Think before you spend

Some things I avoid spending money on like interest to banks and credit card companies.  They don’t pay me much interest, but it’s better than paying them extortionate rates of interest. Interest free credit just means the interest is added to the price. Insurance is another cost that is inflated by all kinds of things. Some insurance you can’t avoid and it’s difficult to know whether to go to a company that will pay out or a cheap company that you might have problems with, in the event of a claim. The important thing is to try to get value for money. You can also avoid some insurance by using something else. Do you really need life insurance if you have savings, investments and a funeral plan?

In the UK, if you eat out in a pub or restaurant VAT at 20% is added to the bill and so it makes it expensive. The food outlet has other expenses and business rates too and all that gets added to your bill. So if you’re trying to save money, it’s a good idea to stay in and cook your own. However, using local food outlets means more money going into you local economy and less going on imports. It’s a shame politicians don’t realise that!

Anything trendy will cost you money and fashionable clothes will cost more than the basics. Look for quality at a reasonable price and look at why some things are trendy. It’s often because of a designer name or a little bit of detail that you can probably add yourself.

Keeping up with the Joneses can be expensive and if you want an extension on your home just because you neighbour has one, you can keep doing that and trying to compete. The only winners are the people you buy the stuff off, the losers are you and your neighbour.

There are year letters on the number plates of cars in the UK for a reason; to incite envy. Envy costs money, don’t get brainwashed by a corrupt elite that thinks in only monetary terms. There really are things that are more important than money.

Mobile phone contracts are the same as having things on credit, the phone isn’t really ‘free’. You pay dearly for it. Think about why you have a phone and what you use it for. Mine was a birthday present a few years ago and it’s on pay as you go. I put some credit on it a couple of years ago. I use it when I need to make a call and I’m not near a land line. I don’t need to use it to access the internet or update Facebook. I have a laptop for that! Telecommunications is a major expense these days and so you have to ask if you’re getting value for money. That reminds me, I must pay my line rental 12 months in advance, that’ll save me £60!

Housing is a major cost and people often move house and go to more and more expensive properties. They see this as making money, as a kind of investment. It is a problem when people invest in their homes, because they don’t have access to other investments like the stock market. The financial system is corrupt, only this morning I read that another bank might be fined because of the LIBOR rigging scandal. You can’t sell your house to realise your investment and so it’s not really an investment. You are also putting all you eggs into one basket. You could consider investing in something like peer to peer lending. I think Zopa is the best, see the link in the side bar. I have been with them for about 2 years and I get a return that is above the rate of inflation. You can also consider other investments, but this isn’t a great time to invest on the stock market.

The UK economy is corrupt and in something of a mess. The Bank of England has injected 375 million pounds into the economy. They say they have created wealth equivalent of £10,000 for every household in the UK. Did you get your extra 10K? Me neither…

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