Martin’s Blog…

I was posed this by an Express journalist writing a story the other day. It’s an interesting question. On the whole call and text charges on the best contract mobile packages are substantially cheaper than the best Pay-As-You-Go packages (see mobile cost cutting article), afterall do it right and you can pay virtually no monthly fee - via cashback and get lots of free calls and texts. So on a purely financial basis, there’s no doubt, go for a contract.

Yet with a teen it isn’t a purely financial basis. First of all the contract will most likely be in your name not their’s, as a credit check is needed, and if they spend more than you want, it’s you who’ll foot the bill not them. All this would suggest that a PAYG mobile is much better for controlling and limiting expenditure, as while some contract packages do allow ‘monthly limits’ many reports say they simply don’t stop calling after a point, so the bill runs on and on.

So what’s the solution, value or control? Of course it depends on the teen. I hope my big sister isn’t reading this, but when we were teenagers, she tended to be a spender and I (no surprise) was a saver. Had we both had mobiles back then, I would’ve been under budget and her substantially over (then again that’s partly because she was much more popular than me!). So in some cases going for value will work.

Yet where you’re not sure here’s my suggested solution:

1. Get a PAYG phone.
2. When picking it, do the research with your teen to find the best package for them (see mobile cost cutting article). This in itself is a great lesson in how to be a good consumer. By letting them consider ‘how many text’s and ‘how many calls’ on ‘my budget’ it’s a good way to discover that money isn’t endless and is always a matter of ‘choosing between priorities’. It’s also really helps to show that getting the latest hi-tech phone, with many gizmo’s that will remain unused, may mean you can’t afford to actually make calls and texts!
3. Next get them to use it with their money. This is a great budgeting exercise. If they spend all the cash in the first two weeks of the month, well that’s it, there’s no more. It’s a very good way to educate them into the fact finance is finite.
4. Promise them that if they budget well and sensibly, don’t overspend on the phone and manage it well, then as they’ve proved you can trust them, you’ll upgrade them to a contract phone next year, meaning both you and they get better value.

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I was passing by McDonald’s the other day, when, near the straws and napkins, I happened to spot its brochure on nutritional explanations. Ok, when I say passing by, I mean passing by via the counter with my large fillet-o-fish meal, but let’s move swiftly on. I found this little, printed brochure fascinating. In it, there were details of the carbohydrate, fat, protein and salt content of its meals, both in actual terms and in proportion to the daily allowance (although no recommended vitamin levels), it also then pointed out that details were on each individual product’s packaging too…. something I hadn’t noticed before (not that I eat there regularly, of course).

What fascinated me was the explanation. In clear language it went through what the different types of food groups mean, how your body uses them and what this means for you. It’s this the credit card companies should sit up and take note of. As I’ve written about before (see message to politicians blog) the great call to help people with debts has been ‘more transparency’ - and eventually, in response credit card companies now publish a summary box when you apply. Yet for me this is nonsense, to throw complex figures and terms at people that they don’t understand is useless. It gives all the info you can possibly need, yet none of the info most people can understand.

Information without explanation is pointless, the summary box has been a triumph of transparency over understanding for most people. Yet this little McDonald’s booklet actually points the way. It’s well designed, colour coded and provides a good, but simple explanation of how things work. Rather than the bland, meaningless technical information of the summary box, a credit card version of this would actually work. A nice explanation, with the details for each specific card slotted in, rather than the box itself. If anyone from the credit card industry is reading, I’m happy to consult on this, (without charge or perhaps for a donation for the MSE charity fund) to come up with a standard that would genuinely help people. Let’s learn from Mickey Dee.

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PS. As an aside, one of the things that really interested me about this nutritional brochure was the fact to show the ‘recommended daily adult allowance’ they chose a woman who doesn’t exercise much. This means her calorie allowance is 2000 calories. This is fascinating, as it actually means the meals show up a larger portion of the days calories than necessary. They could’ve chosen an active man who would have a much higher daily allowance, making the calorie content of the value meals smaller. Whether this is so no one can have a go at it for it, and few people will read it anyway, I can only guess.

