Martin Lewis' Personal Blog

The Power of Yes

The National Theatre kindly invited Mrs MSE and me to see David Hare’s new play, The Power of Yes. It’s a first person narrative tale of his meeting with the big players in the financial collapse as they explain what went wrong.

A meeting that ran on meant we arrived a few minutes late, but thanks to the NT’s TV screens outside showing the play, we didn’t miss too much until we were allowed in the theatre.

As we sat down the entire crisis was blamed, only somewhat tongue in cheek, on people who worked at Goldman Sachs or went to the London School of Economics (LSE).

As a proud LSE graduate and Governor of the Uni, my eyebrow raised each time that line was repeated and I wanted to jump to the institution’s defence. Then again, as a huge proportion of LSE graduates end up in the City, there’s probably a grain of truth in it.

An anti-City polemic or expose of the system?

The tone of the play did feel like an anti-City political polemic, and perhaps at some times was over complex.

Either it, or I, got a wee bit confused at one point. I’m not quite sure whether it was trying to blame those involved because they thought they could beat the market’s risk when of course they couldn’t – or because they couldn’t control the market’s risk.

Yet it did expose the deep underbelly of misunderstanding. The feeling you get is no one truly understood what was happening, but as long as they kept making money during the fifteen year record bull run no one really wanted to ask questions, not regulators, Governments, or even bankers themselves.

My favourite lines….

”In politics spending that you approve of is called investing.”

Definiton of a bubble, “intelligent people invest first, stupid people follow” (quite similar to the greater fool theory)

Where it packs a punch…

The play could be summarised in one line… ‘we geared up the world due to slicing and dicing, and split the debt so everyone feels the pain’. The whole crisis was laid firmly at the foot of the debt markets.

In the old days if you borrowed money, it was the cash someone else had saved in the bank. The profit came from the difference between what the interest depositors were paid and what borrowers were charged.

Yet here, debts were sliced up and sold to many different institutions who in turn sliced and diced again and again and again. In the end every debt was a TV screen of pixels each owned by someone else – yet with no real substance. And of course when the crunch came the whole thing went kaput.

Worth seeing?

The play was a brave attempt to turn a terse, complex subject into an obtainable piece of theatre art. Overall it succeeded, it was entertaining if a bit complex in parts, but told the story well so as, I suspect, to keep both those in the City and interested generalists happy.

So if you’ve an evening free and like high brow theatre, it’s worth a trip. And if you’ve seen it I’d love to know what you thought.

Comment and Discuss

Should service charge be included?

I’ve just spent a couple of days in France, where in many places there’s no service charge, the price you pay is what it says on the menu.

This made me think about the pricing in UK restaurants. By and large it splits into two…

• Service included. Here 10% or 12.5% (up to 20%) in the extreme is added at the bottom of the bill.
• Service not included. Here you’re usually expected to tip 10% to 12.5% – though it varies

If service is part of the bill why split it out?

If service is included then it forms a part of the cost of every dish you order.

So typically the bill at the end currently looks like this

Total:                        £45
Service (12.5%):       £5.65

Total:                        £50.65

Wouldn’t it be more clear and more accurate if it were instead:

Total:                        £50.65

That way the price on the menu would actually reflect what we pay in the end.

This is only a change of presentation of course so the extra money should still be divvied to staff in the same way, and should still be voluntary.

Would it work?

As stated at the beginning I’m not totally wedded to the concept. There are certainly some problems with it…It would make it more difficult for people who didn’t like the service to exclude it, and a change like this could be inflationary. Would the restaurant really charge £6.75 for the Chocolate pizza or just round it up to £7?

But that makes the food look more expensive, and as a result we may move back to the voluntary service proposition where you choose how much you actually tip.

So I thought I’d blog my mulling to see what the consensus around this is.

Update Note: Having read some of the forum discussion – I think there’s a wee misunderstanding that I’m suggesting this as a preferred option. I’m not, like most people I would prefer service NOT to be included, and you can tip if you choose to.

My thought is if restaurants want to include the service automatically, which is semi-coercive, then it’s worth considering making them do it this way.

Comment and Discuss

P.S. And if you use a 2for1 restaurant voucher should you tip based on the pre or post discounted cost?

Not easy to ditch 'n' switch PMI

It’s not revelatory to say insurance renewal costs are a charge for apathy: if you don’t take the time and trouble to requote at renewal (see the car insurance and home insurance guides), you will almost always pay more.

In fact as many often discover, get a quote as a new customer from the company that provides your existing cover and it will often be cheaper.

One easy way to demonstrate this would be to oblige insurers to put the old cost next to the new when they send a renewal document (I wish I’d included it in the 50 words manifesto).

My sneaky insurance hike

Recently I got a renewal through on my private medical insurance policy. While I’m a believer in the NHS, timing and scheduling are crucial in my career, and if I suddenly need treatment, this is easier.

Intuitively I thought the price seemed to have jumped, and lazily, rather than searching for the paper work I called up (don’t worry it was part of my inclusive minutes) to ask what the premium was the prior year.

The jump was 12% – and that simple stat brought it home to me that printing the prior price would have two simple benefits.

• People would be shocked into ditch ‘n’ switch action

  If you saw in black and white the increase, it should help make people realise they’re paying over the odds and get the impetus to change.

• Insurers would limit their rises

  The publishing of last year’s figure would disadvantage insurers as they’d know if they push prices too high they’d lose, so it should act as an incentive to stay competitively priced.

In my case with PMI it’s sadly not as easy to ‘ditch and switch’, as new policies exclude pre-existing conditions; so it’s possible to lose out quite severely.

Even so as I haven’t made a claim in the last year, I was rather put out by the fact that the main justification for the cost increase was my age (jumping from 36 to 37). After all I’ve aged by 3%, but my policy costs are up 12%.

