Rachel is banking on your help

Rachel has been on tour for a while promoting her new CD (and if you don’t have it yet then get on to her website and buy a copy (www.rachelhair.com) but she’s back now and looking for your help.

“It’s the new financial year, spring has sprung, the new Cd is just about launched and it’s time to get back to my finances.

I’m wondering what advice the experts have on bank accounts to suit the self-employed?

When starting off I was always told i needed a business bank account, so I opened one up but I confess I have never actually used it, mainly because it’s at a different bank to my personal account.

Is it really bad to be working all my money just out of my personal account?

As a sole trader are there benefits in having a business account to filter money through before it all starts to go to pay my mortgage and other bills?

Maybe it’s just me being lazy but the thought of having two accounts and having to switch money between them at all time to ensure my mortgage, bills and grocery shopping is still paid for on time just stresses me out!

Also with regards to bank accounts overall, I have a personal bank account, a savings account and an ISA, all at the same bank. Is there any harm in that, or should I be shopping around for things like ISAs at different banks?

Is it good to have your accounts at different banks or is it just fine to always be with the same bank?”

Lots of questions there so let’s have your views before we ask our panel of experts to help us out.

A tale of two people – or is it two companies?

RBS Fraud Prevention Department called me last week to check some recent transactions on my credit card. We went through the most recent purchases and I told them they had missed one out – for a hotel I had stayed in the previous night. “Oh, that one didn’t go through, it was referred.” I don’t think so, I replied, as far as I was aware it was all okay. No-one at reception told me any different, anyway what reason would there be for it being rejected? “Well we told the merchant five times to call us so that we could make sure it was you and they didn’t so I’m telling you it wasn’t authorised.”

The conversation went downhill from there and included phrases like “What do you want me to do,” “What do you expect me to do about it” and “No I can’t give you my surname”.
What. Even after I’ve told you my full name, account number, shoe size, mother’s maiden name and the name of every goldfish I have ever owned. What happens if there is more than one Mary in your global operation?

It finished with that well-worn phrase from me “Can I please speak to your manager?”

Compare that with my call last night to British Gas Homecare. I had a visit from an engineer yesterday to repair my tumbler dryer. It seemed to be working but now my washing machine wasn’t. He’s been a few times already, to assess the damage and to bring and fit a spare part. The girl I spoke to couldn’t have been more helpful. She upgraded the call to priority to expedite a new visit and then called the engineer who had visited to ask if he would call me to see if we could find an easy solution. He called – even although it was 9pm and agreed to visit first thing this morning before he started his work for the day.

Two companies, two very different conversations. From the beginning of the call from my Bank I felt as if I was fighting them – even although they were supposed to be helping me by preventing my card being used fraudulently.

British Gas, on the other hand, couldn’t have been more helpful. Their objective was to make sure my washing machine worked, and the girl I spoke to did everything she could, and more, to ensure that happens.

I know which conversation left me more satisfied.

But why the difference? Does British Gas only employ friendly helpful staff while my bank employs only surly unhelpful people? Does my bank need to look at its training programme in customer service? Does British Gas care more about what its customers think than RBS?

Or is it simply that I spoke to one person when she was having a good day and the other on a bad day?

And if that’s the case, should it be? What standards should I expect from companies that are providing me with a service?

Any Questions?

We’re going to use this page to answer the questions you send us at Moneysucks? What bothers you about your money and what annoys you as a consumer? What should you do with that huge lump sum that’s burning a hole in your bank account, or which loan should you pay off first? What’s the best way to sort our your monthly budget or how can you retire at 40?  Which retailers ofer great service and which ones couldn’t spell the word?  What do you do when your brand new laptop breaks down after a week or your Blackberry won’t let you send text messages any more. Whatever your money and consumer issues we want to help.

Here’s a selection of your questions and comments from the last time we tried this:

 

Q. I have a question on the link between child benefit and the state pension. At the moment it is my understanding that a person receiving child benefit receives NI credit towards the 30 years required for a full state pension. As you know the child benefit will be removed for the person receiving child benefit if her husband/wife is a higher rate taxpayer- this seems unfair to have the wife/husband penalised in retirement for the spouse’s income. It may even be that when the carer retires she/he is not even married to the same person but has been penalised- do you know if that is the case- if so Money sucks!!

