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| HSBC | £9.6billion |
| Royal Bank of Scotland | £6.9billion |
| Barclays | £4.6billion |
| HBOS | £4.6billion |
| Lloyds TSB | £3.5billion |
| Standard Chartered | £1.1billion |
| Alliance and Leicester | £0.6billion |
| Northern Rock | £0.4billion |
| Abbey | £0.3billion |
| TOTAL: | £31.6billion |
We've reported in earlier articles that our banks were likely to make over 30 billion pounds worth of profits (that's £500 per Briton). We were correct. And correct to regard this as excessive. We were also right to say that there is a need for an alternative to banks and that that alternative is building societies. Banks serve their shareholders before their customers. Building societies serve their customers.
(11:00 Sunday 6th March 2005)
A study by Pregnancy and Birth magazine, a favourite in our reception waiting area, has put the cost of bringing up a baby until they were five years old at £52,605. This includes the cost of basic baby expenses plus £30K on childcare.
The purpose of the report was not to scare would-be parents but to allow these people to break-down the costs of parenting, to budget for expenses and to make savings.
The costs start with the £15 pregnancy testing kit, the £50 on pregnancy books, the £12 a week on healthier food, but the real costs come nearer to the birth. Budget for maternity clothes at £200 - 1,000, antenatal classes at £70 - 125, etc. Don't forget your cot, bedding, baby clothes, pushchair...the list could cover several pieces of paper.
After the day of the birth, the costs are spread out: £375 a year for disposable nappies, £1,000 for baby food for the first year, £140 a year for baby toiletries. You might find that fuel bills increase with a parent at home: cooking, washing clothes and using lighting and heating. Life insurance premiums will also increase by about a tenner a year. Many decide to get a bigger car, or bigger house.
Bearing in mind that he has now come out as being gay, wasn't it ironic that George Michael sang so passionately against matrimony in Wham!'s 1982 hit "Young Guns (Go For It!)", rapping, yes rapping, "If you're happy with a nappy, then you're in for fun..."?
If he knew how expensive parenthood was, he would've sang, "if you're happy with a nappy, and a credit card, then you're in for fun", but it wouldn't have scanned as well. We have no particular comment to add to the article in Pregnancy and Birth magazine, other than to underline their message that it is wise to plan ahead, well before the pregnancy testing kit purchase.
50K can buy lots of nice things, even a decent house in some parts of our country, and is still an awful lot of money. Some people would rather blow it all on a cruise, that never starts, from Southampton around the world, hoping to sunbathe the whole trip on the deck and read The Da Vinci Code, or listen to old Wham! tracks on their iPod.
Other novels and MP3 players and lifestyles are available.
(Friday 4th March 2005)
Package deals are still the most popular form of holiday, despite a profusion of bargain flight deals and online booking facilities making things cheaper. A survey by the Jamaica Tourist Board says 59% of families will leave Britain for a package holiday this year. 38% are happy to book their flights and hotels separately but this is actually down from 41% last October.
On the package holiday theme, we occasionally catch a few minutes in front of the TV we've recently plugged-in at Surgery reception, and today, in-between some group financial therapy sessions at the day care centre, we dropped-in on something on Sky Travel or Thomas Cook TV (Freeview channels 11 and 20 respectively). We couldn't believe how this particular deal that we stumbled in on was being sold: "Stunning apartments close to swimming pool with tennis facilities, bowls, near the sea, Costa something, for all the family, only £200-and-something, ...".
What occurred to us was how poky the white-walled cane-furnitured apartments were, how full the pool and poolside was, how brown-bodied the usually beige-sanded beaches were. The heat was in evidence, the family facilities were emphasised, the package was so packaged.
Imagine: The rip-off, sticky-seated, hot-sauna taxi and bus rides, the queues at the airport, the oppressive heat of the daytime sun. The screaming, crying, moaning children running around or splashing about. Then the dodgy food. The sleepless nights on the cut-price bamboo bed, eyes wide open from the oppressive night-time heat that means the windows are open to let in some breeze, but also the noise from the drunken teenagers, the boom-boom disco, the car tyres, the dog barks, and the bawling babies from neighbouring appartments. Then you're too tired to make the most of excursions and to stay up and out late. Now the realisation: You're actually paying to stay here. You've left behind your comfortable home, filled with all the beautiful and entertaining things that are yours, that are suited personally to you alone, to pay for this. You start to feel nostalgic for showery Britain, and why not, millions are trying to get into the UK illegally.