I told them that, and their counter was the ‘ongoing increase in medical technology’. There is some truth to that, but at current levels of inflation my thought is it’s simply the ongoing ‘premium rise’ profit technique of most insurers.

So I stuck to my guns and tried the haggling approach and after two days they got back to me offering a month’s free cover – which is effectively an 8% discount – bringing back some of the increase.

Comment and Discuss

How much can you save in a day?

Last Thursday night I did an ITV1 Tonight called ‘Can you save a grand in a day?’ (watch it here). Thanks to all those who sent great comments and feedback, though in the midst a few have commented that the family were wrong – and that we should’ve looked at a family with more severe debts.

Here’s an example email:

I watched your program yesterday on ITV1 at 7.30. While it could have been interesting I’m afraid the family that was highlighted do not represent the true debt real people are suffering.

For instance, the family has 3 cars & 4-5 motorbikes! If they were truly in debt they would have sold these items. (please see footnote on this – ML)

I would request for you to talk to families in real debt such as me & my husband. We have no cars to sell-no motorbikes to sell & no-one to help us.

We are in true debt & I think it should be highlighted to give some encouragement to ‘real’ people actually suffering from debt & not people that just can’t go on holiday or have their nails done.

Many thanks for your time. Nicola”

In many ways I find this slightly frustrating, as I’ve done many programmes on families with far more severe debts in the past, but you can’t do every one that way, and in many ways I think they are actually not good to focus on (I’ll explain in a moment).

On ITV1 the story was that of a lovely family who work hard and have got progressively more worried about their money. They had already started to cut back, but I went in with the team to see what more we could do.

Yet I understand why some feel frustrated about the story, so I wanted to try and explain to Nicola and the others who’ve been in contact why we sought that type of family. These things aren’t made up on the spot; there’s a lot of good reasons why they happen this way.

• This is a prime time ITV1 programme

It’s important to think of the context here and understand that I do not have carte-blanche to do whatever programme I want. This is ITV1 Tonight; it’s a prime time programme on a non-public service broadcaster. Frankly it’s a fight to get a slot on there anyway; to do so you need to be sure that it’ll get decent ratings.

To get a show on air talking about money is difficult enough, it has to be sexy and direct, and appeal to as many people as possible to get commissioned. As such the concept of ‘how much can we save in a day?’ works. The resources and rating for a ‘follow someone through their long term debts’ simply aren’t available to me.

In the past some of the ideas I most care about have not made it to air, but that’s cool as it’s the nature of the beast, and it’s my job to pitch ideas like anyone else.

• MoneySaving is not only for those in debt

Since I first started, I have always maintained the first aim is to cut your bills without cutting back. There’s nothing wrong with helping those who have money to spend it better – you don’t need to be in debt to be a MoneySaver.

So I disagree with the view that ‘you should focus on those in the most trouble’. This family are just as valid to help as others, and by helping them and generating an overall saving of £7,000 I hope it inspired others to look at their finances.

In fact as I write this we’ve a poll on the site saying the majority of users of this site have more assets than debts.

• This family ARE representative – fortunately debt crisis isn’t


MoneySaving isn't just for those in debt

The idea that ‘real’ people are all in debt crisis simply isn’t true. In fact there are more savers than people in debt in the UK. So when doing a makeover programme like this, the aim is to get a family who represents the situation many see and ensure the issues focused on reflect those that are ‘usable’ to most people.

– The average non-mortgage household debt in the UK is £9,000; the average UK personal income is around £24,000 (from memory)

– This family had non-mortgage debt of £13,000 and dual earner combined income of a little over £40,000

So the family focused on are in fact very typical.

They have what I’d define as ‘debt problems but not debt crisis’ (where you can’t meet you minimum repayments).

Add to this the fact that the techniques used for saving money are the same for everyone except those in debt crisis; it means this programme appeals to the 95% of society.

When in debt crisis, as you’re effectively opting out of the system (see debt help for an explanation) the solutions are almost diametrically opposed and therefore don’t relate to most peoples’ situation.

• This is a January money makeover programme

While I do many programmes, January is a ‘back to basics’ sort your cash month, as that’s what everyone is doing. So the aim here is to go through the big ways people can save and show the methodology for doing so.

• A one day visit isn’t the way to tackle debt crisis

I’m a massive fan of non-profit debt counselling agencies for those in debt crisis (see the debt help guide). That’s because I don’t think you can do justice or genuinely help someone in tremendous debts in a day – it needs to be an ongoing long-term process. Hence why whenever I’m broadcasting or am asked about severe debt I refer people to them.

And they are the experts at debt crisis – not me. So to do a programme on it actually doesn’t really fit too much (though in the past, out of necessity over discovering much more serious debts than I thought, it has happened).

• Remember this is an on TV makeover

While many people want a makeover, very few still remain once they realise they need to expose their finances to the public and have their lives discussed in it. The family we used did, and even though I don’t think they’ve done anything wrong, I’ve seen a couple of scathing comments about them – even the question above does that.

So imagine the same for a family £50,000 in debt on a £20,000 salary. The public can be harsh and many don’t want to do it – it is very difficult to find willing volunteers for TV debt crisis makeovers.

• I can’t work miracles

When people have no income and have already stopped spending on everything, there is nothing more than can be done. It’s a long-term rehabilitation process of working through creditors and the systems available.

I make no bones about the fact that in that case there’s little that MoneySaving can do to help (with a slight exception for MoneySaving Old Style and frankly that doesn’t make good TV and doesn’t inspire others to sort out their finances.

• I’ve done many programmes for people in hardship and hope I’ll do many more

This is just one programme. In my work I try to focus on a mix of topics (though I don’t have a choice, the broadcasters pick what they want).