A. Good question David. My initial response would be that it’s not as simple as saying that someone receiving child benefit will automatically receive NI credit towards the 30 years required for a full state pension. There are other requirements that need to be satisfied before receiving NUI credit and these other requirements will vary from person to person. To be on the safe side I have asked the Department of Work and Pensions to look at your question and come back with a fuller answer so hopefully I’ll be able to get back to you soon. I know that there is a large scale review of the benefit system going on at the moment and it may be that any answer from DWP will reflect that but I should be in a position to answer you more fully next week.

Colin Kennedy asks a question about renting out a room in his property:

Q. I work in Crawley during the week but live in Scotland at weekends. I have a second home in Crawley and I rent out 3 rooms. I have a business which is dormant, but could I use this business as a vehicle to purchase my house in Crawley and rent it out to my tenants and myself? What benefits would I derive from this? Love the website and looking forward to your insight!

A. You could certainly use your business to purchase the property that you already own and then rent it out to others although presumably your business, if it is dormant, will not have the required funds and so effectively you would need to look at the transfer of the property to company ownership rather than your own unless your business can raise the funds to purchase the property from you.
Either way the first issue for you is that you are personally disposing of the asset and may be creating a capital gains tax liability for you since it is not your main residence.
Whether it makes sense for you or the company to own the property is in no small way dependent on your tax position. If you own the property then any rental from your tenants, after deduction of allowable expenses, will potentially be taxed at your highest rate. If the company owns the property then any profit will be liable to Corporation Tax but you may decide to retain the rest in the company until you need it. This avoids any further personal tax but means that you can’t use the money.
A further complication may be that if you transfer the property to your company, and you are a Director and employee of that company, then you may find that HMRC argue that you living in the property is a benefit in kind and that may have tax implications for you.
I hope you find this information useful but please come back to me if you have any further queries.

Jack Fraser asks an ISA question:

Q. I am the student who asked about the pension, but I would like to answer just another quick question on a different matter! If I use up my full £5100 cash ISA allowance with cash this tax year, does any interest gained on that count towards the allowance i.e. if I gained £4 and it went up to £5104 because of interest would I be exceeding the allowance?

A. Very simple answer to this question – no! The allowance relates to cash invested in the ISA – whether Cash ISA or Stocks and Shares AIS and any interest or growth in the value of your ISA won’t mean that you are exceeding your allowance, or eat into the next year’s allowance either.

Margaret Cunningham has come into some money and wants to know what to do with it.

Q. I have just inherited £22,000. The money is sitting in the Royal Bank of Scotland at the moment. Can you give me some advice how I should invest it, please?

Thanks and greetings from Germany

A. The answer to this one could go on forever and depends on so many different questions that I don’t know the answer to at the moment. These questions would include, in no particular order of importance:

Are you living in Germany and is the money in Germany or the UK?

Do you have debt that you could do with paying off?

How long will it be before you need the money?

How much risk do you want to take with your investment – are you an under the pillow type or is the 2.30pm at Cheltenham more your style?

Do you have other investments?

Could your pension do with a boost?

What is your income tax position?

So as you see it’s not an exact science. And these are only a sample of the questions you would want to consider before making a decision. The starting point is to examine your current situation and for you to decide what it is you would like the money to do for you. If you have any debt – mortgage or non-mortgage – then it might makes sense to pay that off since it might be costing you more in interest than you will receive on money you invest. If you have no debt and you want to put it away somewhere for a ‘rainy day’ then it would be a case of looking at how to do that tax efficiently and with a level or ‘risk’ that is acceptable to you and for a length of time that suits.

And Cathy Austin has a question on the finances of long-term care.

