Martin’s Blog…

Following on from yesterday’s TV is frustrating blog, this morning on GMTV I was much happier with my performance. Yet I can’t believe what just happened.

The One O’Clock news

I rarely do BBC TV, as I tend to be seen as a face of ITV and Five. So it was a surprise to be invited today to talk about gas prices. Amidst the chat, here’s the scene (as best I remember, it was very quick):

ML: Two weeks ago I said cap and there were THREE caps left.
Action: Holding up three fingers.

ML: Then earlier this week there were only TWO.
Action: Holding up two fingers.

ML: Now there’s just ONE and it could go any minute.
Action: I started to put one finger down, then realized that left just my middle finger stuck up with the front of my hand facing the camera. So in a flash (I hope) I changed it to my index finger…

I’ve already had texts from friends who noticed…. Ooops. Still you never know I might make it on “It shouldn’t happen to a Money Saving Expert”

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PS Thanks for the pictures folks….

A quick thanks, ut hmm, to those in the Forum discussion above who went to the BBC news site linked to the video and downloaded screengrabs! Though it did give me the opportunity to see I really did get my finger all the way up… luckily only briefly.

I’m feeling annoyed with myself after my GMTV slot this morning. Having done energy capping yesterday in a way I was really proud of, there was so much interest they wanted me on again. I had three minutes, as many people were confused, and sadly I think I probably hindered rather than helped.

Part of the problem was there were, understandably, lots of emails from viewers who were confused over a complex subject. Yet some were so confused that in a way, trying to untangle them made it more confusing for others. The other part was just me being pants – in three minutes, when it goes wrong, it’s very difficult to rescue.

I’d been shown one question before where a person said capping had increased their bill from £60 to £120 a month. Now this simply isn’t possible; there’s no cap out there that’d come close to doubling your costs. This is almost certainly a case of an increase in Direct Debit costs, not the cost of the energy itself. As such it opens up a bag full of issues which aren’t relevant to trying to get the ‘last chance to cap, you have to do it this morning’ message out there – which I’m really passionate about at the moment.

So the producer agreed to switch to a different question that helped explain things better. Yet I got in the studio and, as can happen on live TV, no one had managed to tell Ben, who then asked it me. Inside my heart dropped as to try and explain it was a nightmare, and even more frustrating due to the time constraints on a complex subject. From then on, it was on my mind, and having had only four hours sleep last night due to trying to get it all sorted, and a bit of insomnia, it was like swimming upstream. The last thing I said to Ben and Kate as I left, was I was worried I’d come across as aggressive.

The frustrating thing is you’re always only as good as your last spot on air, so even now, a few hours later, I’m mulling it over. I know some of the message came across, but still it’s left a nasty taste in my mouth… and I’m not back on GMTV until next week.

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I was interviewed by a newspaper today about combating inflation and keeping your big bills cheap. She asked about home phone bills and I decided it wasn’t a priority - certainly not a top five issue.

Yet when I first started as Money Saving Expert in 2000, home phone bills were one of the big ‘uns. My suspicion is, and I don’t know as I wasn’t paying the bill, in the 1980s the phone bill was similar to the gas bill. Now many people pay under £200/year for phone but over £1,000 a year for energy.

Home phones have truly been deflationary (see Cheap Home Phones) with the prices dropping in real terms. Just take international call costs, whereas once you’d pay £1/min to call anywhere, now it’s 1p a minute or free (see Cheap International calls).

My suspicion is if it wasn’t for home broadband, many would’ve dropped their home phones completely, in exchange for the more convenient, but much more expensive mobiles.

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My friend Rufus (not a real name to protect anonymity) who’s a broadcaster, was talking about his pension scheme the other day. It promises that for every pound contributed it will match it up to a maximum 5% of his salary.

Yet for three years Rufus hasn’t been putting money in. I was shocked; this is free money, he’s got a good job and can easily afford to contribute and quite simply not taking it up is throwing cash away.