Examples of Tonight programmes that resonate for people with less cash include ‘thrifty tips’, ‘bank charges reclaiming’, ‘PPI reclaiming’ and many more specifically on debt (I’ll never forget the Cancel Christmas one of the family £140,000 in debt and on the edge).

Plus on other broadcasts, I’m constantly doing subjects such as payday loans, debt crisis, tax credits, benefit help, loan sharks, financial education and many more.

• TV isn’t the only game in town

It’s interesting that many of the comments about this come from the forum. I hope it doesn’t sound churlish to say but I hope that the fact the forum and this site exist with areas like debt free wannabee in itself helps.

The other advantage of this site is we’re in control of the content – so we can put up what we want whether it’s bank charges compared, debt help, IVA guide or (hopefully soon – it’s taken far too long – the guide to mental health and debt, something that’s a nightmare to get TV to cover).

Now please don’t take this to mean I never want to do programmes about the debt nightmare in the UK, I have my MSE charity to help, I’m very passionate about the subject and have many tricks up my sleeve to make some excluded financial subjects televisual.

Yet I need to work within the realities of the medium, and when it comes to makeovers debt crisis as opposed to debt problems doesn’t fit so well.

Comment and Discuss

Footnote: It is worth remembering that what you see on screen is a half hour representation of a full day. For example it turned out three of the bikes were given free and were being done up to be sold on to help supplement income – and the family has two cars (the screen shot included their neighbours) and four drivers.

New record: 9.5m people visited the site

Quick update for stats nerds: we smashed the site’s visitor numbers in January and the figures (generated by Google Analytics) show a staggering 9.5 million different people came to visit the site in January.

That means more than one in five UK adults came to the site at some point and not far from one in the three adults who are online

Here’s the full stats:

• There were 9.5m unique users (prev. record 8.6m in Nov)
• They made 18.0m separate visits (16.5m)
• And read 82.6m different pages on the site (75.9m)

You’ll note there’s no “hits” figure in there. That’s because frankly it’s meaningless, it’s just about how many objects e.g. images are on a page, so a site could have lots of hits without many users just because it has lots of objects. That’s why many small sites use the term. It sounds impressive, but means nothing.

As always with these things there can be some discrepancies. For example a family all using one computer will often only count as one unique user when it should be more – or a person who uses the site at home, work and on an iphone would count as three.

Unlike many of the previous record breaks, this one was expected. January is always the biggest month for money and if you take out ongoing growth it’s even bigger. Yet as the site is constantly growing, by the end of the year we tend to overtake the January figure.

Comment and Discuss

50 word manifesto

As we finished putting together the 50 word manifesto and saw the three party leaders looking up from the page I got goosebumps. The thought that we’d successfully pushed real issues, from real people, under the noses of Brown, Cameron and Clegg’s political elite is very rewarding.

The ideas are stunning in their simplicity and practical application, and most people who read them end up nodding (do give ‘em a glance). Yet…

There’s an irony to the lack of press coverage

We put out a press release detailing the ideas, the politicians’ responses and what they were saying, yet not a dickie bird was said in the press (unlike a comment on Barclaycard’s proposed new reward scheme for example).

There is a certain irony to this though, as I first had the idea for something like this way back in 2008 after watching a press conference with Gordon Brown talking about direct debits, as detailed in this blog: political reporters are you out of touch copied here for ease.

“Political reporters: are you out of touch?

I watched the government’s gas and electricity press conference on Sky news yesterday. It’s a massively important subject that’s blighting the lives of many across the UK, so the prime minister and cabinet ministers were there to answer for their strategy. As I listened to the announcement, I was met by a raft of good and bad, with many serious issues that needed addressing (for an example see my last blog, ‘Does the PM understand Direct Debits?’).

The first reporter to ask a question was the BBC’s political editor Nick Robinson who asked “how quickly will these measures take effect and will there be a windfall tax?” Perfectly reasonable stuff…

Then the next two said:

“Do you regret not calling an election last year?”

“On the anniversary of 9-11 what do you think of terrorist measures?”

My point on highlighting it isn’t that their questions weren’t valid, but that they had been asked countless times that week already and the issue of energy direct debits, which is crucial to millions of homes in this country, is rarely mentioned and this was its chance.

In fact there are still holes in the policy now which are slowly being addressed. Perhaps more attention and focus then may have helped.

The idea that we should try and create a consumer manifesto came from this slight pet peeve of politicians’ perception of public interest being dictated by what the media are focused on in Westminster.

It took a while for the ideas to crystallise and it was only after the savings interest petition that we came up with the 50 words concept. But I’m really glad we got it done, and it’s one of the things on MSE I’m most proud of.

Thankfully this site is now so big (we’re looking to top 9m unique users this month) the message can get out there anyway.

Comment and Discuss

Taxi drivers: do they give you blank receipts?

I’ve just been sorting some expenses receipts out , some for trips for TV progs, others on MSE business. A mid the lot is a range of blanks from various taxi journeys. It’s often when I get out of the cab that I ask for a receipt and they just give me a blank. Now obviously this isn’t a big deal – but thought I would have a mini-whinge.

Now while I appreciate that some like this as they ‘fill in a little extra’ or get an extra receipt, it’s not something I feel comfortable with (though in a rather wimpy, way if a taxi driver says he’ll give me a few blanks I don’t object. I feel it’s slightly insulting to them and I just don’t use them).

Yet when it comes to filling in the receipt, for a legitimate journey, I always feel guilty like if I’d done something wrong. I never know whether I to try disguising my hand writing, or what to do in the signature box: pretend to sign it or not?

Comment and Discuss

Savvy consumers?

There’s an interesting piece in marketing magazine this week (it came up in my press cuttings) about the degeneration of the power of sales. Here’s an extract:

According to Julian Reiter, managing director of marketing group Positive Thinking, the middle class – the backbone of the British economy – now expects a discount. “Sales don’t have the same impact anymore and when consumers are expecting a 70% discount all year round, it’s a big challenge for brands,” he says.