Q. I saw the piece you did on financial advice on long-term care on BBC the other night. My father is in a care home in Scotland. He pays his care-home fees from his “savings” (house sale!) The bank manager told us that it is possible for him to gift £3000 to each of his children & £1500 to each grandchild, each year, which would obviously reduce his capital, without the authorities being able to question this. Do you know if this is the case? We don’t want to do anything dodgy, just want to know if this is correct.

A. Maybe is the perhaps unhelpful answer! The £3000 and £1500 limits that your bank manager talked to you about are the maximum amounts that can be ‘gifted’ to children and grandchildren annually so that they don’t form part of your father’s estate for inheritance tax purposes – and there is often confusion about the rules on Inheritance Tax and the rules that apply to care issues. The local authority is not interested in IHT rules, only that your father hasn’t given money away to ‘deliberately deprive’ his estate to save him paying for his own care. So whether your dad gifts his children £3000 or £30,000 the local authority might want to know why. It may do his case no harm if he is able to explain that it is part of a tax planning exercise.

When is an offer not an offer?

When it’s an invitation to treat.

I know that we promised that Moneysucks? would be jargon-free but the difference in the two terms above is crucial and has left many a shopper frustrated because they think they might have missed out on a bargain.

The legal distinction between the terms is important in a couple of situations but the one that concerns us here is when you see the biggest and most expensive diamond ring in the shop advertised in the window at what looks like a real bargain at £300.00.

Your credit card is out of your purse or wallet in a flash as you rush to buy it before any other passer-by steals it from under your nose. 

Then the hammer blow. “Sorry, we’ve put the wrong price tag on that. It should be £3000 not £300”.

But you’re not put off as you tell the Manager that you know your consumer law and you’re sure that if the shop advertises the ring at £300 then they are making you an offer and they have to honour that offer and sell it to you at £300.

“Sorry”, you’re told. “It wasn’t an offer, it was an invitation to treat”.

And you know what? They would be correct. The retailer is not ‘offering’ to sell you the goods in the window at the price marked, merely ‘inviting’ you to enter into negotiations for them. So the ‘invitation to treat’ is like a bit of ‘foreplay’ that precedes the offer and so doesn’t form part of the process of creating a contract – and if you are a lawyer and there’s a better way of explaining this bit then please let me know!

The bottom line to this one, unfortunately, is that the bargain you thought you were getting wasn’t a bargain after all.  Better luck next time!

Monthly Challenge, Final Week

Last week of counting for the Moneysucks Challenge, and our volunteers have been busy adding up their spending. Zoe first:

Friday 9th – nothing spent
Saturday 10th – £9.44
cleaning products for the house. I bought these from the little shop across the road. If I had gone to a larger supermarket these would have probably been cheaper.
Sunday 11th – £31.00 Petrol and crisps
Monday 12th – nothing spent
Tuesday 13th – £5 on tights (I was wearing annoying tights that day that were always falling down so I decided I needed to go to the shop and buy another pair!)
£2.79 on biscuits and crisps (comfort food to take back to the office!)
Wednesday 14th – £3.00 Hot Cross Buns and Coffee.
I went to the gym in the morning and didn’t have enough time to pack my breakfast so decided to stop on the way to work and get something.
Thursday 15th – Haircut £32.00 Coffee £2.20 Fuel £30
I was trying to hold off to get my hair cut at the end of the challenge so I didn’t need to include the expense but thought that maybe cheating !
Friday 16th – £4 Parking £4.20 coffee and muffin £7.00 Cider and Smoked Salmon
£25.00 Doc Martin Boots
My downfall is going into charity shops when I am bored and picking up ‘bargains’ found a nice pair of doc martins for £25 so decided I couldn’t leave them. Was also not going to put this in my financial diary as I knew it was an item I didn’t actually need and I was very aware that I have probably spent more than I should have this month.
Ok and now to look at my on line account!
1st March – £24.95 Fitness First
2nd March £12.99 Home Care Insurance
17th March £47.06 T mobile bill
Grand Final Total: £240.63

And now Mary-Louise:

Monday 12th March

I did some shopping for food and toiletries which came to £18.69. I then went out for dinner which came to £7.69.
£26.38

