Credit Cards: the best way to borrow?

As economic pressures become more of a concern people are becoming more conscious of saving where ever possible. The threat of a recession means that we are all forced to take more of an interest in financial matters and become more money savvy.

One thing which I was surprised to learn was that Credit Cards are now considered to be a good way to borrow money. Of course borrowing money is best avoided (as is lending money) but some ways of borrowing are better than others. I have never understood the ease with which people become indebted. It seems like putting off the inevitable and making your future harder for the sake of short term gain. There are some situations unfortunately where it is unavoidable.

According to Martin Lewis (of MoneySavingExpert fame) borrowing on Credit Cards is one of the best ways in which to get cash whilst paying relatively low interest rates (if you are super organized). For instance if you use a Mint 0% Credit Card (or one from Barclaycard or Capital one) you can defer costs until after payday without using a payday loan.

A perhaps more controversial piece of advice that Mr Lewis had for the public recently was to ‘live within your means’. He suggested that we should not think about how we can sustain our standard of living but how we can base your lifestyle on how much money we actually have.

Starbucks to close 600 stores

Starbucks has announced that it will close 600 stores and reduce its 2009 expansion plans by half. This is a major move for the chain which is famous for its aggressive expansion plans. All the stores due to close are located in “major U.S. markets”, perhaps Starbucks technique of opening multiple stores in the same location is beginning to struggle.

Price increases and economic struggles such as the rising cost of gas have resulted in reduced takings for the coffee company who’s Chief Executive Howard Schultz returned to his former position as CEO in January. Schultz has said that while some employees will lose their jobs attempts will be made to give as many as possible work in remaining stores. Up to 12,000 workers jobs are at risk.

“By far, this is the most angst-ridden decision we have made in my more than 25 years with Starbucks, but we realize that part of transforming a company is our ability to look forward, while pursuing innovation and reflecting, in many cases, with 20/20 hindsight, on the decisions that we made in the past, both good and bad.”

Howard Schultz

Coffee to go is increasingly being seen as an unnecessary luxury by Americans who are paying more than ever for gas and food. (Those of us in the UK who pay the equivalent of $10+ per gallon for petrol can relate). It cannot be a good economic indicator that Starbucks is actually closing stores rather than just opening less! At this rate it will only be the super rich (who always seem to be photographed with the iconic Starbucks cup in hand) who will be able to afford a Grande Cappuccino.

Free Conservatory or Private Jet? Sellers turn to desperate measures as housing market struggles.

House owners and estate agents are turning to desperate measures to sell houses, including throwing in added extras. As mortgages become less available sellers are finding it increasingly difficult to find buyers especially ones willing to pay full price. As sellers outnumber buyers in some areas a shift of power has happened leaving potential buyers with the enough power to demand lower prices. The lack of competition means that estate agents and owners are offering free conservatories to any buyer willing to pay the full asking price.

One seller is so determined to to lower the price of her £3.15m property she is willing to throw in lifetime membership to a private jet club. Jo Eccles of  Sourcing Property thinks that these techniques will not encourage potential buyers:

‘In the current market most people don’t have to buy and if they’re choosing to do so it’s because they think they’ll get a bargain, not because they’ll win a trip in a private jet. If the price is reduced, they can pay for all of that from the saving they’ve made anyway.’

The slow down of the property market has had an impact on the rental market as well. Renters who in previous years may have decided to buy are finding that they are in no financial position to do so and are remaining in their rented accommodation. Others looking to rent are finding that there is very little movement happening and landlords are of course able to charge higher fees as less properties are avaliable.

Conservatories are being seen as a good way to increase property prices as light and space are very important factors in the valuation of properties. There are also a good way of increasing the amount of space available for those unable to trade up to a larger property. Double glazing is also seen as a suitable way to add value and people attempt to reduce heating costs and increase saleability.

Scratchcard winners want housing benefits.

I’ve written a few blog posts about silly people getting silly tattoos, I’ve even decided to have an ‘idiot of the week’ section. This week’s winners are easy to pick.

Meet John and Louise Nickels. The Nickels don’t have a dime to their name and as such are attempting to claim housing benefits. There is nothing unusual there however, thousands of people up and down the country are unable to work. The thing which marks out John and Louise is the fact that they won £100,000 on a scratchcard in 2006 and have spent all their money.

They are unable to work as John has a ‘frozen’ shoulder and Louise is waiting for a hip operation. They owed £11,000 in council tax and rent when they won the money and they paid this off. They are currently recieving £90 a week in incapacity benefit but are unable to survive on this.

Perhaps if they had been a little wiser with the £89,000 they had two years ago they wouldn’t be in this mess! GMTV interviewed the couple who said that their rent costs them £80 per week. They spent 5 years worth of rent money on a caravan!

The caravan they bought for £22,000 is apparently now worth £6,500 . This is a loss of £15,500! I no expert when it comes to money but surely they could have invested a little better. Even putting some of the money in a current account and not spending it within the first 2 years would have been an improvement. They could have opened an ISA account each which, if it had a 6.35% rate would have earned them £786 over two years. That’s two and a half months rent right there!*

It’s clear that whoever runs the GMTV website is not a big fan of the Nickels. The photo showing the couple in this article has the file name “Scroungers_m.jpg”

*Please note all sums in this post are for illustration purposes only and probably completely incorrect. To quote my old Maths teacher “Thomas seems to prefer being silly to learning.”

The world’s first betting shop millionaire.

A north Yorkshire man became the world’s first betting shop millionaire last week, by beating odds of two million to one. The unnamed gambler struck it lucky by predicting the winners of 8 races. His original bet of 50p has netted him £1 million.

What makes the story even more unbelivable is that the first of the 8 horses to win was called “Isn’t That Lucky” and the eighth was called “A Dream Come True.
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