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I've enjoyed this. My taxi is downstair. Hope to answer some of your questions at another time. I will, however, submit some information about pensions for those who asked. BYE!
Ok that's your lot folks - Alvin has a plane to catch! Many thanks to all who joined in and of course to Alvin.
(ps don't forget that One of the reasons Alvin has agreed to join us, apart from the fact that you are all super fun, is that he has recently worked with OMSCo, the Organic Milk Suppliers Co-operative, to compile Cheap Changes, a pocket guide full of money saving tips to help you to beat the 'credit crunch' without compromising your lifestyle. This is available as a pdf for Mumsnetters to download here)
Carriemumnet: I have been in your friend's situation. It's better that she keeps the cash for those periods when work is slow. Remember that work may not be as steady as he or she thinks as the economy slows down. Hold on to the cash and put it in a high interest account!
theinsider: You live in a competive banking world. The old days when you stayed at a bank for life are gone. Get out there an look for a bank that gives you more of what you want, especially because you are good with your money. Since the problems with Northern Rock, it is highly unlikely that the Bank of England would let another bank end up in such circumstances. If it did, it would undermine the public's confidence and lead to a major run on the banks. So Barclays is as safe as any other. Check out its competition to see if you can get a better deal. Don't be shy about asking for what you want!
Unfortunately I've only got time for two more questions because I'm flying out of Heathrow at 4--cutting it close!
By carriemumsnet on Thu 03-Jul-08 13:49:46
(from MNHQ)
My friend is getting a redundancy pay off of around £45k. She has a mortgage of around £175K . She can't afford to use it all to pay of lump of mortgage as will be going freelance and may need to dip into it, but if she puts it into a savings account is there one that pays high enough to make it pay as well as if she'd used it against the mortgage ie over 6ish% (sorry I know what I mean - hope it makes sense)
funnypeculiar: Here are a few day-to-day tricks that I use. I only withdraw money from the cashpoint once a week--only on Sundays. I then allocate that money over the week, sometimes only carrying that day's allowance in my wallet. I have a weekly limit on how much I charge on my credit card. Because it is a relatively small number, I almost always know where I am relative to it. Control your entertainment costs. On many Friday nights, I go out with my friends for a cocktail. I always know whether I'm going to have one or two which I nurse over the course of the evening, and I don't go over that limit; hence my costs are predictable. Set aside one day each week that you peruse the past week. I do this on Sunday morning when my flat is quiet, just before I go to the cashpoint. Sometimes what I find out causes me to take out less at the bank for the upcoming week.
Hi hope you can help. We have a Virgin One account that we have held now for about 8 years which has served us well. More recently I have been noticing that the % rate we are paying is far from competitive, and that the 'offset' market has moved on quite considerably since Vone was launched. My ? is - is this a good time to move (to another offset) or are arrangement fees still too high?. Or should we just stick it out for abit longer?.
MegReally: I think you have to work on both fronts: the mortgage and the pension. It sounds like you and your husband are relatively young. So the money you put in your pension will have lots of time to grow. Paying off the mortgage will certainly save you on interest costs, but as long as it isn't a burden right now, start to increase your payments as your income goes up. If you get a windfall or bonus, then use that to increase your mortgage payment. But keep that pension going. It was one of the best decisions I ever made to contribute to my pension regularly when I was your age back in the year --01. I am quite happy with its value now, even in this volatile market.
here is my question from below I thought it would be better to post it again rather than have lovely Alvin search up and down the thread [helpful and needy]
I want to know if it is a good idea to throw everything into the mortgage for the next 8-10 years and then throw it into a pension
I say this because dh and I have about £150 between us a month for pensions which is pitiful I know, no company scheme for us either, I wonder if it is a good idea to get rid of the mortgage first to save interest. We could prob pay it off in 10 years if we put everything in to it and that would leave us about £5-600 a month spare altogether
people think that you are always talking huge figures for mortgage and pensions and we aren't, and we don't have anywhere really where we can 'cut down' to save money, except of course if we sell the kids. Then we wouldn't need a car, maybe...