Why pay to go to hell, when heaven is at home?
(Tuesday 1st March 2005)
Leeds and Holbeck Building Society have notified members of an account that is offering 6.0% before tax. The account, called a Loyalty Savings Account for Members is, as the name suggests, restricted to members of the building society only. It has a low opening balance of £100 and a maximum balance of £5,000. The downside is that there is a 60 day notice for access to the cash, or 60 days loss of interest, and after 31.12.05, instant withdrawal will result in closure; the rate includes a 1.50% bonus until 31.12.05. The account is operated via branch or post. If you're a member it beats your piggy bank if you've paid off your debts and have paid-in your full ISA allowance.
Whilst there are significant restrictions on accessing your money and the rate includes a hefty bonus and only society members are eligible, the rate is exceptionally high. We've installed it as the Money Surgery Rate of the Month for March, and added it to our Latest Rates Page.
Compare this account with a recent headline grabbing offering from HSBC, that offers 8.0% gross for regular monthly saving, compared with the next best at 7.0%, BUT you have to move your current account to them in order to qualify, and their current account offers poor credit-balance interest and uncompetitive bank charges, in other words, not worth it.
There is an alternative to banks, by the way. They are called Building Societies. Stick with these guys for current accounts, overdrafts, cash savings, mortgages, credit cards, personal loans, and avoid anything with "bank" after the name apart from the occasional piggy bank. And bottle banks, of-course. Oh, and riverbanks can be handy.
(Monday 28th February 2005)
If you've got an old record collection that's gathering dust, we've got a few ideas from Patients for what to do with them.
Some say that hanging-on to your old records is a must, but keep the dust off by storing them in DJ record cases. They're available from most record shops, and will last for years. Why not play a few of them for a change?
Another option is to use record fairs, see www.vip-24.com for more details, or to use e-Bay. One person, e-mailed a list to second-hand record shops and delivered the ones that they were interested in, whilst he took the rest to a record fair, costing £30 for the stall, marked-up each record and made a few hundred pounds. On eBay, registering will take just a few minutes, while listing each record title and condition might take a little longer, and we are led to believe that a 10-day auction spanning two Sundays might bring best results.
For those of you thinking of giving your collection to Oxfam, one Patient reminds us that charity shops can't afford to have space for stuff they can't sell and aren't skips for unwanted items.
Some people, though would love to get their hands on more vinyl - there's a distinct niche market for the groovy stuff instead of CDs, with some preferring the sound generated by the turntable needle over those from digital sources.
One Patient emphasises how important research is, to value each record realistically, before the records are put up for sale. You might have a rarity lurking in the sleeves.
You could use an intermediary like mveshops.co.uk, who can value them and sell them on, but you will have to pay them commission.
Our favourite suggestion is to transfer them to your computer. Just use a simple cable between the amplifier and the sound card, and use software like Audio Cleaner Deluxe. You can then save the albums and singles onto CDs if you want, or keep them as MP3s and play them on an iPod. Other MP3 players are available.
We can't promise that the companies and web sites suggested by our Patients will be suitable for everyone or that their performance will be perfect, but there is obviously a range of options for those of us with vinyl in the attic. It's worth remembering that once sold, they're gone permanently, and a few old memories are associated with our old records.
Before I go, how many grooves are on the average album? Is it 33 1/3, 45 or 78?
Answers on a postcard e-mail.
(Sunday 27th February 2005)
Motoring is cheaper than in 1975, according to government figures.
It may come as a shock but the cost of running a car, in real terms, is 11% less than 30 years ago. This includes all the bills associated with motoring, like insurance, car tax and petrol. Meanwhile, train fares have gone up 600% and bus fares more than doubled.
This underlines the fact that there is little incentive in this country to give up your car and adopt more environmentally-friendly and less congestive methods of transport. As well as the purchase price being less than in 1975 for comparable cars, the cost of petrol is virtually identical to its cost in 1975.
