stay that way”:  

Kindle version: http://www.amazon.com/dp/B004PLMAQM.

Other versions: http://www.smashwords.com/books/view/22886

DEBT-FREE CHRISTMAS? YOU MUST BE JOKING …

Posted on by

0

A couple of recent stories by Simon Read in the UK’s “Independent” newspaper  (see below) reveal that UK consumers are once again extending their credit card debt, after a period when the trend seemed to be reversing.

What’s more, they are using cards not for luxuries (i.e. “discretionary spending”) but on essentials.

Christmas is coming: the debts are getting fat

The situation for many of those “hard-working families”, as our politicians like to call them (surely that’s discrimination against single people and lazy people?) will probably get worse in a month or two. Why? Not just because of the underlying economic situation and rising inflation, but because of the “retail eternity” (to quote my hero Loudon Wainwright III) that we call Christmas.

Peer pressure

 We have been conditioned to believe that one can’t celebrate Christmas properly without spending a load of money. So those in debt are going to get deeper in debt. If you have young children, peer pressure and the blandishments of advertisers will try hard to ensure it.

US blogger promotes debt-free Christmas

That’s why I gave three hearty cheers when I found that an American blogger called Brad Chaffee had started a discussion thread called “Debt-Free Christmas”. I communicated with Brad and told him how much I liked the idea; he got back to me promptly, saying that the concept was very much alive and well in his family, even if the blog thread is less active right now.

Practical solutions?

What I take as the meaning of his “Debt-Free Christmas” was not so much to get right out of debt at this time of year – that would be a very tough aspiration – but how to find practical ways of having a great Christmas without getting further into debt; despite inflation and peer pressures.

Gift spend limit

In future posts I’ll be talking about how we’ve done it in my family. The most successful method was putting a limit on the gift spend per person. That forced a rethink, compared with the previous procedure of: “Oh God, only a week to go and I haven’t finished my gift shopping; must throw some more money at the problem”.

The new rule didn’t just save money, it unleashed lots of creativity.And we had just as much fun, maybe more.

Over to you

I’d like to throw this open. All contributions welcome!

 

WANT TO KNOW MORE?

 

For Simon Read’s article in the Independent, 6 Nov 2011:

 

http://www.independent.co.uk/money/spend-save/simon-read-ditch-the-plastic-before-youre-forced-into-distressed-borrowing-6257400.html?origin=internalSearch

 

For info on my e-book “Back to the Black: how to become debt-free and stay that way”:  

 

Kindle version: http://www.amazon.com/dp/B004PLMAQM.

Other versions: http://www.smashwords.com/books/view/22886

BOOK REVIEW: “MAKING FRIENDS WITH MONEY”

Posted on by

0

When I first started to plan and write my own book on debt (“Back to the Black” – see below) I naturally trawled the bookshops to skim, then buy and read, other books on the topic. I wanted to find out to what extent the subject had already been covered.  Was it worth writing another book, or had the subject been done to death already?

VERY FEW BOOKS?

I found, to my surprise, that there were very few books on how to deal with personal debt problems. I bought and read most of them, because I didn’t want my book simply to rehash what had already been said. When I say there were very few books, I mean print books by British authors on the shelves of British bookshops. Of course there are far fewer British bookshops nowadays, but that’s another story.

UK / US DIFFERENCES?

I then found there were a few more that were only available as e-books, which is the way I decided to publish first. What I also found was that there were many, many more e-books by US authors. Of course that’s a bigger market (population five times higher) but there must be other reasons for the difference because it’s out of all proportion to that ratio. When I’ve figured it out I shall get back to the question in another post.

“MAKING FRIENDS WITH MONEY”

All that was a couple of years ago. Sitting on my desk today is a more recent addition to the market and I think it’s a valuable one. Its remit is wider than mine, which was simply about debt and how to handle it.

Sanni Kruger is a financial coach. She runs the local (Bristol, UK) branch of Debtors Anonymous and she’s published “Making Friends With Money: how to start feeling wealthy without waiting till you’re rich.” As the title suggests, her message is that it’s not just a matter of how much money you have; it’s also about attitude, about mind-set. Her chapter headings give a flavour of the content: feeling better about money; getting a grip on your finances; using cashflow planning to build your wealth; getting on top of debt; cashflow management from day to day; surviving the money jungle; the light at the end of the tunnel; and finally: achieving what really matters to YOU.