What do you think is the best way of actively managing finances on a day-to-day basis. Dh & I tend to bumble along, and then do a bit of a review every few years/when money is suddenly oddly tight/plentiful/our IFA pokes us
Without being too anal about it, is there a better system that would help us review and monitor our finances?
Alvin, are you able to answer my question? i posted in advance.. here it is again
y lulumama on Tue 01-Jul-08 10:58:29 can i ask why you think the acquisition of money and material goods has become so intertwined with our perceived happiness in the last couple of decades? keeping up with the joneses, having the newest/best/biggest of everything...
how much do you think the media and lifestyle mags are to blame for this type of aspirational living, that people cannot afford and strive so hard for , why are we as a nation sooooo dissatisfied ?
I would be very interested in your views on pensions. DH and I have both had (final salary) pensions in the past but don't currently. Both our employers offer stakeholder pensions - my company pay some contributions I believe (shockingly I don't know the details) but DH's company are shockingly bad in this respect and I don't believe they contribute at all.
Should we be paying into these crappy pension schemes or doing something else with our money? We don't have much spare at the end of each month but with careful budgeting I reckon we could spare maybe £100 or so each.
Bundle, There is no easy answer to your situation. If you are planning to move in two years, will you be saving enough by changing your mortgage to justify the work involved. Or, let me be honest here, are you letting outside pressures influence you. I'm of the keep it simple school. If you're not losing lots of money and you can handle the mortgages, why chase the small changes. On the other hand if the saving will be substantial over the two year period then it makes sense to change.
I have several accounts (mainly current accounts)with Barclays (fairly small sums)and have two questions:
Firstly is Barclays as safe as any other bank at the moment, in the sense that if there are problems my money is guaranteed? Do I need to think about changing for that reason?
Secondly I am aware Barclays is not at all competetive with it's interest rates and am thinking of changing anyway (my account is almost always in credit). I've put off changing banks in the past due to worry about dd tranfers etc going wrong. Is it as easy and stressfree to change as they lke to advertise? Do you have any other advice about changing banks?
Thank you for your answer, slightly surreal to have been discussing this with DH this morning and gently dithering about a decision as we dont know enough about it and now when he comes home I can tell him I asked Alvin!
Q - How do you teach children the meaning of money?
I see many a young adult getting charges on their accounts with bounced cheques over the years. I do try to talk to some of them about it (and end up sounding like their mum!) but it's like they don't understand that they have to have the money to spend it.
Is there a best time to talk to a child about avoiding debt?
What is the best way to encourage children to save?
Bossykate & Margo’s Been Playing with my NooNoo One of the best ways to teach children to save as well as the value of money is give them pocket money and set clear, firm rules about what they can use it for. When they want something that is more than the money they have, establish an agreement that they must save their pocket money up to a specific amount and only then will you give them the remainder to buy the desired object. Also don’t be reticent about getting your kids involved in things like shopping for food at the supermarket. Set a specific limit (in cash) that you plan to spend and then let the child keep a running total of the money being spent. If you go over, include the child in the decision about what must be removed from the basket. You may be surprised at how quickly your child absorbs information about the value of things. This is also a good time to talk to your child about spending only the money they have available and avoid going over. Don't be surprised if your child starts to question you about your spending limits.
My husband (main breadwinner) went freelance about a year ago. So far our income is fairly steady. Our mortgage agreement ran out so we're paying a bit over the odds with our lender on their "normal" rate.
If we switch should we go for a fixed/tracker/variable? We may move in the next two years so don't want to be locked in for too long or suffer massive penalties if we up the loan.
Sophable: It's always good to have a cash cushion equal to 3-6 months of living expenses just in case of an emergency. Because I'm essentially a freelancer, I keep 1-year's expenses in the bank as cash. Once you have your safety net in place, then pay off the mortgage. Many people in recent years have used the equity in their homes as a safety net. But what happens if the bank decided not to lend against it or decides to lend less, which could happen during this credit crunch. (Look at the number of people whose credit cards have been revoked or turned down for mortgages.) Cash as an asset class has been underated. In times like this it can be your best friend.