Shopping it seems has lost its position as a leisure pursuit. Adele Meer, planner at ad agency Archibald Ingall Stretton, says that far from being the relaxed pastime it once was, consumers now “stealth-shop”, using their smart phones to research their purchases and “raising an army of mini-Martin Lewises” to secure the best deals.

In response to this, in the US, clothing retailer Gap has sought to placate consumers who are withholding their spend until sales periods with the introduction of a loyalty scheme called Sprize. It puts ‘Sprize money’ in a customer’s account when a product they have bought goes on sale at a reduced price within 45 days of purchase – in effect, paying them the difference between the full price and sale price. Such tactics not only stop consumers feeling cheated, but, crucially, tackle the issue of them indefinitely deferring or putting off purchases.”

I know some grammarians will first want to argue what the plural of Lewis is. More interesting is the fact that retailers are starting to notice the change in consumer patterns.

Two and half years ago we coined the phrase ‘voucheristas’ to describe people who pick where they’ll eat depending on what restaurant vouchers are available. The trend of the savvy shopper soon followed. I remember trying to describe this attitude for the first time in an interview in Christmas 2008. It went something like this:

The real aim of many now is to be a savvy shopper. Retailers want to draw in new customers, without cannibalising their existing trade, so they use discrete sales – in other words sales that don’t hit everyone. This is done in two ways – either by the launch of discount codes and vouchers or one day type sales. This way they can draw in new customers but limit the cannibalisation effect on existing ones.”

It’s taken two years but ‘consumer savviness’ now has an impact at a macro level. The next phase will be to watch the response from the retail and branding industry. Competition has increased consumers’ bargain and discount expectations. Not meeting those could see retailers suffering a serious drop in custom. Yet for the sake of profit they’ll want to retrench, so what happens next?

As always in the adversarial consumer society there’s a flick flack as to who has the upper hand. Soon retailers will hit back, and then consumers will have to come up with new strategies. Interesting times…

Comment and Discuss

Always check the URL

So someone’s sent you an email, and it looks genuine, but you’re not sure and are tempted to click a link…

The first rule of course is don’t! Google the website and then click on it (though sometimes Google can produce misdirecting results).

I’ve just been glancing at some of the ENORMOUS amounts of spam to some of my public emails (100s a day) – so I thought I’d quickly explain two very basic rules.

Rule 1: Ignore what the link says

By simply ‘hyperlinking’ text you can make the link say anything.

This can be done legitimately…

Compare Mobile Recycling Prices

Yet it can also be used to deliberately confuse, try this…

http://www.bbc.co.uk

To spot what the link usually is, move your curser over the link and you’ll see the real destination appear (either in a little box or somewhere else on your browser screen, look around).

Rule 2: It’s the end bit of the URL that counts, not the beginning

The URL is a site’s web address, it’s the bit in the browser bar when you click to a site (or as explained above what you see when you hover your mouse over it).

To work out which site you are actually being sent to, what you need is the bit just BEFORE the .com or .co.uk or .tv etc.

So in the link :

www.moneysavingexpert.com/budgeting,

it’s the moneysavingexpert.com which lists the website name, but it’s not always that obvious.

Now look at this link, a common bank scam type:

www.abbey.onlinesignup.com

While it’s easy to think it’s an Abbey link, it isn’t, it’s a link to a site called “onlinesignup.com” – DOTs are used as separators and anything before the last DOT before the .com is irrelevant.

Confused? Let me use some examples to help

Look at the link for this site’s forums: http://forums.moneysavingexpert.com

The bit before the first dot is simply a name of an area on the site, it’s the bit at the end that counts.

Try the ones below to see whether you know where it’s going:

• http://moneysavingexpert.forums.com – is not this site it’s forums.com
• http://www.moneysavingexpert.1.com – is taking you to the link 1.com (doesn’t exist), not here
• http://www3.moneysavingexpert.com - could be taking you to moneysavingexpert.com (as it’s the thing before the .com).

Therefore when checking sites out always look for the bit just before the .com to be (mostly) sure where you’re going, though remember web scammers develop new tricks every day.

Comment and Discuss

Genius Marketing: DVD bargain buckets

Next time you walk into a supermarket and see a DVDs bargain bucket by the till, stand back and admire its amazing commercial genius.

It’s a seminal piece of differential pricing and that’s the holy grail of retail. It means you charge each customer a different price depending on how much they’re willing to pay – maximising all possible revenue.

An example …

Walking into Morrisons this week I perused one of these bargain buckets, which included the following DVD trio (I didn’t buy it). So out of interest I went to price the same DVDs at a DVD retailer, on the same day …

DVD Trio: one DVD three films. Total price £3.99

American Gigolo
An Officer and a Gentleman
Ghost

DVD separate HMV online prices. Total £18

American Gigolo £8
An Officer and a Gentleman £7
Ghost £3 (it was on sale)

This isn’t about the cost of HMV. Other DVD stores, including many online, are similar. The reason for the difference is about which type of customers are purchasing. I’ll call them ‘browse’ and ‘destination’ buyers.

• Bargain buckets are ‘browse’ impulse buys.

No one hits a supermarket to find what’s in the DVD bin. Three-films-in-ones are there to attract impulse custom; hopefully one of the trio will hit, so you grab it. They can’t price higher, because on impulse buys the demand shrinks radically with price.

• DVD shops are ‘destination’ buys.

If you’re in a DVD shop, you’re there to buy a DVD. That captive custom means prices can be higher. As the demand is focused, they can charge higher prices. It’s not I want ‘a DVD’, it’s I want that ‘American Gigolo’ DVD.