LEFT-BRAIN THINKING FIRST

Ms Kruger’s background is in book-keeping and accounting, so it’s no surprise that there is plenty of detail here about budgeting and cashflow planning. That’s a subject that is a challenge for many people, including me. Perhaps it should be taught in schools but that’s another question. The coverage of this subject is sound, as you’d expect. However, the advice I liked best in this section of the book was to have two bank accounts; one main one which was simply and in-and-out vehicle for one’s regular / predictable income (be it wages or salary, benefits, pensions etc) and one’s committed / predictable expenditures, which should exit via direct debits; then you work out what’s left after the regular / committed expenditures and transfer that amount to the second account, which Ms Kruger calls the “D2D” (Day-to-Day) account. That way you get a better handle on how much you have available for discretionary purchases and for any expenditure which is regular but variable if you get my drift, e.g. food shopping. Keeping an eye on the balance in the D2D account tells me when I ought to go to Lidl / Aldi and when I could afford an occasional splurge at Waitrose.

RIGHT-BRAIN THINKING

That was very useful but in the last few chapters the book gets more into the bigger picture, or longer-term goals; right-brain thinking or whatever you want to call it. I liked the final chapter on “achieving what really matters to YOU” (Ms Kruger’s capitalisation) because that includes a kind of “hierarchy of needs” approach as it applies to money. To take as an example the specific area my book covers, she suggests these levels of debt repayment:

Level 1: nothing can be repaid

Level 2: more than zero, i.e. £1+ per month: (Ms Kruger, like me, knows that paying £1 / month to every creditor still has value)

Level 3: More than £25 / month to each creditor

Level 4: More than £200 / month to each creditor

Level 5: no debt to repay – ever again.

OK, the numbers will vary according to each person’s circumstance but the principle of working one’s way up the different levels seems good to me. Similarly on transport, she suggests that one might visualise progress (“a journey”, as they say)  from Level 1: “enough money for public transport; lifts from friends”; to Level 5: “new car of my dreams and the money for running costs etc etc, plus enough money in car replacement fund to change it at least every 2 years; public transport (first class) or taxis when desired.”

As you might guess from this section, the book closes with a further section entitled “living your dream.” Lots of other self-help books talk about that topic but Ms Kruger’s book gives people the practical tools to achieve it and the mindset to start feeling wealthy even before you become rich. Just as it says on the tin; or in the subtitle anyway. A worthwhile read.

 

WANT TO KNOW MORE?

On Sanni Kruger’s book “Making friends with money: how to start feeling wealthy without waiting till you’re rich”

Go to www.holisticmoneymanager.com to order. Hard copy (comb-bound A4) £12; downloadable .pdf £7.20, or in four sections each £1.99

On my own book about managing debt, “Back to the Black: how to become debt-free and stay that way”.

eBook only. To sample for free, or purchase (all versions around £0.70 / $0.99):

  • Available in the Kindle store; click HERE:
  • Available in all e-formats, including .pdf, at Smashwords. Click HERE:

STUDENT LOANS: “DIFFERENT KIND OF DEBT”?

Posted on by

2

There’s been some Twitter traffic lately about student debt, including some tweets just yesterday.

Firstly, this from @CashQuestions (Annie Shaw):

“There’s some sort of bullsh*t doing rounds that student debt shdn’t count if u apply for a mortgage. It counts when u come to pay tho – doh”

That was, I think, a response to this tweet from @little_mavis (Mary Wombat) (and retweeted by @CashQuestions):

“I hate the ‘student loan debt isn’t really debt’ or ‘a different sort of debt’. A DEBT IS A BLOODY DEBT. YOU OWE SOMEONE MONEY.”

“Yeah but no but”

So … are student loans are a different sort of debt?

No, absolutely not, in that you owe someone money.

However, yes, in that the debt does not fall due unless and until your income goes above a certain level. In that way it becomes more like a tax.

If you had a bank loan, the bank would not say “OK, that debt is not due; you don’t have to pay me because you don’t have a job – or you have a low-paying job – right now.”

In that way a student loan is better than other kinds of debt, as far as the debtor is concerned.

Effect of bankruptcy

However, if the worst comes to the worst and someone goes bankrupt who still has student loan debt: in that case, the student loan is different too. In my book “Back to the Black: how to become debt-free and stay that way”, I say this:

When you are bankrupt you do not, in general, make payments to your creditors; they make a claim to your trustee instead. There are, however, a few exceptions, payment for which you remain responsible. For example:

  • secured creditors (e.g. any mortgage you may have)

  • “non-provable” debts (e.g. court fines and maintenance arrears under divorce settlements)

  • student loans.

Repay or delay?