Tuesday 13th March

A day for healthy drinking… a hot chocolate (£1.75) followed later on by a milkshake (£2.80)
£4.55

Wednesday 14th March

A couple of real big spends today – stamps for £1.72 and polos for £0.49
£2.21

Thursday 15th March

Bought some milk and cheese (£3.50) before going out for dinner (again!) which came to £13.00.
£16.50

Friday 16th March

I sponsor a child in Ecuador and that money came out of my account today (£21) and picked up some food on the way home (£5.95)
£26.95

Saturday 17th March

More food shopping (how much do I eat!?) which came to £19.64
£19.64

Sunday 18th March

A friend of mine drove me to a charity race we were running so I gave him £5 of fuel money
£5.00

Week 4 total: £101.23

Week four was fairly middle of the road spending wise. I seemed to be buying food all the time but my cupboards are now very well stocked up. I went out for dinner twice during the week which did add up I also realised just how stupidly expensive milkshakes are in some coffee shops! In total I have spent £741.75. I am fairly pleased with this as it means that I am saving a little money every month. However, it does mean that I can’t really afford to be making big spends (e.g. I am starting to reconsider a trip my friend and I are planning to Disneyland Paris…) and expect to be paying off my overdraft. I’ve found this exercise really useful and it has certainly made me think twice about my spending.

We will be chatting to them both next week to discuss what they have learned over the last few weeks, and we’ll all be on Pulse FM in a week or two to talk about the experience, and the benefits of counting what you spend.

Moneysucks Monthly Challenge

Another week goes by for our Moneysucks Monthly Challenge guinea pigs and so let’s start with a particularly detailed account of Zoe’s spending:

Date Item bought Expense Total Comments
Monday 27/02 Petrol £30
Chewing Gum £0.57 £30.57
Tuesday 28/02 Tapas £5.50
Wine £4.10
Hot Chocolate £2.20 £11.80 I have just started back working as a support worker on Tuesday evenings and make around £17 so I basically justified eating out that night due to this! I had enough food to eat in before I left the house.
Wednesday 29/02 Bread
Milk and Chocolate £1.00
£0.85
£1.00 £2.85
Thursday 01/03 Gingerbread Latte

Rent

£2.00

£365.00 I was craving a coffee so bought one in a little coffee shop in Paisley before a meeting I was having.
Friday 02/03 Stuffed chicken breast £5.00 I decided to treat myself to a Marks and Spencers lunch as I was off work today. It was very expensive for the amount of food I actually bought. Not the best value for money!
Iced Buns £2.70 £7.70
Egg, Cheese and Milk £3
Eye Brow Threading £4.00 £4.00 For those who don’t know what this is it is an ancient technique used to shape your eye brows!
Saturday 03/03 Lunch:
Soup and Toast, Coffee and Cake
£7.25 £7.25 Went for a drive to out of town with my friend and we decided to eat lunch out at a little café.
Tip for food £2.00 £2.00 Saturday night was my joint birthday party with my sister. Our parents bought us a meal I contributed the tip
3 x pints of beer £9.00 £9.00 I drank more pints but since it was a birthday celebration many drinks were bought for me this night.
Taxi £10.00 £10.00 I shared a taxi home with my sister and her husband. I had no change so gave them £10. The total by the time I got out was £7. It was a black cab. My flatmates got home later after ordering a private cab and said they had just paid £4.
Sunday 04/03 Food shop £27.64 £27.64 Me and my sister decided to take a Sunday drive to the new Whole food shop in Giffnock. For the amount I paid I really didn’t get many items. This is the first time I have shopped there and I wont be going back in a hurry. Within this price though I bought my Dad’s birthday present.
Car Hoover from E-bay £6.78 My car is looking very dusty so decided to purchase a hoover. I received it the other day but I am sceptical that it will work well due to its low price! I will update you once I have tried it.
Monday 05/03 NO MONEY SPENT !
Tuesday 06/03 Coffee and Apple Juice £2.65 Had two meetings today out of the office so bought a drink both times.
Wednesday 07/03 Petrol £20.00
Sweets .65
Gym Trousers £20.00 I am always at the gym and only have one pair of gym trousers. It was getting annoying so I decided to buy another pair.
CupCake £ 1.50 For my sister
Present for sister £ 7.50
Meal out for my sisters birthday (my treat) £ 35.20 Took my sister out to treat her for her birthday. This total included two cocktails at £6.50 each.
Thursday 08/03 Food Shopping Sainburys £ 16.89 The amount that I got here was loads more than I got at Wholefoods. Definitely better value for money.