Driving is still expensive though. We've devoted a page to it. It costs about 4 grand a year, which equates to about £60,000 over ten years. Add this to what you save from not smoking and you'll have £100,000 in 2015. This 100 grand will buy just 800 standard train tickets for Cardiff to London and back.
Consider all the available methods of transport carefully in advance, bearing in mind that walking and cycling is extremely debt-busting. When on the road to debt-freedom, the phrase "cut out your car, cut out your debts" is as relevant in 2005 as it was in 1975. And even though they've stopped selling Hillman Avengers and the New Mini is nice, computer still says no.
Cough.
Wednesday, 23rd February 2005:
Not just one but two news items today, Patients, hot off the Surgery information line, providing YOU with top value and no adverts.
It's a date for the diary - Wednesday 16th March. The day when Gordon Brown is taking us to the sweet shop, and he's paying. And you can have anything you want. Because it's the day of the last budget before this year's general election, there's bound to be sweeteners.
We wonder what the Chancellor has in store for us. Maybe a visit to the tax-back tuck shop, giving us all a cut in basic rate income tax, or perhaps it'll be a trip to the supermarket confectionary aisle where all the tax-hikes on consumables will be held back, or maybe a little walk to pension rise pound-store, where pensions will rise by twice the rate of inflation. Who knows - we'll find-out next month. It'll certainly put a pre-election, post-winter smile on our faces.
Talking of winter...
We've just decided that Thursday 24th February is "Get-to-bed Early Day" because we've just heard the weather forecast. It's going to be very cold over most of Britain - the coldest of this "cold snap" - and we think what better way to beat the weather, and save fuel bills, than to get in on Thursday night from work or college and just ...go to bed. Radical, I know.
Imagine being tucked up in your cosy warm bed, reading, or listening to the radio, or even sleeping for the more rebellious of you. You'll wake up on Friday morning with ease, you'll have even saved money on some late evening snacks, and you'll have recovered from any sleep lost earlier in the week. It's cold, it's dark, it's f-f-freezing, so stop fighting it and hit snooze mode.
Cut out the cold, cut out your debts.
This is Money Szzzzzzzurgery.
(Tuesday 22nd February 2005)
Shock of the year so far: An insurance company has vowed to maintain or wait-for-it ...increase bonus payments on with-profits policies this year.
Prudential, who run Britain's biggest with-profits fund, said that the fund had increased in value by 13.4% over the last year and is now worth £73bn. Over five million policyholders will be glad to hear the news, having as they do, savings, pensions and endowment investments in the fund, which, like all with-profits investments get topped-up with bonuses, rather than interest, each year.
This news is refreshing to ears used to the same depressing chorus of "with-profits bonuses cut once more" from life companies every few months, in turn. Whilst Prudential are perennial overachievers in terms of investment performance, we are crossing fingers for the other companies when it's their turn to report on with-profits forecasts.
Come on guys, lets have a with-profit fund that comes with a profit, for policyholders. And make it quick - it's so hard to type with crossed fingers.
(Saturday 19th February 2005)
The average UK wedding costs a colossal £14,000. It's a little cheaper abroad, at £3,000, and includes the honeymoon, of course. This may come as sobering news to anyone who proposed on Monday 14th.
The thought of a £14,000 special day is enough to make your Valentines roses wilt.
And, though we think they would be ever so useful, life does not as yet come with an undo button.
(Friday 18th February 2005)
Britain's Banks are due to make AMAZING profits of £30 billion this year, when the big banks report their profits over the coming weeks. That's about £500 for every man, woman, child and anything in-between. This is a staggering figure.
It is quite simply enormous.
And we know why, although it may come as a shock to the average bank account holder.
The reason is that the banks effectively run a monopoly.
According to Don Cruickshank, who wrote a 300-page report into the banking industry for Gordon Brown in March 2000, nothing has changed from then to now, regarding competition in the banking sector. Back in 2000, his report claimed that the banks' sustained levels of profitability was a sign that they were operating in a complex monopoly and that their profits of £3bn to £5bn a year were "super-normal", which annoyed the banks at the time.