Here is another interesting issue around student loans. As Martin Lewis says (30.08.2011) on his excellent “Moneysaving Expert” site, student loan is (relatively) cheap debt; therefore should you repay it faster than you’re required to (if you’ve got spare cash) or is it better to save?

The answer depends, of course, on your situation, so the site has a calculator to help answer the question.

 

WANT TO KNOW MORE?

The MoneySavingExpert site and calculator: click HERE:

“Back to the Black”: eBook on managing debt

To sample for free, or purchase (£0.70 / $0.99), my debt advice book:

  • “Back to the Black: how to become debt-free and stay that way” is available in the Kindle store. Click HERE:
  • It’s also available in all e-formats, including .pdf, at Smashwords. Click HERE:

 

RYANAIR: “PAYING FOR PAYING” IS OK

Posted on by

0

 

Good old Ryanair! If that particular budget airline didn’t exist, bloggers and stand-up comics would have to invent it. Those guys provide rich pickings, mostly for the ludicrous way they boost their low “headline prices” through add-ons. It’s not the fact of the add-ons (sorry, I nearly called them surcharges, which would have been a mistake, as you’ll learn if you read on); because we are not stupid enough to think we really can be flown to Malaga for 50 pence; or even the amount. It’s the way they are added right at the end of the purchase process; the old inertia strategy.

The end of the purchase is the point when you have spent so long wading through their booking process that you have almost lost the will to live; and then you feel what the hell, you must have a holiday at any price.

Ryanair boss orders a pint

The likeable Scottish comedian Fred MacAulay has a great routine  in which he says he’d like to become a barman in Ryanair CEO Michael O’Leary’s local pub: “Pint of Guinness, Michael? That’ll be £1.49. Yes, I know, it seems cheap, doesn’t it? But did you want it in a glass? That’ll be another punt. Did you want a head on it? That’ll be another punt. So you think that’s £3.49? Ah, but did you book it online?”

(I’ve heard other versions of this story, by the way, but it’s the way Fred tells ’em)

OK, I know, they use euros in Ireland nowadays, not punts, but I think the story sounds better this way. And, as they used to say at the News of the World, never let the facts get in the way of a good story.

Ryanair contempt

Not just their policies, but also their public pronouncements, show Ryanair’s total contempt for their customers, for the media and for consumer watchdogs.

The title of this post is borrowed from an article by Rebecca Rutt in the August edition of “Moneywise”. Her title was “An end to ‘Paying for Paying’ “ and she talks of the Office of Fair Trading (OFT) having agreed in July to stop travel companies charging people who pay by debit card. Charging for the use of a credit card is common enough; but to charge for using a debit card might prompt one or both of the Mitchell boys (from East Enders, if you need to know) to ask: “You’re ‘avin’ a larf, ain’t yer?”

A very recent article (9 August) in the Guardian says that the European Commission has decided to investigate this area. Well, maybe.

Ryanair’s sense of humour

And of course “avin a larf” is what Ryanair likes to do; at the expense of its customers and everyone else. Earlier this year, the consumer magazine “Which” lodged a “super-complaint” about this card charge issue but they made the cardinal error of using the word “surcharge”. Here’s the response of Ryanair’s “spokesperson” Stephen McNamara: “Before making super-duper complaints the clueless clowns at ‘Which, Who or What’ magazine should conduct some basic research. Ryanair doesn’t levy any credit or debit card payment ‘surcharges’ “

Of course he’s right … and so are the people at Which. Ryanair calls them administration fees. And if the OFT, or the EU, ever manages to pass any legislation outlawing them (don’t hold your breath and I don’t think it’d be worthwhile), why, they’ll just call them something else.

BA cheaper than Ryanair?

Last week I booked a flight within Europe. So I checked out all this stuff in detail, to the point where I too almost lost the will to live. Ryanair and BA were two of the options, so I went right through the details and terms and conditions. Of course the Brisith Airways headline fare was double Ryanair’s but with BA there were no surcharges, admin fees, supplements etc. When those were added on, Ryanair’s total fare was higher than BA’s.

Guess which airline I booked with … despite my Irish heritage? And do you imagine I’ll get better service when I get on board the BA, compared with the take-it-or-leave it attitude of Ryanair? No prizes for guessing.

P.S.

Last night, on BBC2’s excellent “Newsnight Review” I saw a live performance of a brilliant song I’d heard before, by Fascinating Aida. That reminded me that they had already said it all about this subject with this song. Here it is, with subtitles in case you might have difficulty with the Irish accents. It’s a must-watch! Click here

WANT TO KNOW MORE?