The size of the waste…

• Rufus’ Earnings: £45,000
• Tax Situation: As a higher rate taxpayer, since pension contributions are paid before tax, for every £1 he pays in, he only loses 60p from his pay packet (80p if he’d been a basic rate taxpayer).
• Company Situation: For contributions up to £2,250 a year, it is matched.
• Overall: Therefore for every £100 he contributes he gets £333 into his pension (if he’d been a basic rate taxpayer it would’ve been £250). Put another way, to invest £4,500 a year he would only need to contribute £1,500, or £125 a month. A staggering rate.

Why he hadn’t contributed…

The answer, when it came, was as expected - his reason for not contributing was because “pensions don’t do well do they, I’m worried about what happened to equitable life and losing my cash.” We have a real problem with the perception of pensions in the UK, most people consider pensions to be risky. They’re not, pensions are completely safe.

At the risk of repeating my old one word caused the pension crisis blog (which goes into much more detail) we have a national misunderstanding disease when it comes to pensions. Let me make it plain for most standard pensions (not counting final salary ones, which are slightly different)…

A pension’s NOT a product. It a tax-wrapper, in the same way as an ISA is. It lets you save for retirement from pre-tax income. It’s not risky in any way.

So where does the risk come from?

The risk comes from what you decide to put in your pension. In the same way as you can have a simple savings type cash ISA or a shares investment one. You can choose what to put in your pension, including a rough equivalent to savings.

So people’s pensions haven’t performed badly, but the investment many people put in them has. The lesson from all this is, if you can afford it, do take up your pension, but be careful what you choose to invest in.

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I know I’ve a privileged lifestyle; I have a good career, go on the telly and earn well, yet today I travelled to privilege’s far side…. in truth not even the other 1% but probably the other 0.01%.

I’ve just come back from a day at the Cartier Polo on a scorching 80 degree plus day. It’s a quite gobsmacking event; in the middle of a large park field in Windsor, there are scores of corporate tents and, though I didn’t go in large daytime China White ‘nightclub’. My agent is involved with organising it, so the MSF and I were invited to the centrepiece, a full sit-down lunch at the Cartier tent with Anton Mosimann catering.

A plush toilet and chandaliers in a field

It’s difficult to contemplate when you’re in there that you’re in the middle of a field. It’s a huge white marquee, with fluffy chandaliers hanging from the top, entrance gateways, a separate linked indoor luxury toilet tent including large basin area, aftershaves and other assorted goodies.

There are more models than you’d find in an airfix collector’s attic and the place is swarming with the beautiful, the rich, the ‘well’ bred and the famous.

They said ‘Gucci’ or ‘Ben de Lisi’, the MSF said ‘River Island’

You walk in to a bank of paparazzi waiting to take photos, some for the social pages, some for the fashion ones; thankfully neither are particularly interested in me, so I step aside, as the MSF is asked to pose alone for the fashion ones. The best bit of that is that when they ask “who made your outfit”, others were saying Gucci, Ben de Lisi and some obscure names I’ve not heard of, while the MSF simply said “River Island”.

It was a great day I have to say, more so as both the MSF and I decided not to drink due to the heat and so got to people watch and enjoy the events with a clear head.

Michael Buerk and the Dolce and Gabana Model

My favourite bit was near the end; we were on a table with a group of other journalist types and all trying to work out who the man with the industrially chiseled jaw and his stunning seventeen foot six girlfriend were, as as the paps kept coming in to photo them. At that point Michael Buerk sat down, and I explained the problem and said to him “Michael we need an intreprid journalist to find out who they are…”

The rest of us were embarrassed chickens, yet with war reporting and presenting major news bulletins, it wasn’t exactly a challenge for him. So he walked over, and with a debonair style, simply asked them, then had a chat. He reported back that the bloke was the Dolce and Gabbana underwear model with the six pack (thankfully not on show) from all the posters and the girl was also a catwalk model.

Best of all, to show that bravery has its reward, they then popped over to our table, and the man asked Michael if he would mind having a picture taken with his arm around his girlfriend who was a fan!

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I was on GM-TV this morning with Hamfatter, the band Peter Jones invested £75,000 in on last night’s Dragon’s Den, for a 30% share of their future earnings. It made me muse on the nature of the investment…

If this were a non-televised programme, would they have invested in a band? Bands’ sales are driven by publicity, and here’s a group getting 9 minutes of 6 million audience prime time exposure by the very act of pitching, plus ensuing publicity on GMTV’s This Morning. Apparently they’ll now also be ‘debuting their first single on Chris Moyles’ show’ (and they’ve even got me blogging on them!). So why not invest with this expensive publicity already given?