It’s no coincidence it’s DVDs (or CDs, books or video games) this works so well on. It’s because the actual physical disk and packaging you get is super cheap – the real cost is the film production. So even selling at £3.99, there’s a profit to be had.

Of course this doesn’t happen with new films, as there are more destination than impulse buyers and they would then run the risk of cannibalising their direct custom (the chance of that with old films is slim).

So, quite simply, the marketing here means you pay much more for the same thing because of why you want to buy!

Comment and Discuss

Also see Genius Marketing 1: Free credit on mobile phones

Citizens Advice Bureau awards

Last night was the Citizens Advice 70th Birthday Awards and I was touched, surprised and thankful to pick up a special, unscheduled, award for Citizens Advice Champion of the Year.

What’s most moving for me is Citizens Advice is the original consumer champion. The fact it manages to attract 21,000 volunteers shows its appeal, and in today’s world we need all the advice we can get.

My main relationship with Citizens Advice comes in the field of debt, as those who hear my constant mantra that “get help from one of the non-profit debt counselling agencies” can’t have failed do note (see the debt help guide).

This is echo’d by the MSE Charity also makes grants to many local CABs for specific projects. And the positive feedback on how it’s saved or rescued people is unending.

Yet of course the CAB does more than that, it provides legal help, consumer rights guidance and a whole array of info.

Princess Anne

As patron she made the key speech last night. The speech itself was strong, but of course it could’ve been written by someone else. You do always suspect with patrons that their main job is to look good on headed letter paper.

However that isn’t the case here. In the reception beforehand I was introduced to her and was delighted to hear how much she genuinely knew about the organisation, and she’d personally registered the fact I recommended it on air, which again indicates an active rather than passive role with regard to the organisation.

This moved on to a discussion about debt, loan sharks, and what to do about it, and while its easy to assume the Royals live in a different world, she proved that wrong. She has a grounded knowledge, is interested in current issues and aware of the suffering of people. Though when it got on to my Milionaire Appearance for the CAB – neither she nor anyone else there could answer the £250,000 question we were stumped on.

A veritable who’s who of the finance and advice world

The whole evening, meeting volunteers who do the grindstone work and hearing about the impact, was fascinating.

Yet there were also more than a smattering of the great and good, from the FSA, banks, Pfeg and more.

On my right was Ann Abraham, the Parliamentary and Health Service Ombudsman. I had a very enjoyable in-depth discussion with her, learning a lot about administration, tax credits overpayments and more – all of which falls into her domain. Though I did feel a bit mean on poor Mrs MSE who had to listen to my nerdiness.

A little further round the table was John Fingleton, the head of the OFT. I didn’t get to speak to him a lot; the last time we bumped into each other was bank charges day, but did manage a small conversation about the ongoing public spat between Ryanair and him.

It’s a charity

Perhaps the most important thing to remember about the CAB is that it’s a charity. Millions use its services each year, and I think many believe it is a government-funded body. However much of its income does need to come from donations, and that’s crucial.

In the next year it hopes to set up a telephone version of its service and that’s going to be invaluable. We now live in a world split between web and off-web information. Hopefully the CAB’s new service will help bridge that gap.

Comment and Discuss.

Genius marketing: mobile top ups

Let’s stand up and applaud the sheer genius of some marketing campaigns and their Machiavellian knack to make us feel like we’re getting more for less (while often we get less for more).

Over the next few weeks I plan to write a few blogs on my favourites. I’ll start with mobile phone companies giving us ‘free credit’.

Here are two examples:

• Prepay International calls card (spotted in a newsagent’s window near my home)

The Marketing: Buy a £5 card and we’ll give you £6 worth of credit, buy a £10 card and we’ll give you £13 (do note £5 is the minimum card you can buy).

The Problem: To be a true promotion you need to be given more calls than usual. This would usually be a reward for topping up a larger amount, or a short term deal. Yet in this case a fiver’s the smallest card available and this deal’s been on for at least a year.

The Reality: In effect the price list is misleading. If the standard listed tariff is 20 minutes of calls to the USA for £1, a £5 card should get you 100 minutes. Yet the ‘promo’ means you get 120 minutes. The truth is their base price is actually 24 minutes per pound as the fiver deal is the basic package anyway. And this is the figure you should use when compared to other deals.

As for the £10 deal it looks like you get an extra 30% with it. In truth it should be compared to the £5 deal, and that means only an extra 8%.

• Tesco Mobile Pay As You Go Top Ups

The Marketing: Top up £15 a month and we’ll give you an extra £30 worth of credit on top.

The Problem: The promo here is genuine, as you’d get fewer minutes if you topped up with a smaller amount (Though £10 top-ups are still ‘doubled’).

Yet it’s still superb marketing, as the bonus is only when compared to Tesco’s own price range, which is actually pretty expensive at standard rates. While the deal itself is actually pretty competitive (though compare first with the cheap mobiles guide), the marketing smears the icing all over the cake.

An exaggerated example will explain this…

Option A – price cheap

Standard Price: All calls 5p/min – all texts 1p
£10 top up buys: Either 200 minutes or 1,000 texts

Option B – promo speak

Standard Price: All calls 20p/min – all texts 4p
Promo: Top up with £10 and we give you £40 worth of credit
£10 top up buys: Either 200 minutes or 1,000 texts

As you can see both the options are exactly the same in terms of price. However the first isn’t strong marketing as most people don’t know the actual prices of calls and texts so their parameters for judging the deal are weak. But the buy £10 and get £40 offer in option B seems fantastic.

The value of the promo can only really be looked at when you see the actual cost of minutes and texts, yet many will buy due to the marketing.

Comment and Discuss.

Consumer issues

It was a seriously political day for me yesterday: before going to meet Ed Balls (see Meeting Ed Balls on Financial Education blog) I was at number 10 for a second time (see my a trip to Number 10 blog) to have a quick meet with the PM’s special adviser on consumer issues.