Checked baggage fees: Yes, dear reader, as I said above, I nearly booked a Ryanair flight last week. After wading through the 12 different categories of baggage fees, I found that the average cost was  about £30 per bag per flight. So, for example, as a couple with just one bag each we’d have paid an extra £120 for the round trip.

Administration Fee (‘paying for paying’): Ryanair’s website says:  “This fee is charged per passenger/ per one way flight and relates to the costs associated with Ryanair’s booking system. No administration fee applies to bookings paid for by MasterCard Prepaid Debit Card.”

Well that’s all right then; it’s not a surcharge, it’s a fee. When they say “costs associated with ….” at least they don’t make the unjustified claim that their internal costs are anything like the £6 they charge. “Doesn’t seem like much, does it Michael?” … till you find it’s per passenger per one-way flight, even if you make one card transaction for two or more people, round-trip. Sneaky? underhand? I’d say contemptuous.

Yes, I know, some rail booking sites also charge fees for using credit cards (common enough) and debit cards; but in my experience they are smller and they are per transaction, which is more logical.

I was in business long enough to know the old saying “cost is a matter of fact; price is a matter of policy.” So Ryanair charge a greatly inflated “admin fee” because they want to and because they can.

Also from Ryanair’s site:

4.2.2 Taxes, fees and charges imposed on air travel are constantly changing and can be imposed after the date that your reservation has been made. If any such tax, fee or charge is introduced or increased after your reservation has been made you will be obliged to pay it (or any increase) prior to departure. Similarly, if any such tax, fee or charge is abolished or reduced such that it no longer applies to you, or a lesser amount is due, you will be entitled to claim a refund of the difference from us.

(Note: “you will be entitled to claim” …. that’s if you happen to find out before the time limit we specify. Could we at Ryanair credit your card account automatically, if this happens? In your dreams, sunshine.)

The Guardian‘s article on EU investigation: http://www.guardian.co.uk/business/2011/aug/08/airline-cheap-ticket-offers-investigated?INTCMP=SRCH

Moneywise‘s article “Paying for Paying”: http://www.moneywise.co.uk/news-views/blogs/rebecca-rutt/2011-06-30/the-end-to-paying-paying

… and finally: that song again!

ONLINE PEER-TO-PEER LENDING FOR SMALL BUSINESSES

Posted on by

0

A while back I wrote about “peer -to-peer” lenders, which were starting to be popular with both investors and borrowers, although their market penetration is so far small. The best-known one in the UK is Zopa, at least for personal borrowers.
According to an article by Lucy Warwick-Ching in the Financial Times, there is now a new one, focussing on lending to small businesses. Here’s an extract from that article, with my comments. See below to reference it in full from the FT site.

What’s the deal?

ThinCats.com is an online peer-to-peer lending service enabling investors to make loans to direct to businesses.

Businesses seeking funding pay a listing fee of £450 to upload their information. Potential lenders decide whether to participate in an auction to lend to that company. (Kind of Dragon’s Den, eh? Ed.) If they do, they set the interest rate and the amount they’ll offer. A syndicate is made up of the bidders offering the lowest rates.

The minimum bid is £1,000, but the most common loan is around £5,000. (Clearly for pretty small businesses: Ed.)

Is this good?

With ThinCats, lenders set their own interest rates. Some have achieved rates of 15 per cent in recent months, but 8 per cent to 11 per cent is more likely as the marketplace for these loans matures.

Lenders are not charged a fee and it is up to ThinCats to chase any outstanding payments. (This is a USP, if it works: Ed.)

What’s the catch?

The company is young, so it doesn’t have much of a track record. Loans are secured (key info! Ed.); if a business falls behind with payments, ThinCats would call in the loan security. But investors’ money is not as secure as it would be in a bank account.

What’s the alternative?

ThinCats follows on from the success of other peer-to-peer lending sites such as Zopa.com and Fundingcircle.com; but it is the first to offer secured loans.

(and the first, as far as I know, to target small businesses in search of funding, as distinct from individuals: Ed.)

WANT TO KNOW MORE?

Peer-to peer lending

Link to reference the article www.thincats.com

www.fundingcircle.com

www.zopa.com

“Back to the Black”: my eBook on managing debt

To sample or purchase this debt advice book (£0.70 / $0.99):

MONEYWISE CUSTOMER SERVICE AWARDS 2011: BOUQUETS FOR FIRST DIRECT, BRICKBATS FOR SANTANDER

Posted on by

0

This month’s edition of the “Moneywise” magazine carries a supplement showing all the winners (and losers!) in their annual awards for service and trustworthiness. At a time when banks, and the financial services industry in general, have had many knocks to their corporate reputations, any good news is good news, if that makes sense.