This publicity issue doesn’t just hit bands though, it works for many retailers. I know the owners of Degree Art who pitched on the first series of the Den. They didn’t get any money (they got an offer, but turned it down due to the high share of equity wanted), but they came out of it well; the ensuing publicity was really helpful.

So in many ways, the programme itself is self-fulfilling, and there is a creeping feeling that many companies now go on it just for the publicity. You often hear the Dragons ask “you don’t need the money, why are you here?” While the standard reply is “for your expertise”, perhaps underneath there’s occasions where the real answer is “for the prime time BBC2 exposure”.

Not that this is a problem. It’s great television, which is of course its prime purpose, plus it teaches people about entrepreneurship and businesses and I’m a big fan of that. So much so I put it in my Teen Cash Class guide, in the section about one of the core lessons to learn; that a companies job is to make money from us.

“If you didn’t think that handling your money well was about a battle between you and the companies, hopefully, by now, you’ve cottoned on.

Don’t take just my word for it though, if you’ve ever watched the TV programme Dragons’ Den, take that as further proof. They never ask “how much good will it do society”, their key question is “will it make me money” – that’s the first priority of any business. There’s a reason it’s not called Fluffy Bunnies’ Den.”

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My lovely niece Kim, aged thirteen, was in Manchester’s Traffford centre with a couple of friends. She was approached by a girl handing out ‘win a makeover and photo session!’ type leaflets, which of course the three girls jumped at. They filled them in, and no surprise, moments later they emerged lucky winners.

The obvious catch…

My sister called me to tell me about this, and before she’d finished the sentence I knew what had happened. I’m sure you know the story of how these things work…

You win a makeover and photo session, yet not included in the prize are the pictures themselves, which cost a fortune, and of course you can’t take your own camera into the session.

She was rightfully disgusted they’d handed out the leaftlets to young girls, and now she had to diffuse a situation - being seen as ‘unfair’ because she wouldn’t pay for the photos. I did my best on the phone to help, explaining to Kim how the scheme worked and that it is just a legal con, with a pretense at being a contest, to flog costly photos.

Targeting Kids isn’t on.

My anger is less at the technique - people will try lots of ways to make money - but at the fact they gave them to young teens. We already live in a “must have” society; for companies to possibly deliberately take advantage that is one step too far.

If your kids shop near the Trafford centre, or any other mall doing something similar, warn them in advance to steer clear.

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Having been telling people to grab a European Health Insurance Card (EHIC) for the last few years (see the Cheap Travel Insurance guide for why), I used my own for the first time the other weekend.

I’d been in Italy for a close friend’s wedding (congrats Babs and Mark), but sadly the cough and sore throat mentioned in my last blog had got worse not better, and became extremely painful. Not much fun, and as I had a speech to make, I didn’t want to let my friends down, so I ended up going to the local medical centre.

I was joined by Naz, a friend who had kindly volunteered to translate, as she speaks Italian. One of the first things the Doctor asked for was “medical insurance or the card.” Funnily enough Naz wasn’t sure what he meant, but I correctly assumed it was the EHIC.

Then not one but two doctors looked at my throat for a good fifteen minutes; not something I’m used to from my London GP centre. As I had the card, rather than a much higher fee, it only cost £7 for the appointment; a sum I won’t be troubling my travel insurer for.

Comment and Discuss.

I’m writing this feeling slightly blurry. For the last two nights sadly I’ve not been able to sleep, and as anyone who’s suffered from insomnia knows, it’s self perpetuating as the worry about not sleeping drives you to stay awake. Sadly it’s come at a time of lots of work pressure; I’m filming a few different things this week and hear rumours about some big bank charges announcements to come. So if you’ve seen me on the telly or heard me on the radio this week, forgive me if I’m not particularly lucid at times.