The government couldn't act on his report then, and make significant changes, because of a "regulatory contract" between it and the banks. Mr Cruickshank told the Guardian newspaper today, "Sustained and very high profitability is an indication that they are operating a complex monopoly and that on balance this is bad for the economy. In most sectors you would expect to get new entrants but in the UK if you want to be a bank, you've got to be a bank." He dismissed new players like Tesco because their license is actualy held by the Royal Bank of Scotland. Mr Cruickshank points to the 13-year run of economic good times which used to be experienced in 2 out of every 5 years but the old regulatory contract hasn't changed to suit. They are still being protected from the bad times at customers' expense. He is, however, opposed to a windfall tax on profits.
Mr Cruickshank's 5 year-old report is as relevant today as then, highlighting uncompetitive business banking, unregulated moving of money around the system, and a lack of promotion of competition from the FSA.
Against this background, what effect does this monopoly have on personal bank account holders? It would be reasonable to assume that, given this background, people who buy products from banks would be getting a poor value product. To make £500 a year from everyone in the UK, how on earth can they do that from your current account? That's your money in their hands, making them that £500 a year. Add in a savings account. You get good interest don't you? Don't you? Hang on, you're likely to buy the same bank's car insurance. It looks cheap enough. Here comes their big profit-maker... how about a mortgage with the same bank? They're very nice people aren't they, at the local branch? So why not get home insurance at the same time? Or travel insurance, personal pension, financial advice (free of charge), more savings, personal loan with repayment protection insurance, life insurance, pet insurance, credit cards - what's the rate, anyone? ...Endowment anyone?
You're beginning to see how they squeeze out that profit now, aren't you?
All we say is... £500.
Just think about it when you're next queueing to pay-in that cheque that takes 5 days to clear (5 working days that is).
Think about that next time you're charged £1.50 for withdrawing £10 through an ATM that saves the bank wasting their profit on staff costs.
Watch the news, read the headlines and look out for those record profits from HSBC, Barclays, Lloyds-TSB, Halifax Bank Of Scotland, NatWest, Royal Bank of Scotland...
(Tuesday 15th February 2005)
A credit card which charges up to 69.5% interest, is being targetted at those with poor credit histories. The Vanquis card, backed by doorstep lender Friend's Provident has been dubbed "a national disgrace" by Damon Gibbons of Debt on our Doorstep, who are a campaign group intent on forcing the government to cap credit card interest rates at 30%.
Provident argues that it gives access to credit cards to those who may otherwise be unable to get one, and says that charges are high due to the low credit limits offered, which start from just £150. The cards also come with an annual fee of £19 and users can opt for no extra charges on late payments or breaching credit limits, in return for a higher annualised percentage rate (APR). These interest rates are reviewed each year for each customer, depending on if the customer has proved themselves a good credit risk.
Regarding the Vanquis card, the Consumer Credit Counselling Service said that they encourage anyone to pay their credit card bill at the earliest opportunity, whatever the APR, and reminds us that if the cardholder pays of the balance in full each month, they won't pay any interest. However, they do suggest approaching mainstream lenders initially.
At Money Surgery, we devote a whole page to Credit Card Profit-Making, which is basically a card trick that earns some modest pocket money, but we also often warn our Patients that credit cards are dangerous things. It is so easy to rack up the bill on the credit card and sometimes you can't pay it all off in a month. Next month, you're paying interest for the first time, and before too long you're up to your credit limit. Play with cards, play with fire. Even the card that sits paid-off in your pocket can so easily be used again. We can borrow money and put it into a high-interest account for a short while and earn a few pounds, but maybe we are better off doing something ...else. Transferring your balance to a card that offers 0% for a short time, is sensible, for those of us who are creditworthy enough to be given the choice, but even then, the cardholder must exercise considerable discipline not to increase their balance or to forget about the expiry period of the deal.
It's not just casinos that deal cards that can hurt.
Cut up the cards, cut out your debts.
...like a Surgeon.
(Sunday 13th February 2005)
As from Thursday, 17th February, passengers who suffer flight delays, cancellation or over-booking by airlines will have the right to claim compensation from the airline. The EU regulations apply to flights to or from Europe, on a European carrier and the compenstion will be between 250 and 600 euros (Approx. £170 to £420), depending on the length of the flight and regardless of the fare paid. However, compensation will be halved for passengers who are found alternative flights which depart within 2 - 4 hours. Other rules also apply, depending on the degree of disruption.