Now I can’t say I’m proud of this, well that’s a lie, it’s making me smile at the thought this morning. Last night I watched the end of I’m a Celebrity, and on it they discussed the fact that David Gest claims his maid is called Vaginica Seamen (my guess at the spelling).

Now as I was working, while it was on (as always) my computer was on my lap, so I quickly googled the name. There was only one web reference, in a Chat Forum. It then struck me that other people must surely be doing a search too. So I decided to place an advert on the name on google, paying a penny a click. The text is as follows

Don’t search for Vaginica
David Guest can afford a maid
Save money and so can you!
www.moneysavingexpert.com

I don’t know why I find that so funny. Yet sitting at my desk the next morning, I’m itching to get the ‘how many views and how many clicks’ stats!

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I’ve just received a six-page press release posted to me from chartered accountants MacIntyre Hudson, predicting new green tax measures in the next budget. MSE Dan received the same release, so did MSE Archna, MSE Jenny, MSE Andrea and MSE Brendan. All printed out, all on six sheets of paper, and all talking about CO2 emissions. To start with, in every journalist database I have “email preferred” as my choice of distribution. What shocking waste, and how ironic considering the subject.

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I’m probably going to seem like a rabid pedant, but this is one of my major bugbears. While watching X-factor this weekend young crooning contestant Ray promised to give 210% and later Robert promised 150%. Does this mean Ray is going to put out more effort than Robert? No, it means both of them are talking nonsense.

It is impossible to give more than 100% effort.

101% means you are making an effort beyond your actual capacity. Even if you are making more effort than was previously possible for you, then in fact your ‘effort output’ has increased, but you’re still giving 100% (though an effort level you may previously have described as 80% is now recalibrated as a 79% effort!).

Once we uncap the limit on effort, and permit beyond 100%, then watch the inflation effect, it’ll be 1000% effort or a million, or a billion or a googleplex percent effort – where’s the cap? It is meaningless. Of course you could say, I’ll give 210% of my usual average effort levels, yet this too is rather strange, and means the effort you’re giving now simply depends on your past effort levels, so a lazy devil giving 300% is making less effort than a constantly committed person at 80%.

Now you see what nonsense I’m talking too? That’s why it’s my bugbear, it doesn’t make any sense; we’re trading in the use of mathematics for nonsense. Millions of youngsters are hearing this arithmetical baloney as if it’s the norm and that does us no service. While I too, just like the X-kids, am deliberately exaggerating to make a point, a little thought about the language of mathematics goes a long way; the misunderstanding of numbers is one of the greatest contributors to debt and money problems in the UK.

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There I am, happily having blogged away since my very first “Tony Blair warmed my seat� blog entry in early 2005. Then, all of a sudden the MSG comes along and starts doing the same thing. I’m not happy with the competition.

Five News has asked her do a blog of showbiz stories (see the MSGs first blog), which means my reporting ‘back stage comments’ like the “The Devil Wears Primarkâ€? blog will go there, not here.

Sadly she also writes it rather well and amusingly. There may be war in our house… the two of us sitting opposite each other, steely eyed, trying to out blog each other… then again we may just play scrabble!

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I’m so embarrassed, it’s the first time I’ve ever blushed on the radio. I’ve had a nightmarishly busy day: made a speech, done countless interviews, got asked to write a major article for the Sun in only two hours, been dealing with the weekly email. Excuses over…. on to the tale…

I was on LBC radio (London commercial radio) talking about First Direct’s new account fee, when instead of saying ‘thankfully’ I said ‘fanny-fully’, out of sheer tiredness. I realised what I’d said and attempted to correct it with, “sorry about that, it’s about the worse slip of the tongue I’ve ever done’. Enough said. I want the ground to swallow me up.

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I was speaking to a friend the other day who’s just about to buy a house, using an interest only mortgage, maxed out to the hilt. When I asked why he is buying, his answer was, “because renting is just throwing money away isn’t it, I think it’s time to own my own property!”

