Where Does It Go? – UK Money Blog £

With the low interest rates at the moment, its been really hard finding a good enough account to save, with Barclays offering a paltry 0.5% on my savings I was looking for a better deal.

It was whilst I was walking down the high street I noticed several banks offering “6% savings” which all happened to be part of the Santander group – enquiring within one, Alliance & Leciester, it seems for the moment all the banks are still operating under separate licences but offering similar deals. The 6% account comes with a catch – you need to invest £500 a month (£1000 a month with Abbey) and the limit is £2500. However, there is nothing stopping you opening up several accounts to take advantage of the deals at each and transferring the required minimum each month via an elaborate system of standing orders. The practice reminds me a lot of Stoozing where similar balances transfers are carried out by credit card 0% chasers.

If you have used up your cash ISA for this year, you may consider it (since ISA’s are offering only about 2.85% net at the moment) – you could probably invest around £7500 over three accounts, for a yearly return of around £450.

Whatever happens, I am avoiding long term bonds since I’m guessing interests rates will go up in the next few years – they simply can’t get any lower and that debt is ever increasing.

Introduction

Initially, the credit crunch and, subsequently, recession has had a significant effect on the spending habits of myself and other British consumers. Falling house prices, rising unemployment and reduced lending from financial institutions has, inevitably, caused many consumers to rein in spending and to improve their personal balance sheets, particularly with regard to debt management. Indeed, the majority of consumers are looking to reduce their debts, on credit cards, loans, etc., rather than taking out more credit.

Eliminating Credit Card Debt

A consolidation loan, where multiple debts on credit cards, personal loans, etc. are replaced by a single, affordable loan with a longer repayment period, is not a method of eliminating debt, per se. Yes, it is a method of restructuring debt, which can reduce your cost of living in the short-term, but you may end up paying back more money in the long-term. Eliminating credit card debt, completely, essentially boils down to spending less than you earn, and setting aside enough money to pay off more than the minimum repayment on your card(s) each month.

The first step in doing so should be to stop spending on your card(s) altogether, to prevent the situation becoming worse, rather than better. Some tactics to avoid spending is to put the card into a cube of ice, to help combat impulse buying (without a hairdryer!)

The second should be to prepare a monthly budget, so that you can see exactly how much disposable income you have left after essential outgoings, such as mortgage, rent, utility bills, food, etc. are taken into account. Once you know how much you have left, it is worth setting aside a little for “luxury” items, if you can afford to, and the remainder can be used to service your credit card debt. Whatever your level of credit card debt, you can reduce the amount of interest that you pay by switching your balances(s) to 0% interest deals on a regular basis, if your credit rating is sufficiently high.

Thankfully, three times more people have access to the Internet, nowadays, than during the recession of the early Nineties, and many consumers are using comparison sites to shop around for cheaper deals on car insurance, gas, electricity, etc., as well as shopping and selling their unwanted belongings online. Other cost cutting measures include walking, or cycling, instead of using a car, or public transport, and a reduction in takeaways and eating out. Mobile phone operators have also worked hard to simplify mobile phones and tariff options in recent times, making it easier for consumers to find value for money.

Andy from Simple Stock Investing got in touch about his website giving investment tips to non-professionals, or as he puts it “who are educated but not in finance” – the site aims to give information on those savers who may be interested in playing the markets without subscribing to the “Boiler Room” stereotype!

The site has functional design which perhaps has too many Google Adsense ads, and the navigation is sometimes confusing to find what you are looking for, but on a pure content point of view the site is a Win, with lots of informative content that brings an original point of view to investing, written in a chatty but informative style.

A good example is the post Why Investing Isn’t Gambling, although it can be which I highly recommend.

I’ll let Andy explain his ethos in his own words:

Although many of these tutorials address funds more than stocks, and
they suggest allocating assets in other instruments as well as equity,
I chose the word “stock” for the title because I have the idea that
the inner question of such potential visitors is something like “What
if I invest this money in the stock market?” During the first months
I used “ETF Investing” as a name, but then I thought it might be too
technical, and exclude articles on mutual funds, closed-end funds and
stock, unnecessarily.

Another aim is to process and present data that may lead to useful
conclusions for this style of investing. I mean, to answer questions
such as if buying N different stock can achieve a good level of
diversification, what the ideal period may be between re-balancing,
etc. So far, the only article of this type I have published is one
with the historical performance of the S&P 500 index. It is the most
popular in the site, so I’m planning to put some emphasis on this kind
of article.

Andy invites ideas for new articles so head on over to have a look.

Would you like your financial site reviewed? Get in touch via the contact details above.

Kublax,a new money management service got in touch with details of their new money management service – could this be the Mint for the UK?

Details from their Press Release below:

A new online financial service has been launched in the UK, set to pioneer the way forward in personal finances by simplifying the way people manage their money. Called Kublax, the service works by aggregating all financial information in one place, such as bank, building society, and credit card accounts, and presents them in an easy to understand way.

Kublax aims to make money management an easier procedure, while helping users to save money and create better budgets in the process. The service offers a great alternative for anyone who finds budgeting and balancing their finances difficult, or those who are looking for a free online alternative to expensive desktop financial software.

In addition to pulling together all financial details to a central source, the new service features many useful interactive features, including alerts and budgets. Once a user has uploaded the details of their financial institution, the advanced software automatically categorises the users’ expenses in order to see exactly where money is spent each month.

By setting up a budget on the service, users can track their fixed budget against their actual spending. The handy alerts system also means users can be quickly notified of any usual account activity as well as always be reminded when bills are due to avoid paying late fees.

The new service also features a unique ‘compare me’ function. This tool allows users to anonymously compare their spending with others throughout the UK, and could help users identify clear budget categories they could cut down.

Displaying data visually in easy to read graphs and charts, the product aims to make budgeting a faster and easier process for the UK consumer.

Kublax’s initiative to help consumers have better control over their finances may also help them to save. Throughout the site, users will find suggestions on where they could save via switching account providers.

Users can also feel safe using the service, as it is completely secure. The site uses bank level security and is verified to be hacker proof by McAfee. The site has been qualified by the VeriSign security seal, while their privacy policy has been approved by TRUSTe. Because the site offers a read only service, no transactions can take place via the online software.

Although only launching the product a few short weeks ago, the original concept had already won the Seedcamp 2007 startup competition, and has been well received by the media.

The free financial management service should come as a relief to the millions of Brits who have found balancing their finances and building budgets to be a time consuming and difficult process. For more information or to use the product, visit www.kublax.com

Sounds interesting, I’ll be having a look around the site and reporting back if its any good.

In case you haven’t heard of it, Wolfram Alpha is a new calculation engine that puts the power of a supercomputer in every bedroom – a step towards the semantic web that is the future of the web.

However, before such lofty aims, WA can be used to help with your financial decisions – like so:

• Need a rough figure on how much a mortgage will cost you over 25 years at 5% fixed rate interest?
• How much will you need to invest now at 6% to get £20,000 in 5 years time?
• How much pension will you get if you earn £20,000 now, expect pay rises of 4% a year, am 32 and expect to retire at 70?
• How long will it take to pay off £3000 on your credit card at 25%
• The GDP of the UK?

..and so on.

The tool has its limitations (for instance couldn’t understand £ to $) but its very powerful when applied to what it knows, mainly mathematics related.