I didn’t say that! Part 1…. things people assume I think but I don’t.

(Though also I’m occasionally credited with wise words I believe in, and wish I’d actually said…)

• Spending money is bad!

  This is one of the most common assumptions. I am not anti-spending, life is for living. As I wrote in the very first Money Diet (and the phrase was practicable then)… If someone flew to New York on Concorde and returned on the QE2, providing they can afford it and didn’t pay £7,000 for it when it was available for £3,000… then I’ve no problem. MoneySaving is about living within your means and getting the best deals.

• Cut up your credit cards.

  This is where I’m oft confused with my predecessor TV money folk. My view is the financial system is complex, and where possible we must learn to understand it and live with it; rather than simply opting out and cutting up cards.

  Credit cards are both the most expensive and the cheapest way to borrow. If you have debts on a card, by cutting those cards up, you’re effectively locking yourself into high interest rates. Far more important is to ensure you’re paying as little interest as possible – that way more of your cash is going towards repaying the debt and less to servicing interest. So the start point is a balance transfer or if you can’t get new credit then getting existing customer deals. After that, then locking your cards away or cutting them up is a legitimate move; but not before.

• Bank profits are disgraceful.

  Every time we get to the banking season, I get calls from journalists wanting and expecting me to rant against the profits the banks make. Yet we live in an adversarial consumer society; a company’s job is to make money, there’s nothing wrong with that, but a consumer’s job is to stop them and keep the money themselves. So (barring unlawful bank charges) I have no problem with bank profits, we live in a capitalist world, unless we change the system we must accept that.

  Actually when a big bank makes billions my problem is not the money they make, but that millions of customer who are in poor paying accounts, credit cards, mortgage deals etc… haven’t ditched and switched.

• “I don’t have any credit cards…. So I’m a good MoneySaver”.

  People say this all the time. The assumption being credit cards are bad therefore avoiding them is good. Yet if you are debt free and not using a cashback credit card you’re missing out. By simply setting up a direct debit to pay it off in full at the end of the month – so there’s no interest – you effectively turn the card into a debit card; yet here you earn cashback on it – adding £100s a year to your pocket. That’s MoneySaving (or for the real officianados stooze with credit cards).

• That I’m a thrift expert.

  This is a common media mistake. They confuse MoneySaving and Thrift. For me MoneySaving is cutting your bills without cutting back by playing the system; thrift is about lifestyle change and spending less through cutting back. The two are certainly philosophies that hold hands, but they’re not identical. In my charity book Thrifty Ways which is written from the Old Style forum; I explain that personally I tend to not be that thrifty… for me it’s all about getting top deals.

• Debt is bad.

  Debt isn’t bad, bad debt is bad. There is nothing wrong with making a rational decision to borrow provided it’s costed, as cheap as possible, as short as possible and the repayments are budgeted for. Governments borrow, companies borrow, and so can we. The problem is most people borrow badly…

More of these to come in a future blog (any suggests in the feedback link most welcome)

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