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Q&A about Family Finances with Ffrees Co-Founder, Alex Letts - ANSWERS BACK(36 Posts)
Family finance champion, Alex Letts is on hand this week to answer your questions on family finances.
Has your family finally reached the point where enough really is enough when it comes to price rises? Do you want tips on how you can make your money go further? Is your family feeling the financial squeeze, as costs rise and household income stagnates? Do you feel that families are getting a fair deal/ Are you confused about the best way to save your money? Is your family saving as much as they would like to?
Send your questions to Alex before the end of Sunday 21st January and we'll link to his answers on the 28th January.
Alex has been a hardworking entrepreneur for most of his working life and has now created Ffrees Family Finance to get families a better deal by harnessing families' buying muscle and combining their economic and social power. He's also the author of Jo's Blog which is becoming the champion of families, as they try to reclaim the concept of fairness from the politicians and media.
The concept of Ffrees is to save money from the everyday purchases you make, this automatically goes into a saving fund which gets a yearly bonus (2%) helping you to save easily and painlessly.
Ffrees offers rebates on everyday purchases such as groceries, clothing and entertainment whilst additionally offering rebates on insurance, utilities and even buying cars. These rebates average at 6% and can even go up to 20%. For more information on Ffrees please visit the site: www.ffrees.co.uk
My husband and I have been paying into an endowment for about 13 years. Like many endowments it was sold to us on the basis that it probably would pay off our mortgage but currently there is a shortfall. (We have an interest only mortgage). However it is a considerable sum and we now think we will be able to pay it off by monthly over payments and without using the endowment money. Would we be better to cash it in and put it into some other type of savings for our retirement? I realise it's hard to save at the moment but what would you recommend?
Sorry this is one for an IFA, or mortgage broker perhaps. You have my sympathy as I was mis-sold too, a long time ago, and if the garbage I was sold by Allied Dunbars rep had come true, I would be sitting on a nice fat pile of cash now.
I will add that in my opinion any options that save you money are definitely worth consideration, so if you know you will save yourself money by taking one particular action then I would see this as the best option.
recently had a similar dilemma.ie should we pay off extra on our interest only mortgage or save the money.When we took advice the answer was if you can get about double the rate of interest in an isa compared to the mortgage interest we will have funds to pay it off plus extra. another thing to consider i that we may wish to move house and need the cash.we have found an isa which fits the bill.
Each situation and circumstances will be different and will need someone regulated whom you trust and respect to go through it with you. Another good place to start is your family solicitor. Mine is awesome and has really offered good unbiased advice. Or your accountant.
The one thing I would add is that paying off debt removes uncertainty, and that has its own level of comfort. Also it depends if the interest really amounts to a big capital sum, or is it just a great rate with the capital sum being actually quite small?
Interesting looking at their website team to see that of the senior mgt only one is female, and in fact looking at the photos she is one of only three women on their team of 15 people.
How does Alex think hard working mums can earn more and achieve gender and pay equality in the workplace? That would really help a lot of families.
Your point is well made and its worse than that, unfortunately. Actually we only have one girl in the office at the moment as her boss is on maternity, and the other lady is a non executive. (Though we do also have a great team on the Office Management side, who run the entire building we are in, and they are all three highly effective female managers!).
Most managers with half a brain would actually want a good gender balance, not to be mindlessly PC, but because it really is best for the business. I wont labour the point and I am sure you understand enough about men and womens strengths and weaknesses to know why balance of this type is preferable. We dont have it yet but I think over-time things will get more balanced.
The problem is not in the philosophy but in the practice. I did most of the recruitment for Ffrees and in our technical team we had only one female apply out of dozens (by chance, she didnt turn up so we effectively had no choice).
In marketing we had about 50/50 and we ended up with that ratio. So it sort of worked out. Nigel did the finance recruiting and I think it was about 50/50 for just one job, with an outstanding candidate who happened to be a man.
On the Senior Management front its more about who I personally happened to be connected to in business and who would work in Sheffield too! (And who could bear to work with me, of course). Mostly men I fear, so Heather has added some much needed balance and she OWNS THE MONEY!
Your question about getting Mums into income is more urgent to me than the gender and pay issue. We pay the genders the same, and we treat them the same. Other companies clearly still have their problems, but you should just watch them die out. Natural selection will win and they are the dinosaurs.
My wife often asks me how after raising the 4 Letts DSs she can contribute more to our income, having given up a career 17 years ago. Sounds like you and many others feel the same but in a shrinking job market, the chances are pretty slim.