In many ways this was more of a catch up meeting than a specific agenda and we talked through a few subjects, the main being:

• Bank Charges

In the political world, many parties see charges as the key issue. The PM has said he wants fair charges, which is a euphemism for bringing the cost down and making them per day not per transaction. Both of those are good news and I suspect we’ll see movement on that quite soon. The premise is if the banks don’t fall into line he’ll go tough and try and bring in legislation.

The main point of discussion was where we’re going now with bank charges reclaiming. I explained that we’re still in the midst of working on the new guide, which will focus on taking the ombudsman route. I hope the fact bank charges reclaiming hasn’t been totally kicked to death may add a touch more pressure to the banks when they’re negotiating on future charges.

• Credit Card Changes

There’s a big consultation ending next week on credit card charges which may do some good (see the credit card overhaul deadline). We’re going to be submitting an MSE response to it and I will put that on the site when it’s done.

Of course the issue here as with many things is what can be done pre-election and what would need legislation. Actually quite a few of the less radical ideas could be implemented by agreement – in a similar way to the credit card summit, which the powers to reject credit card rate hikes derived from.

• 50 words

While there, I wanted to hand over a draft of the 50 words manifesto which we’re hoping to launch next week (see the 50 words rule changes forums suggestion). Hopefully the Prime Minister will take a look at it and give it some thought.

My main perception after the meeting is that consumer finance is quite high up the political agenda at the moment; it’ll be interesting to see if it becomes a battleground in the election.

Comment and Discuss.

P.S. Reading this blog back made me think how much things have changed since my first ever April 2005 blog

Meeting with Ed Balls

I was invited to the Department for Children, Schools & Families today for a chat with the Secretary of State, Ed Balls MP. I must admit I smiled on the way in. For nearly ten years I’ve been whinging and ranting about the fact we desperately need financial education in schools. And now rather than it being scrapped, it’s happening, it’s compulsory and there I was discussing the hows and whats, not the ifs and whens.

Why it’s so important.

We’ve been a nation that educates our youth into debt when they go to university but never educates them about debt. The state-enforced borrowing by students has diminished the stigma of borrowing. Yet we never explained to people how debt works, how to borrow correctly, and how to choose who to do it with.

It’s therefore no surprise that with a debt illiterate nation we’re second in the world cup of borrowing after the US.

The truth is many students’ parents are themselves in the mire of borrowing and there’s a worry that these bad habits will be passed on. Financial education is crucial if we are going to break this cycle.

That’s why it’s joyous that it will be a compulsory part of PHSE from September 2011 with different age groups learning different things. (More in my BBC financial education appearance blog and Personal Finance Education to be compulsory MSE News) though of course there are still some substantial practical challenges like what’ll be taught and the need to teach the teachers.

It must be about training up savvy consumers not just a nuts and bolts approach

My concern is that the education will be very straight. The risk of that is it’ll leave children unenthused and it won’t equip them for our hugely competitive consumer economy. It needs a little pizzazz.

My view is informed both by working on the Teen Cash Class Financial Education guide and by the brilliant feedback received in the What to teach kids about money forum discussion.

So content and delivery are the key. Many of the current education programmes out there focus on the practical way things work rather than understanding the hugely competitive consumer marketplace that we live in.

Let me give you a couple of examples

Traditional Approach: At the age of 6/7 you teach children about the different types of coins and how they work.

My View: At the age of 6/7 you take a child into the supermarket and explain in a very simple way that the reason there are sweeties by the till is because a company’s job is to make money. So it puts the sweeties there so you will ask mummy and daddy to buy them for you, and it can make a bit more money.

While the traditional view is very important it tends to focus on how to functionally deal with money, not about being a better consumer.

Compulsory financial education

Schools let banks in to set up branded mini-branches. While this is great on the practical side it’s a nightmare for competition. The old stat is you’re more likely to get divorced than change bank accounts, so allowing banks in schools to sign kids up can be very profitable if the customer sticks there for the next 50 years.

Instead if you want banks in schools then there need to be 10 different ones. You also need to explain to the kids that banks are there to sell, not to help, and give them an arsenal of information to help choose the best one. Then remind them not to think of it as a done deal: keep watching the terms and if it gets worse, ditch and switch (more on how to teach kids this in the Teen Cash Class guide).

The good news is the Minister was very receptive to this. In fact I’d go as far as to say he seemed totally on board; I think this is a big personal issue for him too. Then again of course, before the Education brief he was at the Treasury, and finance is his bread and butter.

None of this is about wanting to step on others’ toes. The likes of PFEG do a fantastic job and are working full speed on the curriculum; yet the big financial institutions are playing a role in steering the education agenda and it’s important other perspectives are given too.

Having done the ‘what we want’ it was then ‘what they want’

I’d already explained before being invited in that this is a passion of mine, so when the Minister asked whether I would be willing to help my answer was quite simply yes; anything to push and help make financial education work and be effective.

The Teen Cash Class is already something where I’ve waived copyright for educational use, and we’ve now agreed to look at working on some of the themes in the teen cash class and see how these could be incorporated into the work that PFEG and others are doing, and look at using some media outlets to push the message out too.

I’ve also agreed to do some talks at conferences to teachers, and even to film a video to enthuse them about the new course. After all, this is all good on paper but unless teachers are given the time, help and passion for the subject the whole thing will fall down.

And I hope that’s just the start – in many ways I think this type of education is the biggest change in our attitudes to finance for years.

Comment and Discuss.

Share your stand up jokes

I ended up watching 20 min of Tim vine on the comedy channel last night… I’ve always been a fan of his machine gun one liners, there’s something amazing about the gradual build of silliness that works.

My favourite (best if said out loud):

“I saw a man in a restaurant snogging a shrimp – apparently he’d just pulled a muscle.”