Passengers can also claim for damaged, lost or delayed luggage up to 1,800 euros (about £1250), and for injury or death due to an accident on a flight by a EU airline. The regulations even apply to package holidays bought from a tour operator who fails to provide services booked.
If you suffer any disruption or are unhappy with the service from your tour operator, you should request compenstion. If it refuses, complain to the relevant authority, details of which can be obtained via the freephone number of Contact Europe Direct which is, 00 800 678 910 11, or via e-mail: mail@europe-direct.cec.eu.int.
For those of us who would love to get rid of our debts, flights to far-flung places are not on the itinerary. It just costs too much. Go after you've beaten Debt. What better reward is there than to take a holiday after you've paid off the last bill, or made that last payment? What better incentive to clear those debts is there than to take lovely long (warm) relaxing break after they're cleared? Each year we ask YOU readers your opinions in our MoneyOscars awards, and each year we always ask "What is the ideal luxury for when debts are cleared?", and each time you guys choose "Holiday" over "Jewellery", "New Car", or "New TV or HiFi".
The cost of taking a holiday doesn't end at the travel agent's office. There's the cost of meals and drinks and treats, excursions, visiting places of entertainment, entry into clubs, taking taxis, fares on buses, extra accommodation maybe, presents for family and friends, presents for yourself, unplanned-for items like batteries, suntan cream, electrical accessories, forgotten items like toothbrushes, hair driers. Then there's the clothes that you buy beforehand to wear on holiday, which could total as much as the booking itself. Don't forget the cost of a new camera or camcorder which many of us consider before a holiday. Or electrical adapters, travel vouchers...
Overshadowing all this like a dark cloud are the things we don't want to think about but can happen on holiday. When taking a holiday, we take a risk on things like the weather, the quality of the accommodation, the good-nature of our fellow-travellers and the locals. Without going into the awful detail, staying at home can often reduce the risks.
We think these new rules which protect the consumer are excellent and will hopefully take away a lot of the risks and pain, associated with some holidays. To our Patients we repeat one of our old adages: "Why travel when you don't HAVE to?"
Beat debt, then take a holiday. And have a ball.
(Friday 11th February 2005)
Is your ideal Valentine the kind of person who will send you flowers and cards and showers you with romantic gestures? Is your ideal Valentine the kind of person who whisks you away to a far-off place for a romantic holiday?
If you answered "Maybe not", then you might find that the opinions of one of our long-standing and pragmatic, though anonymous, Patients strikes a chord.
They suggest that encumbered by the burdens of debt, a partner who "surprises" his loved one in the name of St Valentine by "wasting money" in this way may be in-fact cruising for a bruising instead of fanning the flames of passion:
Imagine the hapless male distracted by work to such an effect that upon remembering that the date is February the fourteenth, he frantically drives around the evening stores after working late, on a mission to snap-up the first half-decent bunch of roses, box of chocolates, slushy card, cuddly teddy and heart-shaped cushion that he stumbles across. There, shining like a yellow and green beacon in the black, rain-swept night is the 24-hour garage... are there any flowers on the forecourt? Yes. Plenty. Twenty minutes later, car boot groaning with pink and red, cellophane-wrapped booty, he proceeds home to his Valentine, satisfied that the forty-four pounds worth of gifts will be sufficient. The trouble is, he forgot that his wife told him not to waste ANY money on Valentine's Day because of their debts. "We'll wait until next year when we pay-off the loan, then we can have a well-earned break",
she said...
At the Surgery, our Patient's tale reminded us of the tv advert for car insurance, where the blonde woman driver congratulates her male partner, whilst re-entering their car at the petrol station: "You really have been saving the pennies haven't you? Cheaper insurance, washing the car..." Then he reaches up to the roof and brings down a bouquet, "All so I can make romantic gestures like this." And she smiles. At this point, you can tell that this is not fly-on-the-wall documentary here. If it was, she'd have rolled her eyes, and whispered something like, "You silly man".