GRAND TOTAL:

£652.53

Zoe comments. “Was rather shocked when I saw this total but then remembered my rent is included in this total. Still it seems a lot. I am beginning to think I may spend more money than I bring in! The last week of budgeting and then doing the sums will reveal if this is true. Writing down everything you spend in a month is definitely a challenge just remembering when you purchase something you have to record it is a task in itself. However the task has made me aware that all the little expenses do add up in a month. I think from now on I will think before I spend. I would love to get out of my overdraft and this is only going to happen if I do start to be a little careful with how I spend my money.”

Mary Louise has been slightly less detailed than Zoe, but interesting reading nonetheless. “I’m into the third week of the Money Management Challenge and things have somewhat improved from my first shocking week of spending!
In the second week of the money challenge I only spent £47.82 and was very chuffed with that! It had been on the usual sort of stuff – food, train tickets and odds and ends. I had also been away up in the Highlands for the weekend and I think the lack of any shops beside the co-op curbed my spending somewhat! This week, I’ve had to pay my rent which is my biggest pay out of the month. My rent is £230 and I pay £30 a month for electricity. On top of this I’ve paid an electricity bill and eaten out a few times so I think it might be another expensive week… I’m really looking forward to the end of the challenge to see what I spend in total in a month – I’m beginning to realise it’s more than I thought it was! It’s definitely made me think more about what I can really afford and how I should start looking for a rich husband as soon as possible.”

And lastly Jennifer has spent as follows:

28th Feb – 5th March

This week I have spent £144.18 in the following way.

Make-up: £7.74
Public Transport: £19.40
Food: £12.29
Haircut: £30.75
Hair Products: £9.50
Shoes: £24.50
Spa Day: £40

I have not needed to pay any bills this week and I didn’t need to buy much food. I have treated myself with a spa day, new shoes and a haircut so most of my money this week has been spent on me! I probably won’t be so indulgent now for the rest of the month.

6th March – 12th March

I have spent £357.33 this week which is by far the biggest spending week I will have in the month. I have spent most of the money on my rent but I have still spent a little on myself.

Rent: £250
Travel: £22.10
Food: £19
Charity Donations: £5
Toiletries: £11.23
Eating Out: £10
Drinks: £10
Jeans: £15
Top: £15

I have been less indulgent this week but still had fun at the weekend. I went for a cheaper dinner and treated myself to some new clothes but I didn’t over spend.

They are all finding it to be a really interesting and useful exercise and it will be fascinating to see the totals at the end of the month.

Do you have the guts to be honest about your spending for a month?

Do I need a receipt?

‘I don’t care if it doesn’t work. We can’t take it back if you don’t have a receipt.’

Oh yes they can.

It’s one of the oldest clichés trotted out by shop staff when faced with a customer they don’t want to deal with. “I’m sorry, we can’t take that back if you don’t have your receipt.”

But it’s simply not true. The fact is that retailers are not under any legal obligation to provide you with a receipt so it would be rather unfair if they try to insist that you need to produce one when returning goods.

So if you are returning goods beccause they are faulty, and have therefore broken the terms of the Sale of Goods Act, then you don’t need to have a receipt.

You may, however, be asked for proof of purchase and for this you could use a cheque stub or a  bank or credit card statement.

If you are returning goods just because you’ve changed your mind or they don’t fit you then the shop does have the right to insist on a receipt since they are taking the goods back in accordance with their own internal policies rather than because of any legal requirement they have.