Right now it’s 11am and I’m shattered, but of course to try and sleep now would be really counter productive as it would further disturb my sleep pattern and mean that tonight I’m even less likely to sleep. So right now it’s grit my teeth and get on with it time…

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On Sunday the MSF and I were at lunch to celebrate a family birthday, and at the next table was a birthday party for a man who’d hit 90. They had a video camera and I heard one asking him “what would you say was the greatest invention of your lifetime?” I didn’t hear the answer, but I mused on this. While he missed the airplane, there’s been television, computing, the internet, penicillin… Which would you choose?

What about since 1972?

I was born in 1972, and frankly I can’t think of a major world changing invention since then. You could argue the internet wasn’t really invented until 1989 with Berners Lee and the worldwide web, but it’s generally accepted that in the late 1960s the first computers were networked together, so I discounted that.

Barring medical inventions, which help prolong life rather than change the world, I can’t think of that much. Even test tube babies have enabled children for childless couples, but that’s a change for individuals rather than something that’s changed the world we live in. When I put this to the group, all we could come up with was the Sat Nav, but I wouldn’t exactly call that a seismic invention.

It seems to me that the change in my life span has been far more about innovating existing inventions for modern life rather than beginning anything groundbreaking. Then again, perhaps it’s simply because we don’t yet realise which inventions will go on to change things substantially.

Still, I’m pretty sure we missed something obvious, so please do add your thoughts and suggestions to the discussion below.

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During an interview for a reporter today, I was trying to explain why calling everything “the credit crunch” was nonsense (see my credit crunch and other myths blog). In it I came up with a nice explanation of The Four Horsemen of the Financial Apocalypse (it’s only the size of their charger that varies):

• Economic Slowdown (Shetland pony). Just a Shetland pony size problem at the moment. It’s slowdown not recession, yet the lack of stability and worries over job security are having an impact.
• Inflation (Racing horse). A fair sized racing horse this. Things are starting to gallop quite fast, and sadly, if your money’s on the wrong horse you can lose quite a lot. Some people are feeling the real hit from prices of food, gas & elec, petrol and more.
• The Credit Crunch (Cart horse). A fair cart horse size here, especially in the mortgage market. Anyone who has to borrow more than 80% of their house’s value is really feeling it and deals are hard to come by. The unthinkable result for many is they’re moving to their lenders Standard Variable Rate and that’s the cheapest; they can’t get a better deal.
• House Prices (Mule). A bit of a hybrid mule this, as it’s part caused by the credit crunch. In many ways a house price correction was needed to sort out the overpriced property market; the problem is the speed and depth that we’ll face. The worst hit come in two categories. 1. Those who overborrowed on the back of property porn TV shows irresponsibly urging people to borrow to the max. 2. Those who spent their house value by spending on cards, then moving that to their remortgage, meaning they’re paying the debt off over a much longer period, thus ruining their loan to value ratio making cheaper mortgages more difficult.

Apocalypse is obviously too strong a word, yet for a few people the meltdown is happening. The real key at the moment is the pain of transition, which feels even worse as we’ve been used to boom times for so long.

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I’m sitting in the Radio 2 green-room, waiting to go on Vine (though the room isn’t green and Clive Anderson’s presenting). When you come up in the lift, instead of music, it has the station playing; yet I was rather surprised to note that in the toilet nearest the studio, Radio 2 is pumping out there too. Obviously a great boon to the presenters who need a quick ‘comfort break’, so when a song’s playing they know how long they’ve got left.

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As is well publicised, I’ve no love for secured loans. The product itself is ‘lending of last resort’ but has sadly been marketed as ‘a one-stop debt solution’ (see the secured loans guide) and one leading debt charity estimates they’re only suitable for 3% of those who have them. This is the reason I campaigned against their being advertised on Childrens TV, and ran a petition to ask celebrities to stop doing the ads.

The Biggest Name is closing

Therefore to read that the big player First Plus, owned by Barclays, is to close its doors to new business is on one hand a blessed relief. It also sheds some interesting light on my blog from last week

It would seem there are two main causes of this closure: firstly, it used to make a serious wodge from selling Payment Protection Insurance, so the crackdown by the regulator on PPI selling, as well as the growth of PPI reclaiming has dented its business model. Yet it’s the credit crunch and house price drop that’s really hit it.

The ‘secured’ bit of secured loans is for the lender, which can take your house if you can’t repay. Yet the downturn in house prices is providing it with less security than ever before. And following on from the US sub-prime crisis where those with bad credit can’t pay their debts and are finding their homes are worth nowhere near as much as before, you can see why Barclays is pulling out of this marketplace.

