Mortgage to Income Ratio

I read somewhere that monthly mortgage payments should ideally be less than 1/3 of monthly income.

Money Management: Useful Categories

Here are some categories for managing personal finances (I like putting things into categories) :

Driving a Hard Bargain?

My wife and I made an offer on a house this week. The question we faced: how much to offer?

Alliance Leicester Account Switching (Dis-)Service

My ‘phone was cut off this weekend.

The Alliance & Leicester did it.

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Worried about Credit Card Spending? Freeze Your Card!

Yesterday evening, I was talking with friends about money. Dan was kind enough to give me a tip that he used to avoid credit card debt when he was a student: when he didn’t want to use his credit card, he used to freeze it.

You know those plastic containers that Chinese Takeaways come in? He used to put his card in one of those, fill it with water, and put it in the freezer!

Whenevre he was tempted to use the card, he had to go to all the trouble of thawing it out. Unless he really felt that the spend was legitimate, the bother was just not worth it.

Life Changing Books: The Money Diet by Martin Lewis

Back in April I started reading Martin Lewis’ book about personal finances: “The Money Diet“. The is aimed at helping ordinary people manage their finances more effectively: it is essentially about the ways in which ordinary people can save money. A lot of the advice in this book is geared towards saving money without sacrificing lifestyle, although there is plenty of advice for those who need to make more radical changes.

Money Saving Success

One of my goals at the moment is to cut my spending without significantly downgrading my lifestyle. I will try to keep this page updated with my success stories.

Annual Savings

£85 (approx) switching to a cheaper breakdown service, AutoAid (Feb 2008).

£120 (£10 / month) approx interest on current account following switch (Aug 2007).

£3412.98 as a result of a job-change (July 2007).

£93 cancelled direct debits for unused services (April 2007).

One-Off Savings

£30 cheque for keeping M:Metrics market research software on my Smartphone (Feb 2008).

£38 on a smart-casual jacket, M&S January sale (January 2008).

£27.49 on jacket, EWM January sale (January 2008).

£10 total discount on 4 turtle-neck shirts, BOGOHP in EWM January sale (January 2008).

£22 on trowsers, M&S January sale (January 2008).

£0.50 on “grommit” shortbread, by buying a broken biscuit rather than a perfect one (January 2008).

£15 postal order for installing M:Metrics market research software on my Smartphone (October 2007).

£2.75 on fuel at Tesco by using a voucher (October 2007).

£30 bank changes avoided by promptly repaying money into old current account when I accidentally overdrew (September 2007).

£50 cash for changing current accounts (September 2007).

£10 compensation from Alliance and Leicester when they failed to transfer my direct debits to my new current account (July 2007).

£4.25 refund on a meal (June 2007).

£12.40 (20%) off a Littlewoods Direct order: Using a voucher (June 2007). [Edit: the voucher was not honoured by Littlewoods]

£367.86 Endowment mis-selling compensation from Prudential (May 2007).

£162 MEAF reclaim against Abbey (May 2007).

Other Benefits

Visual Studio 2008 Standard Edition worth about £200 (April 2008): Free gift at Microsoft product launch event.

Free Thorntons Easter Egg: Promotional Offer (March 2008).

Free small bag jelly beans (Yum, yum!): Promotional offer (Feb 2008)

One free banana (Yum!) : Fairtrade promotional stand (Feb 2008)

Signed up for Quidco (December 2007).

12 free pots of playdough: special offer at ToysRUs (December 2007)

A free Pentel marker : For filling in a freepost enquiry form for a service I’ll never use (July 2007)

A free Financial Review : Offered by our bank, Alliance & Leicester, when we opened a current account. There was a sales pitch, but it was low-key and easily dodged. The adverser was genuinely helpful (June 2007)

Free Braodband : Switching from BT to TalkTalk gives us free broadband for the same monthly spend (May 2007)

Free Sausage and Bean Bake (Yum, Yum!) : Voucher in local paper (May 2007)

Free Wireless ADSL Modem: Asked my Father if I could have the one he was not using. (May 2007).

Borrowed The Money Diet from the library (April 2007).

Started tracking spending in Microsoft Money (March 2007).

Set up a free WordPress blog (Feb 2007).

Repayed a Mortgage? Reclaim the Fees!

Like a lot of people, I have remortgaged in the last 18 months. When I paid off the old Abbey mortgage I was charged a mortgage exit administration fee (MEAF) that was somewhat more than my contract stated. In January the FSA announced if “past customers have paid a higher fee they can expect a refund of the difference”. It took just a couple of hours to write a letter to the Abbey (I am a slow writer), and a couple more to write the same information all over again on the official complaint form that Abbey sent in response to my first letter.

In response I have received a cheque for £162, the difference between my contracted MEAF and the MEAF I was eventually charged.

MoneySavingExpert has the low down on the whole process if you want to know more.

Check Your Direct Debits Today

If you had asked me a month ago if I was paying for anything by direct debit that I did not need, I would have sworn that I had everything under control. I was wrong.

Today, I discovered that I have been paying £45 / year for a Breakdown Insurance (extended warranty) on an Audio System. Generally, I see these extended warranties as a waste of money. In this case, I could buy a whole new hifi every few years rather than keep paying this insurance. My error here was that I had made the mistake of binning the renewal notices whenever they came through the post. It turns out they atomically renew unless you cancel. There is no point in worrying about past mistakes. I have phoned the insurance company to cancel. I have also cancelled the direct debit with my bank. That’s £45 / year saved.

The other week I discovered that I was paying some £7.75 a month subscription to an internet service that I was not using any more. I had originally signed up for a free trial, as I actually needed the service for a few weeks. I am convinced that I cancelled before the trial period ended. When I discovered the error I contacted the company immediately. They say that they had no record of my cancellation. Of course, I can prove nothing. My mistake here was not checking that the direct debit was cancelled. I have now both cancelled the service and the direct debit. That’s another £93 / year saved.

What is the moral of this tale? Check your direct debits. Check them now. Check them regularly.

Your comments are welcome.