As a long time ago in my youth (well early-ish 20s anyway) I spent a couple of years doing stand up as a hobby, playing the London clubs. I almost had it all: stage presence, a loud voice, silly hair. I was only lacking the ‘being funny’ bit or it would’ve all been great.

So last night I decided to try and see how easy it was to come up with his joke style (much to Mrs MSE’s distress in a sounding board role). The answer: not very (which is good as I’m going with his brother to see him live next month, so it adds a level of respect).

Here were my paltry attempts…

“I was in a shop the other day, they put the heating on full blast, I complained to the manager ‘it’s over 90 degrees in here’ he said ‘stop being so obtuse!”

“I went to try new equipment at the gym the other day; it just shouted at me contradicting everything I said – apparently it was a cross trainer.”

“It seems they’ve finally found a cure for erectile dysfunction – that was a long time coming.”

Yet while they’re very poor, there’s something very cathartic about the attempt, so I thought I would see what MoneySavers can come up with (via the comment link) and see if you enjoy the process as much as I did.

Originals only please (if mine have any resemblance to any other jokes written before it is purely unintentional and coincidental I promise).

Comment and Discuss.

PS. Having written this I got an email from Mr. Vine senior (aka Jeremy) to say he enjoyed the obtuse joke and that lovers of Tim’s humour may enjoy this www.murraysworld.com/forum/chit-chat/tim-vine-jokes/

Artist's Impression

If you watch GMTV tomorrow morning, you may note I’m not wearing my wedding ring, and have slightly red-rimmed eyes.

Yesterday was a mega filming morning at GMTV to do the Money Makeover special. Yet in the midst of that kerfuffle and a huge range of slots, at 11.45 I looked down and felt my heart sink, as I realised my ring was missing.

Now I never take the ring off, ever, and it’s far too tight to fall off.

In my despair I told the lovely producer Camille (whose wedding anniversary it turned out to be) she distinctly remembered seeing it on my hand during the Tues live show, so I knew there was no chance it was at home. Then I had the instinctive memory of fiddling with it earlier in the day, but where and when I couldn’t remember.

Worse still, as the Lorraine element of GMTV is sometimes recorded and this week was one of those, I only had about ten minutes before I was back on air – so Camille volunteered “you focus on your work – I’ll look for the ring”, and quickly mobilised a few people to help out and send an email round.

Then I had to go on and record deals of the week – if you watch it tomorrow you’ll see I wasn’t exactly on form – I was more than a little distracted by the thought of how to tell Mrs MSE the ring had gone.

Then it was back to the hunt. The folk at GMTV were fantastic; I’d never realised the emotion of losing such an important sentimental item before. Thankfully some bright spark had the idea of checking the tapes back; I’d done Tuesdays programme live and recorded slots for Wed before realising I lost the ring. It turned out I had it on during Tues show, but not in the Wed recording.

That was a massive help for narrowing down where it could be – so with the kind help of two more of the GMTV team I retraced my steps and started the hunt – focusing straight away on the internal ITV Starbucks (much cheaper than the real thing) where I normally go to work between slots – and there it was sitting on the table – after a brief group hug I literally breathed a sigh of relief.

Then it came back to me, I’d been so tired after a succession of early mornings and late nights that rather than my usual work focus, I’d taken five minutes to have a breather and been playing with the ring there. Quite simply I’d taken it off, laid it on the table – then got a call to come back to the studio and in my rush just left it.

It’s now firmly back on my finger… and never coming off again (I hope).

Comment and Discuss.

TV's great questions

I’m so enamoured with the two, I feel obliged to swerve away from Money Saving for a second to introduce the shows to those who aren’t aware of such programming genius.

Being Human is a BBC3 (and BBC1) drama about a vampire who’s trying to give up blood sucking (aka an addict), a werewolf who hates his dark side (aka someone with anger issues) and a Ghost (aka an agoraphobic) who share a house.

Misfits is an E4 drama about a group of Asbo youngsters doing community service who, due to a storm, are imbibed with mystical but not necessarily useful superpowers (e.g. the attractive promiscuous girl who if she’s touched by a man he instantly wants her in a pseudo-rape way – or the boy who already has no friends, unwittingly becomes invisible).

Both stem from the joy of supernatural social outcasts and the mundane nature of their lives, interspersed with a touch of fighting, violence, gang warfare and tribalism. And while I like Heroes, which you could put into the same genre, it isn’t in the same league as these two home grown British joys.

If you’ve never seen them, they’re worth the effort, get hooked and enjoy! It’s free (unless you’re watching on subscription telly) entertainment.

As for which is best, currently Misfits is a touch ahead, but I suspect that’s because it’s the one I watched most recently. A new series of Being Human starts tonight (I’m writing this on Sunday) and that may swing the pendulum (though I may not be able to watch it live due to three early morning GMTV starts).

Comment and Discuss.

We’re re-launching the site masthead this week, with a new clearer look. As part of it we wanted a different pic of me which fits better with the new style.

During the discovery process I’ve discovered something bizarre about myself.

If you flip me I go all wrong!

First we found this pic which we thought when cut down and cut out may suit:

First try

Yet the problem with it is I’m facing the wrong way, and if used, I’d be looking off the left of the screen (as you look at it).

So the easy solution was flip it… but when we did that horror ensued:

Second try

While I’ve always known I’ve a tiny bit of a skew whiff smile, when flipped, to my view it becomes enormous, a bit like the Joker in Batman.

What is tough to understand is why it works that way , is this just because I’m unaccustomed to seeing myself that way round, or is it something more?

So I had a quick look at other shots, and they’re similar, this being a case in point:

Third try

While it’s a pretty hideous picture anyway, when flipped it becomes magnified:

Fourth try

A bit of photoshop

After much humming and ha-ing and running through the various shots that are high quality enough and that we have copyright of, we still drew a blank.

