Judging the Economy via Search Volumes

Could Google be a way to predict trends, enough so that it could point to investments?

Its an interesting idea, introduced by Hitwise when they ask if the housing market has hit rock bottom - pointing to a levelling off of the decline in Google searches for “Houses For Sale”

Certainly looking at searches for trends for “houses for sale” in Google trends doesn’t share the level off, with a decline still shown, almost 50% down on the same time last year due to a shortage of mortgages

Also look at spending power - “DIY” is down about 30% from last year, but is experiencing an upswing in the last month.

Are people finding they do have more disposable income, or are they trying to tart up their houses as much as possible to make them easier to sell in this tough market?

But is everyone feeling the blues and booking themselves on holiday? Looks like search trends for “holiday” are on their way up.

Could you maybe let search volume govern investment choices? Indeed, could you not build a search engine that looked for company names in the vicinity of certain “buzz” works such as Buy, Sell, Good, Bad, and make a call on possible share options? I’ll tell you if it works after I make my first million

Technorati Tags: google, trends, economy, mortgages, buy a house, blog, uk, money

Marx cackling in his grave?

More doom and gloom on Radio 4 on the way to work last week - Centrica who own British Gas have announced that average annual gas bills could raise to £1000 a year - an increase of 60%.

As oil prices have risen, gas which is an immediate product of crude oil has had to walk in step. To be honest its been a long time coming - follow the money - oil and gas company shares have not historically walked in step with the price of crude for a few years, as this graph shows:

It was only a matter of time before the utility companies started putting up prices.

This is all happening at the same time as the credit crunch starts taking hold - there are some estimates that house prices could dip by 30% and stay there for 20 years! More conservative estimates talk of a four year gap until they reach 2007 levels.

Will the banks learn their lessons? Will sub-prime mortgages be consigned to the past as a silly un-prudent idea, never to be repeated?

As repossessions continue, we could see houses being sold only to the cash rich, leaving less and less people in control of more and more property - we’ll become a nation of renters and a tiny minority of landlords. If it really goes tits-up we could even see those landlords falling foul of high interest rates and rising costs, with more nationalisation of banks to prevent the economy collapsing.

I sit here working, earning more than I have ever done before, yet find myself with less and less disposable income. I work to keep myself in just enough comfort to continue working.

Why does this all sound familiar?

The
worker becomes all the poorer the more wealth he produces, the more his production
increases in power and range. The worker becomes an ever cheaper commodity the more
commodities he creates. With the increasing value of the world of things proceeds
in direct proportion to the devaluation of the world of men. Labour produces not
only commodities; it produces itself and the worker as a commodity — and does so
in the proportion in which it produces commodities generally.

Marx - Economic and Philosophic Manuscripts (1844)

How The Banks Bet Your Money UK

A very informative YouTube video on how the sub-prime market rocked the UK, ending up with the nationalisation of Northern Rock.

It includes a very easy to understand guide on how the banks planned out the sub-prime lending scheme, using Collaterised Loan Obligations (CLO).

The Collaterised Loan Obligations bankers used are less regulated than normal banking.

How The Banks Bet Your Money UK & US part 1

Basically bankers borrow money at a low rate from say pension funds, then buy sub-prime mortgages which gave an income greater than the low interest they were paying. This gave an estimated 26% a year return on investments per year. Big figures for a greedy banker.

It’ll be similar if you used a 0% credit card to buy a buy to let flat - whilst you have tenants you earn enough money to pay off your credit card bill and make a good amount of profit - but if for some reason your tenant cannot pay, you’re left with debts you cannot afford.

Of course, it didn’t end up like that. The banks even leant to people with no asset, jobs or capital, so often they had a specific term for them - NINJA (No Income No Job or Assets) - a derogatory term used by high income bankers to describe the sacrificial lambs that would provide their bonuses. When those NINJA’s couldn’t pay their mortgages, the income for the CLO dries up and the banks are left with huge loans to pay off. Ergo - the Credit Crunch.

If you thought that was informative, the other parts of the programme are available here:
Part 2
Part 3
Part 4
Part 5

Car Tax Rules

A new bill to factor into your expenses this year are the new car tax rules - if you’re buying a car first registered after 2001 then the car tax you pay is set to change, due next year.

If you buy a very fuel efficient car, you could pay no car tax, but a gas guzzler could cost you £455 a year.

A BBC information page gives you the typical tax for the leading cars being sold today, find it here.

You may need to bear this in mind if your selling a car from after 2001 also, since the car may have been instantly devalued, or you may be lucky to find it has increased in value, since buyers will factor in they will pay no car tax on a highly economical motorcar.

There has been some backlash from the press that this tax will affect the poorest more, and Gorden Brown also faces backbench rebellion due to it acting retrospectively, hitting drivers who had no knowledge of the tax when they bought their car.

Like many government initiatives at the moment, the measure seems to have good intentions (cutting CO2 levels) but hitting the wrong type of people in the pocket, which after all is the majority’s main concern.

Judging by the pressure on Gorden Brown recently, this measure could be taken down, but expect some kind of initiative targeting green cars soon.

Its been a real noticeable change in policy in the UK where environmental concerns take front stage - as a child in the 80s I remember such initiatives would have been part of the “loony left”.

Tags: cartax, budget tips, car

Online Finance Planners

There are various online planners these days, here are a few of them.

The Snowball Calculator I’ve mentioned before, a great way to organise your debts and it really works.

Various Flash graphs to see how your money grows or falls in the future, including pensions.

Quick Salary Calculator to work out your take home pay after taxes and NI

Budget Calculator from the FSA to see how much you are spending. See more of their tools here.

How much was money worth in 1850? Compare prices now and then with this olde £ calculator

A few travel related money saving sites….

Why pay for hotels when some kind soul will let you sleep on the sofa?

See how much money you’ll get in the exchange rate markets with XE.com

Calculate the ethics of going at all, with this carbon footprint calculator.

A few mortgage specific ones now….

Lots of shoddy mortgage calculators online which try and sell you a mortgage when you’re just after information - the Guardian’s mortgage calculator sticks to the facts.

Is it worth buying a house or investing the money instead? This calculator tries to help you decide.

How much is that student loan going to cost you? Try out the Student Loan debt guide.

Savings and investments

A quick way to see how much money you get back out of certain investments is found here.

These investment calculators let you work out you work out how much money you’ll get back in more breakdown detail. You can select monthly, annual, or a single premium.

Tags: budgettips, travel, online, finance, planners, uk

£13,400 - How much it costs to live in Britain

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

Working Tax Credits - Do It

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

A Phonecall worth £60

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

Renting vs Mortgage

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

EDIT - 17 July

Found a good site explaining the tradeoffs in more details here - What Should you Pay for Your House?

Tags: mortgages, housing bubble, cornwall, uk

Just got a 2.9% card over two years

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