Most retailers will allow you to return unwanted goods within a certain time frame – and it varies from retailer to retailer so if you think you may have to return something then ask how long you have at the time you are buying it.

Are the banks really open for business?

Our Banks are telling us that they’re lending again, and that they are reaching their lending targets – nearly!

But we keep hearing stories of agreed facilities being withdrwan, or only being renewed at huge extra costs. And of continuting difficulties for people trying to move house, or buy their first property.

On top of that the banks are still not paying decent rates of interest on many of their accounts and millions of us haver money floating about in accounts paying no interest at all.

We own many of the banks, or so we’re constantly being told. Should we not expect better of them?

What’s your experience of our Banks.

Are they lending eonugh money, and quickly enough? And if not how do you think we should get them to increase their lending?

Tell us what you think.

My house, my home?

Some sections of the press are still full of dire warnings of 25% drops in property prices in parts of the UK this year or while others give us the the good news that prices will stabilise, and may even start to rise during 2012

We’ve decided not to get involved in that argument right now.

That might sound like a bit of a cop-out, and in a way it is. But that is only because there is another point that is sometimes missed out in this ongoing debate about the future of property values. Whether prices rise or fall, and whether you make money or lose money, you need a roof over your head. And if more of us thought about that rather than how much money we were going to make out of the buying and selling of our houses, then perhaps the many answers that the pundits are giving to the question over the future of property prices will be less relevant.

Your house can either be somewhere to live, in which case it’s your home, or it can be for investment, in which case it can provide an income or some cash when you sell it.

It can’t be both!

If you continue to live in it it’s your home not an investment and if you don’t live in it because it’s rented, or because you sell it to realise the capital you have tied up in it, then it might be ‘your house’ but it certainly won’t be your home!

I know, this is becoming a circular argument. But it is an important one. Huge rises in property prices over the last couple of decades have meant that more and more of us are taking this ‘property can’t fail’ line to justifying not having a good mix of investments, or more importantly as an excuse for not making proper arrangements for retirement as in “I don’t need a pension, I’ll just sell my house when I retire.”

Property has been king for years now, and returns from property have outstripped those from most other assets, although detailed analysis will show that timing could have a major impact on your profit.

Now I happen to think that property can be effectively used as part of a well structured plan for retirement. But it generally only works if it’s a second or third property purchased specifically for rental with no requirement for you to have to live in it yourself.  The ease with which mortgage money could be obtained up until a couple of years ago flooded the market with amateur landlords who thought there were quick bucks to be made from buying and selling flats up and down the country.

There is still money to be made from the property market if you’re looking to but for rental, but generally only as part of a longer term strategy, and generally still only if you are borrowing to help fund a purchase, and effectively using someone else’s rental to build up your capital.

For those of us with one property that we live in, we should start to enjoy it as such, rather than worrying about how we can ‘maximise our profit’ when we sell!

Moneysucks Monthly Challenge is underway

Zoe Nisbet starts her monthly challenge today. For a whole month she is going to keep a note of everything she spends, and at the end of the month we’ll have a chat about what lessons she has learned about the way she uses her money.

Zoe will be blogging regularly during the month to keep us updated on her progress.

Here is what she says so far:

“So the challenge begins today. I have my little notebook ready where I will record everything I spend. I am excited about this exercise as money is something I tend not to think about. I seldom check my bank balance during the month I guess because I am scared to do so. If I think I have spent a lot of money I will just be careful for the next few weeks until my pay has gone in. I am hoping this challenge will shed light on how much I actually spend during a month placing me in a position to make informed decisions in the future about my money.

A few of my friends have decided to do the challenge with me.

Mary-Louise (ML) who works next to me has decided to do this monthly challenge. She says “I have never really kept much of a tab on my spending. If you asked me how much I spend in a month I would really have no idea!! So I think it’ll be really interesting to find out how much I am spending and on what! At the moment, I’m trying to work my way out of a fairly substantial overdraft and so it would be great to get some tips on how I can be more careful with my spending. It’s the first morning and I’ve already spent £71.50 so I’m doing well!”

Let us know if you want to join in!

Next Page »