It needs a leap in thinking and it needs entrepreneurialism. I currently have one Big Idea in this area but dont know if it passes the feasibility test yet .am working on it, I promise. Imagine the potential and pent up energy that could be released to help fix the economy (also among the Over 50s too, of both sexes). Watch this space.
Will keep working on our balance at Ffrees too. Any readers should keep an eye on our careers page, as we recruit quite often. Mums would be very welcome and we are relaxed about flexi-time.
It looks ok but at the moment I use Kidstart which saves money for DD. I've earned over £300 in five years
DD is lucky. Thats a decent start. and it's very smart to take any opportunity to save money and save it up automatically for your family's and children's future. There are other savings and cashback schemes that do have a wider range of partners that may save you even more money by being a member. My advice would be to check the one you are using offers the best competitive rate so that you are making the most out of your money. But our goal is a bit bigger. Think around 5% on what you spend as family each year (excluding the dreaded mortgage). I think thats possible. Could you do that?
I would really like help with my house options with my mortgage am I stuck in my current house?
I think the issue is whether you can sell or not sell your current house, and if so, whether you are in a negative position with respect to your mortgage loan. I wonder also if you might have a penalty clause to pay if you do pay it off. But stuck, one certainly hopes not.
You will need to get some really dispassionate and unbiased advice to tell you what your options are, depending on what your situation is. Do you have an accountant or solicitor you trust? They usually offer a good sounding board and will understand your own personal situation.
After googling this company there's a bad review from martin lewis, other than this it sounds like a good idea especially with asda in the list, i can imagine myself getting something back from what i spend weekly.
what are your top 10 ways to save money for families?
There is indeed one bad review out there from the autumn when we first tried the Ffrees Family card out (actually its not from Martin Lewis, but a financial website. They didnt realise we make no money out the card but have to pass through standard card charges from the banking system).
It really hurts, I can tell you, when you see this stuff in print, especially when bits of it had our communication absolutely banged to rights. But in some respects it was helpful, as it showed where there was misunderstanding and where we hadnt been transparent enough. I think we have addressed these issues now, so see what you think. Any feedback will be really valuable.
In our family the list of ways to save stuck up on our fridge is something like this:
1.If the DSs want fags and booze, you pay for it, not me
2.Credit card is banned. It is a way of kidding yourself AND it costs about 20% if you dont pay it off
3.Family need to save 5% across the board which means:
4.Heating down a fraction (well, I moved it 10% and they havent whined yet!). Turn lights off!
5.Use the Ffrees card for our weekly shop
6.Ffrees target of 5% for all expenditure we can, except petrol and mortgage
7.Keep the Miles Per Gallon read-out up on the car dashboard; (2x DSs drive and you will be amazed much fuel it saves you). DSs to pay for their fuel and claim it back from me less 10% (to educate them how it hurts to shell out).
8.Dont chuck food away just because the sell by date has come round. Eat it. No more till it you do!
9.Downsize the car (saves fuel and duty and insurance) much complaining but DONE
10.Look at the mortgage options to see if we can switch (actually trying to sell now).
Its our money and we want it back from the DSs!!!
Oh, and I switched energy suppliers too, onto a fixed deal. It seems to have saved me about 10%. Check moneysavingexpert for this, ML is excellent on it.
Do you think you can engage DSs/DDs in this?
Me and my husband are both on low salaries and can pay all our expenses but can't save anything. Will we have to rent forever or are there ways to buy a house with no savings?
Since the credit crunch the 100% mortgage has been avoided by most respectable lenders and those that might consider it will only do so for existing customers. There are schemes to lend you the deposit. They are advertised online. Please think very carefully though. Its a huge risk and expensive too. Government is currently consulting on stopping 100% loans altogether, and for good reason it seems to me.
Saving for a deposit on a house is seen by so many of us as being the end goal. Not being able to afford it makes you feel like you are wasting money.
But you might actually have the last laugh. Theres not a lot of vested interest in talking down the property market but the truth is that home ownership might not be the sure-fire winner it has traditionally been.
Certainly in my area, the market must be down 15-20% over the past 3 years though few will actually admit it. Economists will argue that low interest rates and increasing inflation encourage the house market, but the reality certainly seems different.
London looks to be a special case for unique reasons, but that might also be a property bubble so be careful what you wish for.
So before you have anxious nights worrying about missing out also ask yourself how you would feel about losing 20% of the value on a £200,000 home. It wont necessarily happen, but you need to think about the possibility, especially with the economic uncertainties all around us today. Could you afford to see £40k disappear into thin air?