Our point is, if you have unwanted debts as a couple, and the other half succumbs to society's Valentines pressure in a moment of weakness, you have every right to whisper "You silly man (or woman)" or worse. Fighting debt as a couple or household is a teamwork thing where you both make significant sacrifices for both your benefit.
Love comes in many colours cue slushy music, including fluffy pink, but maybe when both of you make amazing sacrifices for each other to show debt the door, maybe that's an improvement on a Texaco teddy-bear. No offence to Texaco.
(Thursday 10th February 2005)
Lloyds-TSB is offering £50 to anyone who switches their personal current account to them. They promise to pay up within a matter of weeks of your first salary credit and they will asign a dedicated switching team to handle the transfer of all your direct debits, standing orders and account details for your employer. They'll even close the old current account for you.
Unfortunately, that makes the fifty pounds a lot less attractive.
We recommend that everyone gets the right current account for them. Be it one that offers high interest on credit balances, or maybe low overdraft interest rates for debit balances. Perhaps your ideal current account is one that offers low charges or it could be from a bank or building society that is close to home. Trawl the market, using the Internet, for the best account on offer. An Internet based account might be convenient for you and offer better rates.
Whilst we would not dream of encouraging people to play "Frogger" with dear old Lloyds, in other words to open and close accounts just to get the £50 incentive, we are aware that this can happen, which is probably why this bank has insisted that they will swap over the automatic payments and close your old account with the other bank or building society. This makes jumping back, and preserving your banking record, with the old current account virtually impossible.
Jumping to Lloyds-TSB, getting the £50, and jumping back might be worth the hassle to some wonderfully resourceful people, but probably not if the old account is shut-down.
There is another couple of banks offering decent current accounts with more modest cash credits: Alliance and Leicester at £20 for online applications, and First Direct at £25.
If any of these accounts get a good rating in the media, and they suit your requirements, then why not ask for more info? But please check all the account terms and conditions first.
Remember, though that switching current accounts is a tiresome task and "dedicated switching teams" are rare beasts. Having a captive, passive customer gives banks the extra incentive to post you more info on other products, like loans, cards, mortgages, car insurance, home insurance, pet insurance, travel insurance, currency exchange and savings, which may not be ideally suitable or good value necessarily but will definitely make the bank some profit. Lloyds-TSB is seeing its current account market very slowly eroded by upstart account providers like Internet-based smile, Cahoot and egg, and from highly competitive Alliance and Leicester and Nationwide Building Society. They need to expand their customer base at its heart - the current account.
And they'll get their £50 back pretty quickly...unless you're quicker at playing "Frogger".
(Wednesday 9th February 2005)
We've been amazed at some recent stories in the media regarding dieting and how expensive it can be.
Expensive? What are these people eating and where? Ryvita at the Ritz?
Choosing to limit what we eat for flirtatious or fitness reasons gives us the ideal opportunity to save money.
That's what it is: An opportunity.
Think of the rubbish you'll deprive yourself of: No more expensive workday sandwiches. No more pricey garage sweets. No more expensive meals and drinks in restaurants with soft music. No more raiding the larder. No more raiding the fridge. No more pizza deliveries. No more late night takeaways. No more pigging out when you're bored. No more eating a whole packet of choc chip cookies with your coffee. Sorry, that was just me there on the choc chip cookies. However, it is possible to eat sensibly by resisting the expensive and calorific foods and working out what offers good value in terms of cost, nutrition and taste, and from where to buy it.
Fitness foods can often be cheap, natural foods, like fresh fruit and vegetables. Fatness foods can often be expensive, processed, prepackaged, preprepared, convenient, advertised, and in large portions. Supermarkets sell baked beans for 9p a tin, rice pudding for 15p a tin, soup for 19p a tin. That could be a day's food for an adult for 43p. That's 2p less than a packet of wine gums from your convenient lunchtime shop. Not that we suggest that this should be a permanent diet but you get my point.
Health and wealth, hand-in-hand.
What better incentive to diet is there than to save huge servings of cash in doing so, and what better incentive is there to save cash than to be slimming down at the same time?
(Tuesday 8th February 2005)
Our Surgeons have been in action this evening, dissecting some weekend horse racing betting odds. They knew what the test results would be, but they had to be certain. They operated on three races, adding up the odds and made a certain diagnosis. They concluded that gambling will lose you money.
