Where Does It Go?

An interesting study by the Joeseph Rowntree Foundation was published today, which claimed a single person in Britain needs at least £13,400 a year for a minimum standard of living (as reported by the BBC here)

This is compared to the national average wage of £26,000 as reported by the National Statistics Office.

In reality this average is a mean, not a median score which would more accurately reflect the chance you bump into someone earning more than this figure half the amount of times, since the top 20% wage earners earn 80% of the cash - this gap is widening.

A guardian news story estimates that supermarket staff need to work 94 hours a week to reach this average.

A recent NY Times story ran showing that contrary to some peoples belief, money DOES buy happiness, in a study carried out there.  Another interesting conclusion was it was more a countries relative income that governed happiness; if a country’s poorest were close to the richest, the happier the citizens overall. 

It is an interesting look into the fundamentals of capitalism, both in its revealings of those deeply involved in the system spending to sustain it, and how the perception of fairness within the society helped everyone’s happiness levels. 

£13,400 a year would be an absolute fortune in a country like Armenia, which wiki currently reports an annual income of $1562 (~£750) - this equates to a minimum British wage being enough for 17 Armenians - are we 17 times more happy than Armenians?

Tags: wages, world news, salary

I keep meeting self employed people who haven’t heard of this scheme - which is a real shame as its brilliant. 

Basically the motive is to make it worthwhile for people to work - a lot of Tory propaganda in the 80s was aimed at the council estate single parent mum who had loads of kids to get benefits - it was more worthwhile to do that than to actually work. 

Tax Credits seek to correct that by making it more worthwhile to work - if you qualify you get a weekly or monthly payment to bump up your earnings.

If you work more than 30 hours (16 for parents) and earn less than roughly £15,000 - you qualify.

For self employed people this is even more attractive as the costs of the business as taken into account - only actual profit counts against the earnings.

My brother took on tax credits after many urgings from me when he was a musician in Cornwall - after arranging his NI contributions (£10 a month), he got in contact with tax credits - he sent in evidence of his work hours, a diary of jam practices and gigs, along with promotion posters, and recieved the tax credits within 6 weeks of roughly £45 a week.  Not enough to retire on sure, but worth enough to cover petrol getting around. 

One other thing to note is even if this year you are earning over the threshold, Tax credits works on the last tax year up to April - so if you earn £20,000 this year but only £6000 the year before - you may qualify.

Resources:

HM Revenue And Customs Info on Tax Credits

CAB Self Employment Checklist

Tags: taxcredits, budget tips, self employed

I moved into my new house, and had to go through the ordeal of arranging a phone line with broadband.  Telecommunication companies have to be the worst public services I’ve ever faced - BT, Tiscali and Wanadoo have all raised my blood pressure on several occasions. (Check out some of these BT complaints)

Today I resigned myself to being passed around from call centre to call centre as they tried to sort out my issue - I had been charged £120 more than I expected in my latest phone bill for a very unspecific “one off charge”.  I swear blind I remember the BT engineer when I spoke to him had said I shouldn’t be charged at all for connection.

After explaining this three times to various call centre staff, my exasperation was rewarded with a £60 credit on my bill. The connection issue according to the final TSR had stopped being policy several months ago. Nice for them to tell me; my first warning of connection charge at all was the bill.  When I explained I had been passed around by four call centre staff before finally speaking to him, and “my mate in Truro worked for BT and said I’d get it for free” he gave me the discount to save me lodging a complaint.

Moral?  Always communicate with companies - remember they want your money but the staff are human beings.  I tried to not be a prick when talking to the call centre staff, and just firmly and calmly pointed out my grievances each time I spoke with a member of staff, lodging complaints as soon as my expected level of service wasn’t reached. 

Tags: BT, complaints, discount, budget tips

I live in a pretty seaside town in Cornwall which has a lot of Londoners coming down buying up holiday homes; great for them but the locals are now priced right out of the market.  Buying a house in my parents day was a natural step to adulthood; these days the prices are so inflated its not even considered, especially on Cornwall wages which average the lowest of the country.

Buying your own home is a UK obsession - Margret Thatcher’s move to let all council house be bought by their renters in the 80-90s via S125 has meant a lot more people of that generation now own former council property.  This I think has helped fuel the consumer splurge, with former tenants finding themselves jumping upwards from working class (The Brits are still obsessed with class; sorry) and taking out secured loans to cover in many cases frivolous spending - who needs a kitchen refurb every two years?

An interesting post by the New York Times property expert David Leonhardt offers a buy or rent calculator - it basically shows that sometimes its best to rent rather than tie up your money in a speculative bubble.  (Graph in $’s but same principle for £’s)

A basic rule of thumb touted in the article by David is to divide the price of your house on the market with your annual rental.  If the ratio is above 20 the monthly cost of ownership exceeds the cost of renting.

My figures…

Pay £700 a month rent on a £300,000 valued house; £8400 a year rental outgoings - I get a ratio of 35.71% (!)

This is typical for the county.  This is obviously way over what I want to tie up my money in - I’m thinking I’ll only now ever get a mortgage if I can get an LTV (Loan to Value) under 50%. 

Those sitting in their over priced houses smugly are in no real better position - if they sell their house they have to buy another over priced house

Tags: mortgages, housing bubble, cornwall, uk

After consulting the snowball calculator, the figures indicated it’ll take me around 2 years to pay off the debt s I have on my credit card at the moment.  After digging around a little in www.MoneySavingExpert.com, I gave Martin a bit of cash by clicking his affiliate link to the HSBC CreditCard

My reasons where:

• I could pay off the debt in under two years.
• I didn’t want to have to switch too soon in 12 months say
• Give myself a little discipline by not having 0 interest, so encouraging me to pay it off and not spend more on the card
• My current 0% plan is ending in 2 months
• No annual fee
  

I’ll follow the Golden Rule - no purchases on this card until the balance transfer is paid off - it’ll go in the drawer and a direct debit set up to pay it off, to avoid interest being paid on that before my balance.

I think this keeps up with my philosophy of money saving without working too much - I don’t want to count the pennies but will count the 20p’s?

The stats of the card according to the website are:

• 0% on purchases for 12 months from account opening
• 2.9% for two years on balances transferred within 30 days of you opening your account. 2.5% balance transfer fee applies (minimum £5)
• Typical 15.9% APR variable after introductory period
• No annual fee to pay

A good overview on how to deal with credit cards is found here at No Credit Needed - Credit Companies Want Your Money