I find this logic farcical (and in a friendly way I told him so). He is considering an interest only mortgage, because a repayment mortgage is too expensive, in other words, he’s not going to repay any of the actual debt, just service the interest each month. Yet his quote was renting is “throwing money away” - what’s this, chopped liver? All his plan means is simply giving the mortgage company the money instead of a landlord and he’s paying 50% more than before, so there’s less room for saving and/or repaying the capital.

On top of this, the mortgage will be at 95% LTV (ie he only has a 5% deposit) so as for “I thought it was time to own my own property” well sorry, but you don’t own it - the mortgage company owns most of it, and if you can’t repay (and they’ve absolutely maxed out borrowing) because of a change in circumstance or as interest rates go up; the mortgage company will simply take it back.

Now of course, if house prices continue to rise he will be able to sell the property and make a profit, then again if he continues to want to own property, the price of what he needs to buy will go up too.

I think we need to challenge the logic of the ‘renting is a dirty word’ myth; this isn’t the first time I’ve said this, I expanded in much more detail in my past blog (read here) but this brought it home to me. There’s nothing wrong with wanting to buy a house, but there are many people out there just getting a mortgage, not buying the house…. it’s time for a change in the way we think (also see the free Mortgage and Remortgage Guides)

Please be careful.

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Now some of you may know Gu Puds as the rather upmarket decadent pudding brand (see this) seen in the supermarket, but they have another, more sinister role. They dared challenge the MSE Towers team with overt bravado in a pool tournament.

You see Gu Puds also has an office in the complex where MSE Towers is based. At the centre of the complex is a bar/restaurant/coffee house where I actually do a lot of my writing (on the laptop, with the web turned off, with a coffee and some focus) which is running an inter-office pool tournament.

Both the MSE A Team (me and Webby) and the B Team (MSE Neil and MSE Dan) were drawn against teams from those pudding pretenders. And in the e-mail confirming the match, the pudsters finished with a “Thanks for letting us know when we can beat you,” I shan’t list my full reply but lets just say it included the dictionary definition of the phrase “being beaten” as ‘that’s not in my vocabulary.’

Thankfully Webby and I have just returned victorious and are into the second round, the Gu Puds bosses were left squirming in our wake. Gu puds, more like soggy biscuits.

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PS. They’re actually lovely people and very nicely sent a box of fantastic brownies over the other day, but I’m never one to let that get in the way of my competitive streak.

Today we hit 750,000 people who’ve opted to receive the weekly e-mail. Three quarters of a million people, it really is quite staggering. The site is now a healthy three and a half year old and I can’t believe how big and bonny it is. Thanks to all MoneySavers who’ve recommended it to friends and family.

I’m afraid I have a tiny wee confession to make though. While 750,000 people have opted to get the e-mail, it’s only actually sent to 683,000. About six months ago we started the first ‘clearing up the list’ process; so that every e-mail address that bounced three times in a row was wiped from the list. The first chunk took about 50,000 out. The reason for doing this is simple, it currently takes 14 hours to send the whole email - so the more ‘duds’ we can take out - the quicker it sends and the more efficient server use it is.

This left me with a dilemma; ever since the site started I’ve kept people up-to-date with how many are on the list and how the site’s grown - so to suddenly be 50,000 short is a problem.

Thus I came up with the official number which is ‘how many people have opted to get the e-mail and not unsubscribed from the list’ and currently stands at 750,000. Yet there is also the actual number of e-mails sent out, which is now about 67,000 less. So I admit it, but don’t tell anyone (sssssh).

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I got an interesting call today from BBC Childrens’ news programme Newsround. It was following up a story on the launch by pfeg (the personal finance education group) about money education in schools and wanted some MoneySaving Tips for their audience (target age nine-years-old).

Sadly I was hugely disappointed when I saw what pfeg is doing. The headlines said “showing kids how to avoid debts” but the schools they showed were all teaching about running small businesses and buying and selling. How does that teach children about personal money management, debt and relating it to companies? More off target money education (see 500 words to tell politicians about debts blog). Yet, again more disappointing off-target stuff.