Surprise, surprise
If a horse has odds of 3-to-1, it has a 1 in 4 chance of winning. Theoretically all odds should add up to exactly 1. Three horses each with an equal chance of winning should be priced at 2-to-1 (1/3 + 1/3 + 1/3). Two horses, equally matched would each be 1-to-1, or evens. The Surgeons went through each race, adding-up the odds and got these results:
| Race 1 | 1.28 |
| Race 2 | 1.08 |
| Race 3 | 1.18 |
The collective odds added-up to more than 1. That's a bit like saying, "We've got ten horses in this race, all at 3-to-1."
Conclusion: The bookies always win. End of story.
Noticeably, the odds aren't overwhelmingly stacked in favour of the bookie. Averaging at 1.18, they are tantalisingly close to making him no profit. It's not even very noticable unless you dissect the figures like our Surgeons did.
I guess that's the tease: Mr Bookmaker could be out-foxed.
All gambling is like this. The odds are stacked against you in every form gambling takes. Only one thing you can safely bet on: Bookies will always win in the long run.
When in debt, cut out... Ayr, Lingfield, Market Rasen, Leopardstown, Kempton...
Like a Surgeon.
(Monday 7th February 2005)
Smokers are the luckiest people in the world.
They can do something the rest of us can't. They, and only they, are able to do the best thing anyone can do.
"What's that, Doctor? Feed the starving? Home the homeless?" Unfortunately... not.
What they can do is give up smoking.
A smoker who gives up smoking 20-a-day in ten years will save an enormous £35,000. That's an amazing figure isn't it? Read it again: £35,000. Reducing it to mere numbers doesn't do that sum justice. That was Thirty-five thousand pounds. That was sixty-four thousand US dollars. Roughly. Run with me on this. Taking into account the current price of about a fiver for a packet of 20 and factoring-in price rises and the interest. Leave the smell and the health issues aside for a moment.
Just think: £35,000.
Money Surgery hopes every new-year resolute non-smoker succeeds in dropping the weed. Please read our page on giving-up smoking for a bit more info for Patients who are considering doing the "best thing anyone can do". The sixty-four thousand dollar question is... can you afford not to?
(Sunday 6th February 2005)
On average, subscribers pay a little under £40 per month for their television package with a well-known company. With such a deal, of course, subscribers can view a range of channels, depending on the package chosen, including relatively recent movies and live football.
To someone paying-off debts as a matter of priority, paying for this sort of TV package is daft. Over ten years, the cost of the average package is probably £8,000, factoring-in future price rises and the loss of interest. That £40 per month is in addition to the cost of the tv license, and hardware/electricity costs.
Hang-on, they also show adverts on these channels and like the adverts on channels all over the world, their sponsors and commercials promote all sorts of products: Cars, beer, chocolate, holidays, insurance, processed food, national lottery, stain remover, internet gambling, and so on.
Get this: Subscribers forfeit £8,000 for ten year's worth of adverts for unhealthy food, alcoholic drink, gambling, and products that they may find expensive and inappropriate or unsuitable. "Yeah, I've got debts that I'm struggling with. Lets pay £8,000 to watch adverts so I can choose a junk food supplier while I invest some cash on the lottery and horse racing that I saw on a TV commercial. Don't worry, I've got beer: saw it on a TV commercial".
Cut out debt. Like a Surgeon.
(Saturday 5th February 2005)
Following on from our article of yesterday, below, concerning the value of Halifax's competitive 5.7% 5-year-fixed mini-cash ISA account, we have just received some reliable economic forecasts for Britain that point to another DOWNTURN in base rates. The report from Capital Economics actually mentions all of the factors that we listed yesterday which the Bank of England would regard as requiring stabilising by reducing interest rates until balance is reestablished.
As we discussed, a downturn in interest rates would make medium-term fixed-rate savings accounts, with market-leading interest rates, much more viable over their term compared with the best variable-rate accounts on the market.