A - RTKangaMummy It’s commendable that you putting money away for your son’s future. But what you are looking for—a secure investment with high interest—is impossible to find without there being the risk of loss. If you are your using secure to mean “risk free” then you must be willing to accept the relatively low interest rate paid by a bank or building society on the money deposited for you son. If you want high interest, you may need to give up some of the security you seek and invest in a unit trust that is made up of shares. You may get a better return over the long term that you would at a building society, but you are exposing that to volatility and the possibility of loss.
Cathpot: By continuing to contribute to your ISA you are taking advantage of pound cost averaging. Your money is buying more shares while the prices are low. This will lower your overall costs of what you own. The reason your ISA has performed so badly is that the markets have been bad recently. All of the major indices are in negative territory. However, given that your timeframe is so far away (I wish I were as young as you) I would probably continue to contributing. What you may want to look at are other ISA that have provided a better long-term return--and I| emphasize long-term over short term.
of your books, which in your opinion, would be the best to get, for general budget/investment etc advice?
seeing as though I am watching my £££ like a good girl, I am not buying the lot (my children are 5 and 3 and are not aware of money yet so the latest one may not be the best?)
Windfall: Congratulations. I'd like to have a windfall myself. Paying off your mortgage is good. But before you put the rest of the money to work, you have to determine you risk tolerance. Right now you are being very prudent and putting the money into a high-interest bank account which means it will not be at risk. The only way you can get a better return is to invest in shares; but I probably would not do so at this time given all of the undercertainty in the market. Be patient with yourself and the money. Wait for better investment days to come along. There's no harm in keeping your money just ticking over in a high interest account. At least you're not losing it.
Hi Alvin, I put a small amount of money away each month into an ISA which tracks the stock market. It has been going for 4 years now and returns are currently very poor. This is an investment I am not looking to cash in for at least 10, probably 15 years. Should I continue to put the money in on the basis that it will be buying shares now at a low price and in 10 years time should be worth more, or should I stop and put money into a savings account? If I do stop adding to it will the money within it continue to be reinvested in shares? Thanks for your time.
LynetteScavo: I've written 6 or 8 books. My newest one, Show Me the Money, is for children, as well as their parents. It gives them a broad understanding of how money works. It's colorful and fun. You'll learn a lot from it as will your children.
Sophable: In the current economic environment, it's probably best to hold your money in cash until things settle down. I had dinner with a friend last night and he talked about how he had been investing money and watching his investments go down. He was not happy. There no harm in holding onto cash and waiting to invest it when the markets look more positive.
In the next 12-18 months I'm hoping to earn a substantial sum - several 100k - enough to pay off the mortgage and leave me with a good investment, but not enough to retire on.
Big spend over the next 15 years may be school fees and looking after my parents (which may require a bigger house) so I need a fairly low level of risk. I assuming I can put a good wodge in low risk investments (high interest accounts, ISAs) but I'd like to see some growth beyond that and I'm a bit clueless about what to do to generate it - any ideas?
In my book, 'Your Money or Your Life' I have an entire chapter on budgeting. I that doesn't help then you should try one of the money management software packages like Quicken. Budgeting is really about allocating money to your needs first (the things you have to pay every month). I also advocate saving an percentage of your money before even paying those expenses. The last thing you want to budget for is discretionary spending. These are the things you want. What makes it difficult for most people is that don't distinguish clearly between the needs and the wants.
Fantastic to have you on here! Once ISA allowances have been used, what is the next best place to put savings in your opinion in the context of the current economic climate?
A - MsDemeanor Money is cited as being the cause of marital discord and divorce more often than infidelity. So it’s important for you to be open, not secretive, about money. This does not mean you have to a joint account or tell your partner or husband about everything you spend money on; but there must be some ground rules with which both of you are comfortable and with which both of you can live. You need to sit down, discuss the relevant issues point by point and establish clear parameters. One of the most important things if you are going to handle your money separate is whether your partner has any obligation to help you if your spending gets you in trouble. (The fact that you are more extravagant and want to be secretive about it suggests that you know you are spending more than you realistically should. (You are very likely projecting your own disapproval onto your partner.) You need to start talking sooner rather than later!