For me the crucial information is educating kids how to think and act as consumers and (when they’re a bit older) how debts work. So, in the four tips Newsround wanted my aim was things that aren’t just useable now, but a good way to think about money forever. Here you go:

• A company’s job is to make money. When you go into a supermarket there are always sweets by the tills, just in case you’ve forgotten to ask your parents for some already! Whenever you go into a shop always remember its job is to try and get you to spend your cash, that way they make more money.

In fact it’s also worth playing a game with your kids in the supermarket. Challenge them to spot all the different ways the supermarket tries to persuade and get people to spend more money. They should enjoy the challenge, but also it’ll be educational.

• Save your money and you get paid! There are lots of kids’ bank accounts around. If you put money in an account the bank will actually pay you, this is called interest. It is done because it can then use your money to helps its business, and therefore its will pay you for temporarily letting it use it. However some banks want your money more than others and will pay you more, so always find the bank with the best interest rate. Do that and £100 in bank now could be worth £160 by the time you’re 18.

• Try before you buy. If you want a book, or a game or CD go to a library or video shop to try it out. Often when you really think you want something you may be surprised to find it’s not as much fun as you think once you’ve bought it, but then it’s too late. So why not try it out before you spend too much money and you may decide not to buy it.

• Always ask is it worth it? When you want something, decide if you really, really want it. Whilst a big expensive £50 toy may be exciting, overall you may enjoy ten £5 toys more. Which do you think you’d get more use and fun out of overall?

I think these are a good start point, also see the Newsround web version.

Discuss this blog and please add your money tips for 9 year olds

Let me be honest. I’ve got a funky thing on my finger! I say funky, perhaps it’s more fungy. Around the nail of one of my fingers there’s a tiny bit of white flakey skin. Now I’m not writing this just to put you off your cornflakes. There’s an important point here. As I live in an urban area, getting an appointment at the doctors isn’t the easiest, and even when I do, frankly I always find it a wee bit embarrassing to go for something this minor.

So off I trundled to my local pharmacist, shoved my finger at them (in the nicest possible way) and asked if they could help. Two minutes and £2.75 later I was carrying my paint on anti-fungal sub-nail cream ready to fix the problem. With the burgeoning difficultly of using the NHS, pharmacists are a ready, useable, medically trained resource that are still vastly under-utlilised. I know many people do access them in the same way as I have today, but still a vast number clog up busy Doctors’ surgeries with issues the pharmacist can handle. Perhaps this needs better communicating.

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PS. While I try to avoid being too overtly political in my articles, this is the reason that in the ‘Cheap Prescriptions and Medications Article’ I deliberately include the option of trying local chemists as well as supermarkets. After all keeping the local chemist going is a true benefit to a community, if for their expertise as much as for the product.

A MoneySaver has just sent me a letter they received through the post, a broadsheet newspaper with a handwritten note on the top of it saying ‘Sarah, get it, it works’ (I’ve changed her name). The article itself is headlined WANT PERFECT SKIN? Why a remarkable occurrence in Russia could now make it possible. Thankfully, it has little to do with cosmetics. There is then a full page article describing the benefits of a product called Immuderm (here’s a picture).

To make it look even more realistic on the back of this sheet of newspaper is a large listing of what at first glance look like share prices (take a look).

This is a scarily clever piece of junk mail. The handwritten scribble with your name on it makes it look like a friend has sent it through the post and forgotten to put who it’s from. When I showed it to the MSG she said ‘I’d assume it was from my mum’.

If you check out the paper, you’ll see it’s supposedly from a publication called “The Weekly Journal� and dated 16 March 2006. Yet I can’t find a record of any such publication – and who’s Weekly Journal. Plus while this is a UK advert with the price listed as just over £60, rather than $60, the share prices on the back is actually a list of US mutual funds.

While you almost want to admire the chutzpah of such an innovative approach to try and wring money out of people, overall it’s an invidious type of spam marketing and the people doing it should be ashamed of themselves.

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