The report makes the following predictions for 2005 that bear a remarkable similarity to the "possibilities" which we suggested would "conspire to force the Bank to pull its base rate back down":
The report predicts a drop in base rates back down to 4% from their current level of 4.75%, by the end of 2005, in response. Whilst this report contains all of the rate-reduction factors that we thought might possibly turn up, that does not mean Money Surgery necessarily predicts these as well. Capital Economics bases much of its case on house prices falling, and it is worth bearing in mind that they have been wrong on this before. In 2002, it forecast that house prices would fall 25% in 2004 but in fact they rose 14%. Also, GfK Martin Hamblin reported a rise in consumer confidence in January, especially in relation to expensive household goods.
Their general predictions, however, make sense. They sound reasonable. We know that taxes are going up, house prices are stagnating, and personal debt is incredibly high.
If the Bank of England base rate dropped to 4%, the best Mini-cash ISA account with a variable rate would be paying 4.1 - 4.25%, which is a generous distance from Halifax's Fixed, Five-year 5.7%.
(Friday 4th February 2005)
Hello Patients.
You might be aware of a big, juicy rate appearing in the mini-cash ISA section of the Latest Rates page, lately. It's from high street heavyweights Halifax and is a fat 5.7%. The drawbacks are that the rate is fixed and fixed for a tediously long 5 years, with no access to your money or the interest until the end of the term. Also, the minimum investment is £3,000, unfortunately.
The question is... if you invest, will 5.7% still be a good rate in 5 year's time? Interest rates have notched up a little over the last year from their lowest level in 30 years and some expect rates to continue their upward trend. But some of the factors that prompt the bank of England to raise rates have reversed recently: Consumer spending since before Christmas has disappointed shopkeepers, house prices have started to drop a little in some parts of Britain. Conversely, consumer debt is still at record levels. So, as ever, it's a gamble.
Over five years, forecasting base rate movements is virtually impossible. Over the last ten years, mortgage rates went down from about 7%, up a little, down again, up once more, before plunging, over a couple of years, to the very low levels recently witnessed, with a few quarter-point rises in the last year to their current level of about 6.5%. Looking at the extreme possibilities, a continuing retreat for property prices coupled with sluggish UK economic growth, poor consumer demand, and increased personal taxation to balance the goverment's books would all conspire to force the Bank to pull it's base rate back down. On the other hand, continued consumer borrowing, inflated house prices, a bourgeoning economy and a general feel-good factor might well mean higher rates. Not easy is it?
When choosing an account like a mini-cash ISA, which, of-course, offers reasonably good rates but with the bonus of being tax-free, think always of the long-term performance of the account provider, especially over 5-years in this context. Consider too, the ease with which the account funds can be transferred to a better account with a better rate. Think in terms of being in the top half of all the rates in this sector rather than "The best one".
We'll never promote a company's products on this site, however, we were surprised recently at how consistent the Nationwide Building Society has been over the last three years, as reported by a respected newspaper, in all savings sectors. These things will change, though, so the message is, "read those newspapers".
...Oh, and keep visiting the Surgery.
(Tuesday 18th January 2005)
Experts are warning people to avoid a mortgage deal which offers up to 130 percent of the value of the property. The Max130 product from Mortgage Express, the specialist lending arm of Bradford and Bingley, is aimed at first-time buyers or those wanting to merge debts. Online broker, Purely Mortgages said it might encourage consumers to run-up large credit card bills which can be consolidated into a 25-year mortgage.
A mortgage that offers so much more than the value of the property, specifically to first-time buyers and those already struggling with debts, is another example of how easy it is at the moment to borrow money. The lenders are relying on the continued growth in the value of homes as collateral on the loan. Don't rely on household high-street mortgagers to act responsibly or in your interests, rely on yourself and regain control of your financial life. Don't tell us, here at the Surgery, that there won't be someone who takes on this loan, consolidating his credit card and overdraft debts in the process, to buy his first home and face the decorating/furnishing/homebuying bills that accompany this otherwise memorable experience, only to slide back into using the old credit card and running-up the old overdraft, praying that negative equity is a thing of the past. Don't tell us because we've looked after dozens of them here at Money Surgery. Don't merge debts, get rid of debts, say the doctors.
Copyright 2000 - 2007 ©Kevin Anthony Jones. All rights reserved.
