Martin’s Blog…

I never thought I’d write such words, but it’s true. I received a text from the MSG the other day, who as she was interviewing The Hoff about his new film for Five News, had been given strict instructions to tell me everything. Her text included, “The Hoff thought I was hot and was very disappointed to hear about you, xx”.

Of course I decided this gave me ultimate bragging rights… sadly though the MSG revealed perhaps it isn’t the greatest compliment (and anyway he can’t have her!)

Let me relay the story. She walked in to the interview room and immediately the Hoff said, “Wow are you the interviewer? Finally a good looking reporter!” Then as she sat down, he said, “You must be married? Engaged?” he then looked at her hand, saw no ring and said, “or got a boyfriend?”

At which point (thankfully) the MSG replied, “Yes, I have a boyfriend!” Then it was on with the interview, as normal.

Now before you think this is conceited of the MSG, the key point of why I’m relaying this (apart from bragging) is what happened next. During the interview she asked him, “I hear that you’re looking for an English girlfriend?” as it’d been reported in the papers last week, to which he replied, “I’m looking for anyone…. English, Irish, Iranian, I don’t care…. anyone!”

It seems perhaps my “The Hoff wants m’woman!” cry is not quite so unique!

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No chance mate!!

There are always hoards of people waiting as I leave the LK Today studio; not for me, but queuing to see the Sharon Osborne Show be recorded. Walking the 100 metre gauntlet to the car (TV companies always send cars, so the producers needn’t worry that you won’t make it) is always strangely worrying as many cry “who’s he?” to be answered a few seconds later with “ah… it’s nobody”

Today as I left, I had a quick joke about it with the regular guy on security. Standing next to him, towering above us both, was a huge chap in a black suit who, with a big smile, said “Hi money man, always watch your programmes they’re great - tell you what I’ll walk you down to the car.” So as we were walking and chatting I asked him “so what do you do here?â€?, thinking he was part of the GM-TV security team, but his reply was “I’m Sharon’s minder”!

Maybe next week I’ll hold my jacket over my head and run to the car, to see if it gets the crowd thinking I’m Robbie and screaming!

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On Friday morning I interviewed the Chief Executive of Royal Bank of Scotland (RBS) Retail Banking for the ITV1 Tonight with Trevor programme I’m presenting on this evening (Monday 25 Sep). It specifically concerned the case of Richard Cullen - who sadly committed suicide with £140,000 of unsecured debts in early 2005.

Of the large number of credit cards he had, four were with RBS brands, with £35,000 of outstanding debt on them, costing £4,000 a year in interest. Richard’s salary was £15,000. At one point while the RBS branded card Mint was chasing him for arrears, another RBS branded card, Tesco, was increasing his credit limit. On the surface this sounds a clear cut case of irresponsible lending.

We must stop believing the banks will look after us

There are many debt junkies in this country (the term the Chief Exec of the British Bankers Association used when I interviewed him last week) and that of course makes banks the pushers. Yet we don’t blame shops for our over-spending - so why do we blame banks for our over-borrowing?

As site regulars will know, I believe we live in an Adversarial Consumer Society - a bank’s job is to make money, our job is to stop them. If we assign the banks the job of ensuring ‘responsible lending’ then it’s a dangerous path. This leads us to trust them, to believe that if they say we can afford to borrow we can. The best way to behave is to consider that the bank is the opposition, and to act accordingly. Always make decisions based on your own judgements, not what the bank says - why listen to the ‘pushers’?

Were the banks culpable in the Cullen case?

It’s a tough call - and the interview wasn’t easy to do - it was an emotional one for both of us. My job as interviewer for the programme was to interrogate the bank over its culpability and to examine all the issues. Yet with my ‘expert’ hat on - I’m used to being the interviewee not the interviewer - on this occasion I found myself asking challenging questions, but sometimes sympathising with the answers.

The Chief Exec defended the bank’s position. His view, rightly in my opinion, is this was a complex issue with the interaction of many banks. At the time this happened only ‘black data’ was shared between banks, in other words they only knew whether a person had “defaulted or missed payments on other accounts.” (These days there is more sharing of “white data” which actually indicates how much outstanding debt people have).

So someone rotating debts and getting new borrowing to pay off old borrowing (which is different to shifting debts to get cheaper rates) as this situation seemed to be, could quite easily be missed by each individual bank as there are no defaults on the system.