Here is my totally unscientific extract, i.e. the awards that interested me most. And don’t worry, if you don’t subscribe to Moneywise (which is very good value; and I am not on commission!) you can access the info online; scroll down for the link.

In summary: First Direct dominated the awards, winning many categories. There were also awards for several organisations I’ve mentioned on this blog: Zopa, Yorkshire BS and Coventry BS.

“MOST TRUSTED” AWARDS

Current account provider:

Winner: Smile. Highly Commended: First Direct. Trusted Providers: Clydesdale Bank, The Co-operative Bank, Nationwide, Yorkshire Bank

Credit card provider:

Winner: First Direct. Highly Commended: John Lewis. Trusted providers: Co-op Bank, M&S Money, Nationwide, Tesco Bank

Mortgage provider:

Winner: First Direct. Highly Commended: Coventry Building Soc. Trusted providers: Britannia, C&G, HSBC, Nationwide

Savings provider:

Winner: First Direct. Highly Commended: Coventry Building Society. Trusted providers: Britannia, Nationwide, Post Office, Yorkshire Building Society.

Personal loan provider:

Winner: Zopa. Highly Commended: First Direct. Trusted providers: Nationwide, NatWest, Sainsbury’s Bank, Tesco Bank

Overall “most trusted” provider: First Direct. Highly Commended: Nationwide.

SERVICE AWARDS

In addition to the “most trusted” awards, there are also six service awards in each of 15 categories: go to the link below for details.

NAMING AND SHAMING

The magazine also named and shamed the outfits with the worst record. Sadly, out of seven categories, Santander came out worst in five and worst equal (with Halifax) in a sixth.  Moneywise got an interview and an apology from Steve Williams (Santander’s Director of Service Quality, not the Bristol West MP of the same name)

 

WANT  TO KNOW MORE?

Awards details

For the full lists of all the Moneywise awards (winners, Highly Commended and shortlists / “trusted providers”) in all categories, with info on the survey’s  methodology; plus contact details for the companies they endorse (but not for those they name and shame!), go to: LINK

“Back to the Black”: my eBook on managing debt

To sample or purchase this debt advice book (£0.70 / $0.99):

CALL FOR MORE FINANCIAL ADVICE

Posted on by

0

Today I read a great piece from Simon Read of the Independent, calling for the wider availability of financial advice. I posted a comment as follows:

_____

Great piece! More strength to your pen! I absolutely support your call for wider availability of quality financial advice; ten years ago I narrowly avoided personal bankruptcy and found a better solution with the help of two excellent advisers at the local CAB; but not everyone is as lucky and I know what the queues are like at the CAB in Bristol.

Have RTed your tweet.

I too quoted Mr Micawber in a book about my debt experiences (“Back to the Black: how to become debt-free and stay that way”). The version of Micawber I used was worded slightly differently from yours, in that mine was income / expenditure, ending: “Annual income twenty pounds, annual expenditure twenty pounds, ought and six, result misery.”

The debt-to-income comparison you mention is interesting. I found some alarming debt / income ratios in the Times a year or so back, which I interpreted in my book as follows:

As Credit Action’s website succinctly puts it: “Individuals owe more than what the whole country produces in a year.”

The trend of increasing personal indebtedness, a by-product of our consumer culture, certainly contributed to the financial crisis.

In early 2010, a typical UK household containing one wage-earner on average pay has, according to the Halifax (a division of the Bank of Scotland plc), outstanding mortgage debt that’s equivalent to 507% of income (i.e. of the ONS figure for average annual income). By way of comparison, the UK Government’s ratio of debt to income – a ratio that was widely castigated as unsustainable during the election campaign of spring 2010 – was “only” 170%. (“Worried about national debt? Mr & Mrs Average are in a far worse state”: Ian King, Deputy Business Editor, The Times, 19 Feb 2010) Go figure, as my American friends might say.

Most personal debt is of course, at least in the UK, secured mortgage debt: levels of home ownership have traditionally been higher here than in most other European countries. It has always been considered that mortgage debt is safe debt; that was true for as long as the housing market continued its customary rise but at times of recession in the housing market …. Etc, etc

One could also add the risk of rate increases leading to a rise in the numbers of mortgages in arrears, repossession or forbearance … a number that’s already high, as you mention.

 

WANT TO KNOW MORE?

To see Simon Read’s original piece (The Independent, 16 July 2011): http://www.independent.co.uk/money/spend-save/simon-read-rising-poverty-worries-means-advice-is-crucial-2314442.html

To sample or purchase (£0.70 / $0.99) my eBook on managing debt: