Using Wolfram Alpha for your finance needs

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.

Monthly Spend Calculator

I know its in dollars, but this calculator seemed appropriate to you, my noble readers in the UK:

How much going out costs you

Got some interesting statistics from the FSA this week about how much the average 20-something spends on a night out – find out more at www.whataboutmoney.info, a financial site set up by the FSA to help young adults with their finances. They say:

New study reveals the true cost of going out

The Real Life Costs Report* from What about money? found young adults thought they were spending nearly £60 a week on socialising, but in reality young adults are more likely to be spending more than £90 on ONE night out (£92.22 UK average).

The report reveals that many of the UK’s young adults are going out more than one night a week, which could result in spending up to as much as £547 per month just on nights out on the town. That’s over half (53 per cent) of their monthly expenditure on having a good time and a possible £6,570 spent on socialising every year.

This makes for an annual socialising bill of more than £47 billion amongst the UK’s youth population**.

The research found that in the current economic climate, young people are trying to manage their money better but despite their best budgeting efforts, many are getting caught out by the unplanned costs that usually boost the final price tag of nights out.

Over half (53 per cent) said they buy new clothes for a night out but many said they purchase shoes, make-up, and new haircuts adding an average of nearly £30 to their overall spend for a night on the town. It’s easy to see how extra ‘hidden’ costs can stack up!

How did they break this down? Well, according to the study the average 20-something spent:

Young adult cost of a night out…

• Getting ready, e.g. hair, beauty and clothes etc – £28.31
• Drinks -£22.39
• A tasty night-time snack, eg. kebab, chips, bar food and takeaways – £16.42
• Going out and getting home, eg. public transport or taxi fare – £13.23
• Entry to a club, gig, bars and other events – £11.87

TOTAL (night out) = £92.22

I suspect this figure may be gender bias, given the emphasis on the “getting ready” budget. Rebecca Filletti, a 23 year old trainee barrister from London said:

Rebecca Filletti

“It can be tricky to budget for a night out as you sometimes forget about the small things you spend money on – the cost of haircuts, clothes and make-up can all add up, but you don’t consider them part of a night out. Plus added extras like taxis or food on the way home can all mean you spend more than you originally planned to.”

Quite, but compared to my last evening it sounds like Rebecca here was attending the Proms or some such – I find it pays to just take cash out with you and not your card to avoid the temptation of drawing that extra £20 – admittedly I can walk to most entertainment nearby so don’t have to incur transport costs.

It sometimes galls me considering how much a person’s life is spent earning for those couple of hours a week where they can really let their hair down, it seems the way things are set up is too put young people into debt so they have to work the rest of their lives to pay it off – take the Student Loans for example, where only 20 years ago University was free to most, we now of course have University Fees (unsuccessful campaigned against when I was a student)

I made many mistakes when I was 21ish with money that I’m still paying off now – I suppose it is part of the learning process. For instance, taking out a loan with the bank with PPP(which basically you paying the bank to make sure they get their money if you ever go unemployed), running up large overdrafts and not shopping around for deals – all really due to lack of education. I’d be an advocate of basic money sense taught in schools, more so than it is currently, but could the school system just be factories for turning out good little workers for the country these days? (league tables, tests and subjects that work well commercially pushed over arts/fitness)

At any rate, I fully support the intention behind www.whataboutmoney.info so check it out if you’re 16-24 and looking for help, although I suspect if you’re on a personal finance blog you’re probably pretty clued up already!

If you’re interested in the area breakdown for the study, they were:

Money Spent On Night Out
UK Average – £92.22

• London – £93.13
• Yorkshire & Humberside – £82.44
• North West – £91.41
• North East – £80.84
• South East – £88.71
• West Midlands – £90.02
• East Midlands – £78.39
• Northern Ireland – £99.95
• South West – £94.66
• Scotland – £97.35
• Wales – £87.83
• East Anglia – £98.54

*All figures, unless otherwise stated, are from 72 Point. Total survey sample size was 2,000 and was carried out on-line.

**Figures based on current number of 16-24 year olds in the UK (7,220,400) and average annual earnings of this age group in 2008 (£12,313). Data provided by Office of National Statistics.

Never a better time to buy a car?

Cars in the current crises are hitting all time lows, with new, nearly new and used vehicles available to up to half of the price a year ago.

Struck by the lack of credit to new customers and the lack of funds for cash purchases, dealers are desperate to move stock. I was quoted 18.9% for a new car loan recently, which is pretty outrageous (from www.peugeot.co.uk) – the worse bit was I had to spy on the salesman’s fingers on the calculator to get the APR – he kept up with some spiel of “don’t worry about the APR, think of the monthly cost”

Prices may be bottoming out, with the car manufacturers not responding by dropping prices, rather increasing them in reaction to the decline of the Pound against the Euro; Ford and Vauxhall report the are increasing list prices by around 5%.

Also, car dealers are reporting used car prices have risen by £300 from December compared with prices dropping like a stone in the months leading up to Christmas.

Some remarkable deals are around, such as Broadspeed offering two-for-one deals one cars to tempt buyers. Vauxhall are also hoping to tempt buyers with giving you back 5% of your 0% APR finance loan for three years

Rich Headland, editor of Which Car? has said recently:

If you have the cash and your job is safe, there are some stonking bargains out there – particularly for new cars. We recently found Fiat Pandas being sold for new for less than one year old models at dealers.

Smaller cars seem to be holding their prices better than big cars, with people still smarting from high fuel prices in the summer. Car Tax changes also mean you could be paying £350 for your yearly car tax for a big car, to no car tax at all with a modern fuel efficient car.

Lets not forget the new VAT price as well, a 2.5% drop in what you pay which will be taken away in a few months time.

Economy 7 – save money on fuel bills?

According to research carried out for Guardian money, if your household is a high consumer of electricity it could save £300 a year on bills if you switch to Economy 7 electric tariff.

Economy 7 became popular in the 60s and 70s when consumers were encouraged to use a cut price tariff at night to use excess electricity generated by coal and nuclear power stations that have to be kept running at night even when demand is low.

It has fallen out of favour recently, mainly being used by flats with night storage heaters that charge up during off-peak hours – typically from midnight to 7am. This time could be used by appliances such as washing machines, dishwashers or bread makers.

Suplliers maintained that if you use 20% of your energy needs during the off-peak times, you would make a saving. However, TheEnergyShop.com foudn that figure is closer to 40%

It takes habits to change – switching on your washing machine as you go to bed for example, but some households swear by it. Some maintain it also means a lower carbon footprint.

Do your sums before hand though – I had Economy 7 in my old flat for the night storage heaters, but found no significant saving due to the daytime charges being typically higher than normal, to offset the cheaper night rate.

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

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, mortgages found on review sites usually the only way to find competative prices.

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

The power of “No”

Last month I spoke of going onto pay-as-you-go on my mobile to try and cut expenses, they offered me an £18 a month contract which despite hard work from the TSR at the call centre I said no to. Pleads included “This offer is only going until next week!”

Well today I was phoned up by another salesman from 3 (My mobile phone provider) asking for me – nowadays I always answer “Is this Robert Brown?” with “Who’s speaking?”, and I was about to launch into a murder scene interrogation…..

…but as I was lining it up with grunts and obscure mutterings (I doubt I could of pulled it off with the Tom Mabe style) the guy at 3 offered me £10 a month for life for 500 minutes anytime/any network. 

This works out over £300 a year less than what I was paying for up till this month, with 100 minutes more text/calls.

Just goes to show how desperate companies are to fix you into a contract – no doubt the iPhone is taking away a lot of business so they get me locked in for another 18 months, hell they even threw in a new phone (Nokia 6500 Slide), which I read a few reviews of and it breaks a lot, but I could always sell it on ebay.  I’m pretty happy today since I would have probably used about £10 a month in top-ups.

Anyway, a good lesson for me: never accept the first thing they offer you.  Just by saying “no” I’ve saved probably £100 a year.

Snowball Calculator

Carrying on with budgeting help, I came across this method named “Snowballing” which offers psychological methods to pay off debts.  If you have several debts, such as loans, credit cards and overdrafts you can use this method by paying the minimum fees on each, then using any remaining cash to tackle them one debt at a time.  You can choose to tackle the debt with the lowest balance (psychologically nice) or highest interest (mathematically best)

There is a Snowball Calculator around that can help you work out how much to save I think I’ll check it out.

Tags: budgeting, calculator, tools

Mobile phone contracts

One of the first cutbacks in reviewing my budget was my mobile phone – by the end of the contract this had risen to £35 a month after a half price deal had finished 12 months before.  I’ve always been on contract and have never tried pay-as-you-go, so thought I’ll try it out as a way of keeping track of my expenses.

£35 may be pittance compared to the girlfriends bill (£90 last month) but still felt unnecessary as I rarely used all my free minutes (I use email much more)

This didn’t stop 10 minutes of polite “No”s to the 3 salesman trying to convince me to take out a new contract.  I felt 18 months is a long time for any mobile phone contract at the moment, particularly with new deals coming out.

One of the big pluses with a contract phone is that you get a new phone out of the deal, but my Sony Ericsson’s performs well (well it takes calls and texts – thats all it has to do really innit? ) and I’d still be contactable.

Naturally if you use a phone more than I do, you may want to consider a contract, but I’m always conscious that the companies make their money on the contracts, not the phones.

3 my provider tried to sign me up to the £15 a month 300 anytime minutes or texts, which gives you 300 minutes or texts or some combination of the two.  This works out at 5p a minute or text.

I’ll compare this is the Pay-As-You-Go 12p a minute I’ll be on, but know I’ll be a lot less likely to use the phone with this rate upon it.  If I use the phone more than 125 minutes a month, I’ll be better off on the pay-as-you-go.

Am I just being kooky not wanting to be tied to a contract?  I just feel having the money coming out of my account kind of forces you to use the phone more.

Tags: budgeting, mobile phones, 3, contracts, tips