Therefore to be fair to RBS, it couldn’t have known the full extent of the indebtedness with the other banks - where there was another £105,000 debt outstanding. Yet, still, it did have £35,000 debts outstanding for a man who earned just £15,000. So even if we ignore the other debts this is a serious question. Its argument is the four sub-brands were all operating separately and thus weren’t allowed to communicate with each other - they were in fact separate companies. Again these days the system has changed. Yet when I put the question “are you telling me now that there won’t be anyone on £15,000 income who is lent £35,000?â€? of course he couldn’t say so.

Blame depends on your viewpoint

Whilst my view that ‘the banks are the opposition’ thus abrogates responsibility for the banks they cannot foreswear all blame. The truth is most people don’t think that way. One reason for this is a historic overhanging loyalty and feeling of pastoral care; the other is the fact that banks deliberately market us “advice, trust, guidance and a helping hand.”

They want us to believe them and come to them for information and advice. So, perversely when I examine it from my perspective they aren’t to blame, yet if you look through their hype then collectively (as with the limited info I have, I don’t believe any single lending institution is responsible for this tragic situation) they should bow their heads in shame.

It’s society’s problem too

When it comes down to it - this is a societal problem too. We are a nation that educates our students into debt, but never about debt. We provide debt crisis help but never genuine one-on-one independent help on how to borrow in the first place. Our TV screens are swamped with commercial debt consolidation and IVA agencies paying fortunes to pump out their message, yet our non-profit debt counselling agencies are underfunded and have to rely on unpaid media to get the message out - when much of that same media is being funded by the commercial debt advertisers.

My condolences to Mrs Cullen.

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Further Help If This Affects You: If you are in debt or worried about it, please read ‘Problem Debts: Where To Start’ which includes a checklist of what to do, information about non-profit debt counselling agencies, The Samaritans and Relate.

This wasn’t originally going to be a blog entry, it was a reply to MoneySaver Black-Saturn in the ‘New Stats about the site’ discussion who said “you must be proud”, yet after reading through it I thought it worth an entry.

To answer the question, yes I am really proud. I find the sheer scale of the site gobsmacking. I remember setting it up on the kitchen table at home, and getting my friends to look at it - most of whom said “why bother?” and find it staggering that that was just three and a half years ago.

One of the best moments, and beautifully it happens a lot, is when I read comments such as “this site has changed my life”. I’ll be honest, my heart (and probably head too) swells. Yet I think it’s important to say that “this site has changed my life” too, though of course in a different way.

It’s given me a financial independence from other work, (if you’ve not already read it do read ‘How This Site Is Funded’ so you can see how). I now have a team so much more MoneySaving research gets done. Plus the site and my personal profile have grown symbiotically, each benefiting the other - which has helped my career - and pushed my mission to get the whole UK MoneySaving along the way.

Yet in many ways the thing I appreciate most is that I have an unfettered communicative sphere. While TV, radio & papers are great and I love doing them, someone else always has editorial control and choice. Here, because I own the site, have no paymasters, nor advertisers to keep happy - I can say and do what I like, without interference, no matter who it pees off. Plus there’s no shortage of space - so I can indulge myself in some of the more nerdier explanations.

To not have a proprietor or editor saying what to do is a huge luxury as a journalist. Better still (and I’ll be honest, I do do this), it means if I’m doing a programme and they want me to do something I disagree with then I say “sorry I can’t because it’d be inconsistent with what I say on the site”. Thus it gives me the strength to maintain that integrity and independence through my work. Plus, ultimately as I no longer ‘need’ TV or radio - if it gets to a conflict I have the ultimate sanction of ‘walking out’ without worrying about keeping food on my table.

Within the last six months (and I won’t name names) I was doing a piece and I didn’t agree with one of the voice-over lines - it conflicted with what my usual advice is - so I refused to say it. The producer (as is their job) said “why don’t you do it your way, then do it my way and then we’ll use which one fits?” Now I made this mistake once before and of course they always use ‘their way.’ So I refused and only laid down my version. When (s)he said to me “what if the powers that be don’t want it? They might not show it”. I was in the very lucky position to be able to say, “then perhaps it’s best you don’t run it and you needn’t pay me” as I’d prefer a film not to be shown, rather than to be seen/heard giving out info I don’t believe in. Years ago I wouldn’t have had the bravery or security to stick with what I believe in, but “this site has changed my life.”

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I’m gobsmacked. We were just discussing the PruHealth loophole to get Free Gym Membership, which MSE Jenny had done in its original incarnation six months ago. Now her six months is over the fee has gone up to £43 a month, still cheap but she’s decided to run home for fitness instead. This was a bit surprising as MSE Towers is in West London and she lives in South London…. her comment “well it only takes an hour and a half to run home, the bus takes an hour, and this way I save the bus fare!”

Admirable - a bit scary - but admirable none the less.

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I’ve just come back from doing BBC Breakfast where I talked about mortgages following the CAB’s report that many are struggling to meet their repayments (watch the BBC’s Real Player video of it). I can’t applaud Citizens Advice enough. As I’ve discussed here before (eg in my blog House Prices Could Fall) I’m fearful we’re pushing ourselves further into trouble, with people overextending themselves on their home loans (if that’s you, do read the Remortgage Guide which could at least cut your costs).

My view is much of the problem has been caused by TV property porn shows. Many of the property gurus, often, understandably, work in the property industry themselves, and of course therefore are quite happy to see continued price rises. There’s so much of this on our TV screens that we’ve been hypnotised into certain beliefs about property ownership. Let me set out some of what I believe are the misconceptions:

We’ve been hypnotised to believe…

1. Property ownership is a right

If you don’t own a home, you’re seen as the underclass and renting is pooh-poohed as a dirty word. Of course in the long term home ownership is a good goal, yet this is confused with “I must immediately get on the housing ladder or I’m a loser.â€?

Yet by leaping into home ownership many people risk borrowing much more than they can afford, overstretching themselves and getting into financial ruin. A home is just another asset – admittedly an important one that provides us with security; yet a mortgaged home isn’t yet ours – fail to repay and the mortgage company can sell it from under you.

I’ve spoken in the past (see my blog) of my depression at meeting a couple of 21 year olds while out filming a Tonight with Trevor programme who believed they’d already missed getting on the ‘housing ladder’.

This is because we’re persuaded that this is the be-all and end-all of financial security. It isn’t. It’s one aspect, a solid aim, but so is having some savings, managing your money, and not building up other debts. There is a great danger that people are over-pressured into buying a home.

2. House prices can only go up

You hear this all the time, and when it’s challenged by a sensible ‘well property prices could drop’, many people reply ‘yes, yes of course that’s true but they’re not going to are they, especially not in (INSERT WHERE YOU LIVE)?’

That’s a very bizarre statement to me. I’m nowhere near clever enough to know what’s going to happen to property prices, and anybody who tells you they do know is talking nonsense. House prices may well continue to rise steadily or they may boom; equally they may stagnate, drop or even crash.

All of these are possible options in a market-driven environment, and the property market certainly is just that. The house price market tends to be cyclical and we’ve had a long-term run of price rises. At some stage we’re likely to have, at the very least, a cooling off - in fact I’d bet every penny I have on it. Yet I can’t tell you when this will happen, it could be this year, the next year or in 20 years time…. as I said I just don’t know…. nor in truth does anyone.

It’s also worth noting a continued house price rise isn’t necessarily the best thing for the UK. What we need in the UK is a sustainable housing market – one that’s affordable. At the moment there’s huge money flowing in from investors in the buy to let market, pumping up prices and taking them out of the reach of many people.

You may be saying “yes but I’ve made £100,000 on my house!�, yet unless you downsize this is only a paper gain you can’t spend it. Of course you could ‘release the equity’ in your home, as many have – which is great, though all it really means is you are increasing your borrowing and hoping there’s no drop in prices.

3. Not owning a house is a terrible thing for your finances

Charlie, the Breakfast TV presenter, asked me a question that reflects the view of many in the UK today, “but surely if you’re paying rent when you could be paying off a mortgage, you’re throwing your cash away?”

This is a precept that only holds true if you believe ‘house prices can go only go up’. If property prices were to crash, those who are renting would be the winners; they’re not locked into paying a mortgage that’s possibly bigger than the house’s value (i.e. negative equity)… So no, paying rent isn’t always the worst thing for your finances, though of course historically in recent times property prices have continued to rise, so it has been true.

Now don’t misunderstand me, I’m not predicting a crash, just saying it is one possible circumstance. Nor am I saying never buy a house nor get a mortgage; it’s more about being aware things can change. Arbitrarily forcing yourself into an unaffordable mortgage isn’t good, yet it’s increasingly common. Many who have a terrible credit history still find it sensible to borrow at 7% or 8%, a huge expense and potentially risking everything to try and buy a property.

Over a long-term period home ownership is very likely to be a boon to your finances. The market tends to rise over the long term (though nothing is ever guaranteed) so saving up for a deposit and getting an affordable mortgage to buy the home you live in, providing it doesn’t curtail the rest of your life, is wonderful. Yet having no spare income and eking out every last penny you can to try and own a property that you may not be able to afford in the long run can be a disaster.

4. If a mortgage company will lend it you can afford it

The average house price in the UK is £180,000. To get a mortgage for a property worth that much, as a single person you would need a salary of £50,000 and as a couple a joint income of £70,000. Now take a look at the UK’s average earnings of around £25k. This quite simply means that home ownership is unaffordable for many.

Yet of course if the mortgage company says it will lend us that amount, we must be able to afford it, mustn’t we? Baloney!!

Mortgage companies lend us what they consider to be a good amount to maximise their profits. As I always say, a company’s job is to make money out of us - not to be a beneficial financial friend. And just as credit card companies post ‘pre-approved’ letters through our mail boxes, even if we don’t need them, mortgage companies push us to borrow - it’s how they make their money.

Now don’t think I’m saying mortgage companies are irresponsible, on the contrary, they are very responsible… to their shareholders generally. Of course, they’re not stupid, they don’t lend people amounts that are totally impossible to repay. Yet if you’re left overstretched and desperately eking out repayments, they’re still making profits.

Better still for them, the fact it stretches people’s finances may mean it’s not affordable and could force you to take out unsecured lending like credit cards and loans, at a high rate, possibly from the same company, leaving them grabbing even more from your debts and profiting. Don’t worry though, if the worst happens and you can’t pay, the mortgage company will still be fine, it can always grab your house… why do you think it did a valuation in the first place?

Perhaps this is going a wee bit over the top. Many mortgage companies do show a level of responsibility. They’re not really my target, I simply want to emphasise that only you can really take responsibility for what happens. Many people get mortgages on the brink of their financial affordability, grabbing as big a house as possible in the hope of raking in oodles of investment returns.

Yet interest rates seem to be on the up - no one knows where they will go. So don’t ask yourself “can I afford the repayments?”, instead ask yourself “could I afford the repayments if interest rates rose by 2%?”… the answer for many is probably no (for more details on getting a sensible mortgage see the mortgage or remortgage guides)

Admittedly there is slightly less worry if you have a fixed rate mortgage as you’ve a couple of years’ or more protection in the event that rates rise, but on the back end you will still be at the mercy of the market.

If I have, well perhaps that’s a good thing. My aim isn’t to make predictions, just to try and undo some of the false assumptions we’ve been fed. House prices could continue their relentless march upwards, and then many will profit.

Yet equally things can go wrong. Plan for the worst and hope for the best.

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OK, I admit it, I’m obsessed. Ever since I started this site I’ve had a graph (pictured at the end of this). It plots how many new recipients of the weekly email there are. I update this diligently every day with the midnight figure….. OK, that’s a lie…. I update it about every thirty minutes to see the change. Worse still over the last few years, I’ve added lots of little extra lines to the graph. These are:

1. The Daily New Recipients
2. Total Recipients
3. Recipients during the last year
4. Average daily recipients during the last year
5. Rolling 7 day average new recipients
6. Rolling 49 day average new recipients
7. Rolling 100 day average new recipients
8. Daily percentage increase in recipients
9. Average daily percentage increase in recipients over the previous 50 days
10. Annualised version of the days’s percentage increase in recipients
11. Annualised average daily percentage increase in recipient over past 100 days
12. Percentage of recipients who have joined in the last year
13. Plot of the average number of people still needed per day to hit 700,000 by 31 December (though I can alter the target number and frequently do - actually 800,000 would be closer)
14. The average daily new recipients this calendar year.

I have to say there’s a surreal beauty in the way the lines harmonise. The daily chart vibrating with high frequency, resonating through to the rolling, averaged rates, it’s a cacophony of colours and statistics which I deeply enjoy. You must understand, while I’m incredibly proud of how the site grows, it genuinely is the movement and changes in the graph that I find particularly thrilling.

There are so many different interactions. Until a few weeks ago the shortest rolling average was 10 days. Then I noted that this caused an anomaly, as less people join the list at weekends; and thus on weekend days the average would plummet rapidly. Hence now there’s a 7 and 49 day rolling average - which adds a certain purity to the harmonics.

Ah the joy. Then again reading back on this I’m perhaps beginning to understand why the MSG looked at me strangely last night when returning in the car from Manchester - I was explaining our different average speeds each hour and how the sat nav’s predicted arrival time was impacted by this….

Nerd, moi?

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The graph itself (actually its one of three graphs mapping the same data, as different scales are needed)

Rumours (not true, but it makes us laugh) in MSE Towers are that MSE Dan (our superb pure money researcher) is The Hoff’s biggest fan. As Mr. Hasslehoff was on This Morning today, there was a wee bit of ribbing that, “everytime he said the word ‘and‘ it was really code for Hello Dan!”

Dan’s reply: “yep, he’s mildly dyslexic!”

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After the One show in Birmingham this evening I went for a drink with the team. I was chatting away to Nadia Swahala co-presenter of the show and my buddy after we bonded sharing a couple of raucous train trips back from Birmingham to London. I just thought MoneySavers would love her description of her mortgage - she laughed as she was saying it, it took me a second to work out what “the Australian ones that let you spend your house” meant….. normally flexible mortgages are “the ones that let you overpay, to clear the debt more quickly”, Nuff said.

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I’m just finishing off my final One Show piece that runs tomorrow night. It’s in the edit suite at the BBC in Cardiff, and I nipped into London Television Centre to do the voice over. The producers script the piece on the back of what I said on the day. I also send them some notes on how to explain the credit card shuffle.

The problem is I have the few lines of voice over - but as this is being produced in Cardiff, I’ve not actually seen the piece, nor do I know what clips are being used. I’m very protective about the pieces I do on TV. While the producers are great, this is a specialised complex film based on my technique that we’re trying to make simple, and I’m always concerned about making sure crucial bits haven’t been cut out for the sake of time or style.

It’s very difficult to do this without seeing it. And in the past (not on this show) when it’s happened to me before, I’ve watched in horror as I’ve been edited either in a way that doesn’t explain things well or that actually doesn’t make sense. Fingers crossed this will all be good, and I couldn’t ask for better people. The BBC Wales team (who usually do the consumer show X-Ray there) who have been making my films are fantastic, yet the fact I’ll only see it twenty minutes before the show, when it’s too late to change anything…. scares the pants off me.

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It seems a grandma’s wisdom overcomes all else. I’ve just got off the phone from mine…. one of my most important weekly duties is to list my TV appearances so she can ’see me’. Of course, as is her right, she complains that “I only ever get to see you on the TV, why don’t you come and visit me?” Truth be told, I do visit her. As she lives in Manchester and I live in London though, of course my visits are never often enough. Then again I’ve phoned her at least three times a week since I was thirteen, but she still always says “you will speak to me again won’t you?” so I suppose I should know the score.

Now my wonderful grandma is getting on a bit, but she still likes to look after me. Having told her I was on both BBC1 and ITV1 this week, she was delighted, saying “you’re doing well”. Yet she very quickly countered by starting to lecture me on the importance of ‘looking after my money’. I told her “don’t worry grandma, I’m very careful and my career is going well so all is good.” Yet she said “but Martin, don’t spend it, make sure you save some, it’s very important to save money you know.” The MSG was sitting beside me tittering slightly (she too is now ‘watched every day’ and gets rebuked if she forecasts bad weather!)

I did then remind her that my job is the “Money Saving Expert”, to which she conceded, “OK, so I suppose you know something about saving money, but just be sure you’re careful, and put it aside so you’re safe.” I couldn’t agree more grandma, and I’m starting to see where I get it from!

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“I’ve got a parcel for Mary Poppins?”….. muffled response…. “Oh sorry you’re Mama Mia, no problem.” I overheard this conversation today and just had to share it!

Anyway, as you may have noticed, (as noted in my previous blog) I was at Mama Mia the musical filming for the One Show. It’s all about a piece on the Credit Card Shuffle. Now I love to dance, but I’ve never danced on a West End stage before (or any for that matter) … and it was an absolute nightmare.

My problem was due to the ‘rake’. This is a new word for me. It seems stages are built with a slope on them to help the audience see the show; it was probably an incline of about 10%. It totally messes up your balance, puts a huge strain on the body and throws you off kilter. So if my nerves about dancing on the telly weren’t bad enough - this certainly stepped it up a level.

In the end I was slightly disappointed as I don’t think I danced as well as I can… I just hope it comes out OK next Thursday.

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