Is there any merit in downsizing a property to create a lump sum of cash savings or is the money best left in bricks and mortar.
Example would be selling house for 400k. Buying much smaller at say 320k. After selling fees, legal fees and stamp duty as well as moving costs I would expect about 55k left to put away. But of course a property worth less will not generate as much equity with a rise. But lose less with a fall in value.
See above for my opinion on the risk inherent in the housing market at the moment, stuff you seem to have already thought about.
All I would add to your analysis is this. In your equation you have costs of downsizing as being £25k. Seems about fair. But its a BIG percentage of your assets just absolutely smoked. So your savings lump sum is already 6.25% in the hole!
Everyone will have a different opinion on where the best place is for your money. Take some professional advice from more than one source and then do what your instinct tells you. No-one cares about your assets like you do!
Id be interested in your thoughts on the housing market in your area?
I'll have two DSs off to university shortly. Received wisdom seems to be take out all the student loans and worry about it later. But they will be paying 6'6% interest from day one. If DS 1 borrows £50,0000 he'll be paying back £156,000. Unless he never earns enough to pay it back, this seems like a terrible idea. I could scrape the money together and just pay it upfront or I could take out a cheap re-mortgage. What do you think is best?
Yep. This is sooo close to my heart. I have had 2 DSs through Uni and one more just started this year. One still to come. Ouch.
The Martin Lewis approach is that the student loan system is the cheapest unsecured money you can ever borrow, given you or DSs may never pay it all back. I agree with that part I think, though with mortgages at new lows, secured loans on your home might be worth a look.
If DSs are brilliant Oxbridge types (sadly, not so far with mine) and they go into Law or the City, some top employers pay off the student loans for you after 3 years in your job as part of the inducement to join and lock-in. So that is worth thinking about, for a nano-second.
The cost of Uni is horrendous, about half the cost of boarding school all-in. (Fees £9k and rising, rent £4k, living in term time £2.5k a ghastly £15,500 pa minimum). But many Unis are feeling the squeeze. There are financial offers available and increasingly there will be deals to be done. Be aware of this too.
Something else to think about is that I suspect the current loan system, with higher than expected defaults and high unemployment of graduates is going to make these loans unworkable without increasing the interest rates you or DSs have to pay in future. So your calculations may just need to go up soon! I think the figure may anyhow be nearer to £200k though it is impossible to calculate without knowing the DSs future earnings. It is a BIG number and there is real uncertainty. See Jos blog at www.ffrees.co.uk/blog where I have written about this in the past.
What I did with the first 2 DSs was hedge my bets, by telling them I would pay half, and they would need to borrow the other half (they fleeced me also for maintenance money too). So the debt is not too terrible.
I wonder if mortgage companies will soon ask what the size of your student debt is and use it as a credit scoring factor
Theres no right answer. Probably I would pay it all off for them if I could, but they know Im a soft touch and feel guilty that I had it all for free (and effectively their generation is paying for our free university education). Do you have the same guilt that I have??
Whats your views on credit unions? We currently save with our local one and get a good rate (used to be dividend). Do you think CUs will continue to pay good rates or are there other options that you think are better?
I love the principles behind co-operative enterprise.
It embraces all that is good about business (self-help, entrepreneurialism and community support) without all the ghastliness that usually comes with the rest of commerce (corporate rapacity, ethical vacuums, personal greed).
Anyhow, if the worlds banks had all been co-operatives I suspect our childrens economic future might look a lot brighter than it currently does.
If you are getting a fair rate, absolutely do stick with them. Its better to know that your provider has an ethical backbone. As they are not profit driven and dont need to make more than a small surplus on operations, and as they dont over remunerate their directors, they should remain very competitive. I dont have a crystal ball, but I hope they go from strength to strength, dont you?
Bizarre and great timing on this question: coincidentally yesterday I started reading a book about the co-operative movement called The History of the Rochdale Pioneers by George Hoylake. It is really fascinating and worth the effort. Wonderful prose too! Amazon has it.
I would really appreciate feedback on the co-operative principles, so please let me know what you and other MNers feel about it.
DO NOT GAMBLE YOUR MONEY. . . With this 'company' I have had a complete nightmare. Lost over £1,000 and they still refuse to give it me back. A 3rd party made a payment to my account only to find out that there was so much red tape. Staff extremely rude and unhelpful
Please do not use this joke of a company
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