Universally Challenged A 7.5% interest rate is pretty good. In order to get a higher return you will more than likely have to place the money at risk and I don’t think that’s what you want to do. Keep the money safe and secure. And beware offers of a higher return that involve ‘investing.’ This word means there’s risk of loss involved.
Q - : If you were to have a windfall, would you save it or pay some of your mortgage off?
A - Rubyslipper It would depend on if I already had three-to-six months of my living expenses saved in a bank or building society. Having this emergency cash cushion is an important part of prudent financial planning because you can never tell when you may need that money for an emergency. If you already have that amount of money in savings, it would then seem prudent to pay off your mortgage with the windfall. During times like the current credit crunch, I would not rely on a home equity line of credit as my “cash cushion” as many people have done in the past. In the current credit environment, your bank may decide to restrict the amount it would lend you against the value of your property. Having cash in the bank is always good.
oh hello clever, likeable and sensible mr alvin hall! Dying to hear about pensions and alternatives. Dp puts too many £ in each month to several pensions when we could better use the money to clear debt (all interest free) and mortgage. Am needing some ammo to hit him with. He has excellent corporate scheme, final salary... So why he refuses to abandon the 4 other pensions is beyond me. says she with no pensions but with investment desires. ps thanks for coming on, lots of us really dig you!
Alvin Hi, I’ve just had a quote from a pension co that says if I put in £1k a month now I will get a lump sum of £113k and an annual pension of £16.6k assuming growth of 5% and interest rates on retirement of 2%. (retirement in 25 odd years) My questions are: - pension funds aren't protected are they? so could I put this in and lose the lot if eg the pension fund goes bust? - Is there a better way of investing £1k a month from now until retirement to allow for a higher annual income on retirement? - What are the alternatives to pension funds? Thanks
Heya Alvin. Im a young single mum at university so i dont have a very big income. I want to upgrade my car for something bigger for my growing family and more relyable for my daily commute which means I will have to find money to finance it. What would be my best option to do this?
By the way, we have one card which dh drew cash on a couple of times TWO YEARS ago. You'd think that would have gone by now, but no, we still get charged interest for cash withdrawal. DH has spoken to them about it, and there's nothing (apparently) that can be done; it's the last thing to get paid off.
We do need a credit card though, but we have cut back drastically on the purchases and have managed to reduce our total bill by a couple of thousand in about 6 months.
Presumably then, it would be better not to use the new card at all, but just pay a bit off each month for as long as the interest free bit goes on and then transfer the rest of the balance to another interest free credit card like we are doing now and take advantage of that for as long as the no interest period goes on etc etc.
Meanwhile, we continue to use an existing credit card but pay it off totally each month thereby accruing no interest anywhere?
Jux, Nationwide have a credit card where they will use your monthly payment to pay off the most expensive (i.e. highest interest-earning) part of your bill first, but I think hana's advice is best!
What do you think of CTFs? We're on a very low income at the moment but I'd like to put £100-200 pounds a year away for our daughter if we can manage to. I've invested her voucher in a CTF but nervous about topping it up as I'd like to ensure that she uses it for something sensible (uni, etc.) when she turns 18, rather than fritter it away on clothes and holidays (as I would have done if someone had handed me a few grand at 18!)
Also, I took out a credit card last year and transferred a balance onto it that was supposed to be 0% for nine months but (sshhh...) the nine months has come and gone and they haven't started charging interest yet. Can they come after me for the interest retrospectively if they wise up? (I've been scrupulously paying the bill on time each month.)
Alternative to cutting it up: Place it in a bowl of water in the freezer so you can't read the numbers. You will have to wait for it to defrost in order to make a purchase, as microwaving it will break the chip / magnetic strip
Jux - check the terms, but usually the best thing to do with a card with a transferred balance is not to add any new purchases to it. Cut it up! That is how the companies make their money.