So it was back to the original shot. This worked, but this time we flipped it and MSE site designer Darren photoshoped my wonky smile down a bit and that’s the version we ended up with:

The final pic!

Yet this is taking it a step too far…

Darren, being the wag he is, then decided he should take it a step further and took it off his own back to decide to solve my “thinning hair issue”… nuff said, it won’t be used, or maybe…

Darren's version

Comment and Discuss.

Marriage tax breaks: did I rig the poll?

“Poll started 05 Jan 2010:

Should married couples get a tax break?

It’s hit the political headlines, but is it right for the tax system to reward the institution of marriage?

Which of these is closest to your view?

A. Yes. Marriage should be rewarded. 65% (7343 votes)
B. No. Though stable relationships, married or not, should be rewarded. 9% (1041 votes)
C. No. Relationships shouldn’t play any role in the tax system. 26% (2925 votes)”

While I had suspected the strength of feeling about married couples’ tax breaks would lead it to win, I thought option B would’ve been a close second.

Did I unintentionally rig the poll?

While thinking about this, it occurred to me that the way I drafted the options may’ve substantially influenced the result.

It’s a common theme in polls and surveys (Sir Humphrey’ once explained it in Yes Minister, far more eloquently than I ever could).
I suspect had option B been tagged as a positive rather than a negative, a chunk of those who support the policy would have shifted their votes towards it.

In other words would the result be the same if these had been the options?

A. Yes. Marriage should be rewarded
B. Yes. Though stable relationships, co-habiting or not, should be rewarded
C. No. Relationships shouldn’t play any role in the tax system

Of course I’ve no way of knowing this, but instinctively I think people who approve of the general principles probably just click yes without reading the other options.

When I write these polls (or the team do), we try to write them with best result in mind. Though sometimes it’s tough to work out the impact until afterwards.

Comment and Discuss.

P.S. A personal perspective

While I don’t believe we should always legislate for exceptions, I do think it’s important we establish that the ‘traditional family’ model can be quite different in modern day society.

I lost my mother just before I was 12. If this system had been in place, and a family suffered the tragedy we did, would it mean that it could have added a further financial impact? On top of losing one parent’s income, would it implicitly have re-categorised my father to a single parent and thus lost him the tax break too?

Finance education appearance criticised

Just read the following post in the forum by MoneySaver Girleight… taken from something she’d seen in the Guardian…

Hadley Freeman bizzare Simon Cowell comparison criticism in Guardian

Heck, on BBC Breakfast News on Sunday morning, the station hauled in a financial expert to get his views on a story. And who was this “financial expert”? Why, none other than “Martin Lewis, financial journalist”. All you fellow aficionados of daytime TV will no doubt have shared my shock at this – after all, Lewis is not just any “financial journalist”, he is GMTV’s financial journalist. His appearance on the BBC is like Simon Cowell being asked to play a part in the upcoming government: ie, a sign that a venerable institution is stooping down and beseeching for help from the cheap seats in the hope of catching some of that populist bug.”
http://www.guardian.co.uk/commentisfree/2010/jan/06/hadley-freeman-daytime-tv

Does anyone know what Martin was talking about on Sunday? Unless it was some irrelevant issue it seems a bit odd to criticise him for being populist and to suggest that the BBC shouldn’t interview him because he’s popular!

So I clicked through and read the article, which turns out to be quite funny. But before I get onto that let me answer Girleight’s question.

“What was Martin talking about on Sunday?”

I was on BBC breakfast on Sunday morning (when there is no GMTV) talking about financial education in schools. The reason was the government had firmed up its announcement about compulsory money lessons (see Personal Finance made compulsory MSE news).

I’m passionate about this subject and have been working and campaigning for it for years (see teencashclass and the MSEcharity). So when the Department asked me I agreed to give a supportive quote:

Finally we’re getting somewhere. Like many nations we educate our youth into debt when they go to university, but the disgrace is we’ve never educated them about debt – no surprise that over the last 20 years we’ve dug a hell hole of personal borrowing problems.

This is a welcome first step, we must ensure no child leaves school without knowing that a company’s job is to make money and sell to them; how debt works and when and how to do it safely, and that we live in a competitive economy and by knowing how your cash works you can lead a better life.”

However as the details are still loose and I’m meeting Ed Balls about it next week to hear more, I carefully worded it to support the concept rather than the specifics (you can see the full Govt press release here).

The Guardian piece

Well I shall leave for a start the philosophical question of ‘does a breakfast programme count as daytime TV?’

I thought it a nice fun piece, though in my case the hack who wrote it does seem to have a bit of a case of pigeonholeitis. To give you an example of what I mean: Is Stephen Yardley… the man from family affairs …the man from Z-cars …the man from Howard’s way? The correct answer depends on your age and perspective, not on him (or perhaps to you he’s just not famous).

Actually I do have regular BBC and Radio 2 slots. I do Radio 1 & 4 as well and have appeared on many other programmes e.g. Watchdog & The One Show. Of course where she’s right is that I don’t do BBC breakfast often. I’m proud to be a regular part of the GMTV team and think it would be discourteous to appear on its direct competitor, unless it’s for a news story I’m directly involved in (rather than commenting on).

Yet pigeonholeitis is very common. When people meet me in the street they tend to only ever mention one specific outlet whether it’s this site, Tonight, News of the World, Radio 2 or even Countdown and consider that’s my sole work. The same happens when leaving the GMTV green room. Guests often say “lucky you – finished for the day”, whereas as it’s a Tues, the day we send the email, I’m usually coming to MoneySaving Towers for another fourteen hours of work.

Anyway enough of this, I’m rambling, back to work (whichever one you choose).

Comment and Discuss.