Yet sadly it isn’t all roses for two reasons:

A. It was one of the best of a bad bunch

For the VERY few for whom secured loans are appropriate, First Plus was one of the cheapest players, so if it could find you a deal it was cheap. Its departure leaves a hole in the market, and my worry is better the devil you know, for who will step in to fill the gap?

B. What happens to those who still have its loans?

This is where it gets very scary. Unlike normal loans where the amount you pay is fixed at the outset, most secured loans have variable rates, and lenders can put them up willy-nilly. Many with secured loans have already seen their interest rates doubling and as there’s little they can do about it, it’s pushing some into crisis mode. Worse still, as these loans tend to be for huge amounts and spread over years, the pain is likely to last and last.

The worry here is that now First Plus has closed its doors to new business, it has no reputation to protect as the brand is finished, thus it wouldn’t suffer much by hugely hiking rates for existing customers. My hope is this won’t happen, yet just in case here’s a subtle hint to all First Plus customers.

After all, Barclays is the parent company and still has a brand to protect, so if people refer to it that way it increases the brand impact of treating its customers poorly.

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The law firm that pushed the price fixing compensation case in the US is about to launch UK adverts, to urge people who flew with the airlines on the relevant dates to claim their compensation. So far 100,000 individuals and 1,200 businesses have registered, but it’s thought there are 5.6 million passengers to contact. If you’re looking to claim read my past Virgin BA Compensation agreed: how to claim and earlier Reclaim from BA / Virgin blog.

What interests me about this is the US court demanding the airlines pay for this publicity. My suspicion (having not researched it) is this is a benefit of the class-action system that happens in the US but not here. Still, the courts pro-actively seeking out people who have been wronged, rather than waiting for them to bring a case themselves is a remarkable thing.

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Last Thursday night I developed a tickly throat, and by Friday morning it was burning up & I lost my voice. It’s been on and off ever since, with a painful throat and terrible cough. Unfortunately, this week as well as my GMTV slots (which are short, so I can manage through them), I’ve also had filming scheduled in for an upcoming ITV1 Tonight on mortgages.

Both filming days have left me exhausted; I’ve been running a slight temperature and if it was anything else I would’ve cancelled. Unfortunately the nature of these programmes means interviews, filming permission, case studies and more have been set up on a heavy schedule and with the programme deadline looming, cancelling simply isn’t an option.

Today I was at Brent Cross shopping centre doing a ‘Martins Mortgage Minute’ clinic, in other words meeting people and talking through what was happening with their mortgages. This was made more difficult, as I was slightly worried about spreading my lurgy to anyone who came close, so I ensured everyone was warned first.

In one chat with a lovely woman called Angie, I got that unstoppable cough moment and simply couldn’t carry on. I tried again far too soon and made a few hastily aborted attempts, but when you’ve gotta cough, you’ve gotta cough, and it wouldn’t go away.

There were no more drugs to take; I’d done all the cold ‘n’ flu, cough syrup and tablets possible, and water wasn’t helping. It took a good twenty minutes before I was able to continue, and thankfully I managed to prevent it going to the next coughing step (decorum prevents me writing what that is). Then with a cup of hot water and lemon I carried on and managed another hour, before coming home and flumping on the sofa.

Who says telly is glamourous…

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Contrary to this note below spotted by the folks in MSE Towers (why weren’t they working… hmmm) no I wasn’t at Wimbledon. In fact I was at Brent Cross shopping centre doing a ‘Martin’s Mortgage Minute’ for ITV1 Tonight.

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I can honestly say I felt genuinely delighted to read in the Daily Mirror that Carol Vorderman won’t be renewing her contract with First Plus to advertise secured loans.

Nearly two years ago this site was at the forefront of the petition to ask her to consider stopping doing the adverts as the power of her brand, being the UK’s most recognized arithmetician, ran the risk of people taking the loans when they weren’t suitable.

While it may have taken a little longer than we may’ve wished, I’m delighted to see that now, in the midst of the credit crunch, she’s decided to call it a day. I wish her the best of luck with the exciting new projects mentioned in the article.