Our bank (NatWest) has just offered us their credit card to which we will transfer our existing credit card balances, as NatWest are giving us 0% interest on the balance transfers for 13 months. If we use these cards in place of our old cards can we then pay off our monthly purchases every month with a bit extra to get the balances down? I suspect that whatever we pay each month will be used against our transferred balances, while new purchases will accrue interest.
Can we specify where our money goes - old balance or new purchases?
(WWW- , that hapened to me and when i told them they let me keep it for my honesty and kept me on that level as long as i agreed no annual rise; when rise time came nobody else ot diddly squat (including dh)- you employers are mean! they could at least say ta!)
Apologies if this is out of turn, but... If we are bigging up other financial websites, then I have to say I think The Motley Fool is the Mumsnet to moneysavingexpert's Netmums.
can i ask why you think the acquisition of money and material goods has become so intertwined with our perceived happiness in the last couple of decades? keeping up with the joneses, having the newest/best/biggest of everything...
how much do you think the media and lifestyle mags are to blame for this type of aspirational living, that people cannot afford and strive so hard for , why are we as a nation sooooo dissatisfied ?
me and dh don't have life insurance-but we both have pensions that would pay out a lump sum if either of us died- is this sufficient? is it worth paying out extra for life insurance as well or would be be better off saving any spare cash into a high interest account?
I have a similar question to some others on here. We have 2 mortgages, one with 15 years to run and one with 24. We usually use our full ISA allowance each year, plus save a little bit extra in high interest savings account. I know we need some savings as a cushion, but are we best trying to put any other money into the mortgages, and only having 'emergency' savings only? Will this be the most sensible move in the long run due to the interset we pay?
PS: We do currently overpay about £2k in total per annum on our two mortgages.
Hi Alvin I am making a repayment to my former employer for pay they overpaid me. It was their error, which I brought to THEIR attention, they have been complete tossers about it and I want to make the cheque payable to
ABC plc - payroll twats. They have asked for payment to ABC plc - payroll
I'd like to do the above but will it get me into trouble? Are there rules about what you can write on a cheque or can you write anything? Thanks!
due to husband's crtical illness insurance payout - he has cancer so unable to work for probaly the next year - we have an amount to invest. Which bank account would you recommend that we can access fairly easily (maybe a weeks notice) but is a good percentage rate. The best we have found is about 7.5%, can you beat that!!!
We have a year to run on our 2-year fixed rate mortgage.
Should we sit tight for now and be optimistic that in nine months time, the worst of the rate rises will be over? Or should we assume the worst and start looking for another fixed rate deal now, before the rates increase still further?
BTW we have no redemption penalty to pay if we change mortgages.
we are not house owners and unlikely to be, at the very best it would be rental for another 4 years until dh graduates; most likely is never.
Bar a pension as soon as i go back to work (on carers allowance atm), what should i doing to help my sn ds3 long term? we'll be on a moderate income (me teaching, him electrical) but i will be almost 40 (we lost previous house when dh got very ill)
I heard that programme,Bundle,I believe he has a book specifically for children to make financial stuff fun.I am sure he will point us in the right direction
A quick question,are you able to recommend a good savings account for children ? Thanks.
I see many a young adult getting charges on their accounts with bounced cheques over the years. I do try to talk to some of them about it (and end up sounding like their mum!) but it's like they don't understand that they have to have the money to spend it.
Is there a best time to talk to a child about avoiding debt?
What do you think the approach re children and money should be? My ten year old asks questions about what we earn, what we owe, how much money we have in the bank etc etc and I've been honest ish, while telling him that I don't want him to repeat any of it (yeah, right). This is because my parents wouldn't even tell me how much say, a washing machine cost and I therefore got to my late teens having NO idea of the cost of anything. I tihnk I am swinging too far the other way tbh, what's your view about teaching the price AND value of things?
I echo www's question (or a version of it). I'm 36 and have no pension. I'm self employed with fairly good income although much of it tied up for next 6 months. What is the best way to prepare for retirement and what percentage of salary should I be putting aside?
Thank you Alvin!
if that's the kind of money we're talking then I need to kill myself now
