Finance Expert Lawrence Gold invites you to give him a run for his money…

With the credit crunch pushing up the costs of living a new report, due out next week, claims that Britons could be facing the most expensive month of the year.

Consider just some of the report’s findings:

· One in five homeowners say their fixed rate deal comes to an end this month, hiking their largest monthly outgoing

· Gas, water and electricity bills will be their highest ever as rises announced earlier this year filter through in May

· Your annual TV Licence fee will also be coming through the door this month.

· Brits are overhauling their wardrobe for summer

· May has two bank holiday weekends in which to amuse ourselves...

So how on earth are we going to make ends meet?

To answer all your questions and to give us some tips and advice for the rather rocky year ahead we’ve got TV Finance Expert Lawrence Gold dropping into the webchats.tv studio. Lawrence is a mastermind when it comes to money matters and knows exactly how to cut corners on your costs without sacrificing your quality of life. Since this is a live webchat you’ll be able to submit all your finance-related questions for Lawrence to answer, so why not give Lawrence a run for his money?

Lawrence Gold and Dominic Stinton of report authors TalkTalk join Consumer Show presenter Lis Speight live online on Tuesday 6th May at 13:45 to discuss personal finance strategies.

H: Lis Speight, host
L: Lawrence Gold, Money expert

 

H: Hello and welcome to the Consumer Advice Show, I'm Lis Speight.  Now then with two bank holidays and the sun finally making an appearance, May is always an expensive time of year. In fact you could argue that of all the months, May is the most expensive. Of course this isn't helped by the credit crunch that's engulfing us all. Well here to help you get a grip on your finances is money expert Lawrence Gold, welcome along Lawrence, really nice to see you today

L: Hi Lis
 
H: Thanks for coming in.  Now this is a live show and we're interactive as well so if you've got any questions for Lawrence about pensions, mortgages, if you're in a financial pickle then get them into us, all you have to do is type your name and your question in the box that's on the screen, press submit and it'll come through to us here in the studio and we'll try to get through as many as we can during the course of the show. But let's start first of all by asking Lawrence, why is May such an expensive month?  Seems quite weird to me, you'd have thought we've got Christmas out the way and we'd be plain sailing

L: Well it is this year it just so happens that May is very expensive, in fact today is the most expensive day of the year

H: Bizarre

L: Now why? Well one in five fixed rate mortgage deals ended last month

H: Right

L: Which means the new monthly payment goes out today on a much higher scale so –

H: So it's a bit of a shocker for people

L: Absolutely. You've got winter bills coming through the mat today –

H: All those heating bills, the gas bills –

L: Yes and it's expensive because we've just had winter. And then we've also got the TV license fees renewals that are due today, so it just so happens today is the most expensive day of the year, however if you think about it, it can only become cheaper

H: It can only get better can't it! Now if you've got financial problems out there, where do you start?

L: Well the first thing is don't bury your head in the sand

H: Right

L: And I always say you've got to speak to someone whether it's the Citizens Advice Bureau, bank manager or even friends and relatives, but look get a piece of paper and split it into two, put what's coming in on one side, income there and outgoings on that side, and split the outgoings out, so you've got expenditure that you have to pay, mortgage, rent, utility bills etc

H: So that's the most important thing

L: They've got to be paid

H: They're first

L: And council tax obviously and then – excuse me – after that you look at the ones that you can save money on

H: Right, which is what sort of thing?

L: Well clothing, going out, socialising, you can cut back on those, and when times are hard, that's what you have to do

H: And do you think we're getting worse as a nation then, we've got this global credit crunch upon us, do you think Britain's worst hit?

L: Well we're very good at credit, I mean we're on the air for 15 minutes, and in that 15 minutes £3 million will be increased personal debt in the UK

H: And that's not just my shopping bills!

L: No it's all mine!  So you know it's a lot of money, £1 million every 5 minutes

H: Wow

L: And it has to come to an end, and the credit crunch has hit home, but maybe it was needed

H: Yes. So do you think that we're just spending too much on credit cards, do you think we're relying on them too much?

L: We're a nation for it, I mean instead of saving up for something we say well we're have it now, we can pay off. In the olden days we used to save up and then buy, it's the complete opposite now

H: So what's going to happen then?

L: Well I just think people have to be more careful, and you don't buy things if you can't afford them?

H: Yes. But people say "I'm not very good with money"

L: Yes but what does that actually mean?

H: Is that true, can you learn to be good with money?

L: Well I think it should be compulsory in schools

H: Right

L: I think there should be some financial education, but you can – there's plenty of websites and newspapers now that will help people, and if you've got a problem, you know speak to people, there are people like me out there who will help

H: Yes ok. So don't ignore it

L: Don't ignore it, that's the worst –

H: Better to make a decision than no decision

L: Absolutely

H: Ok well that's a good start; let's move on to some of your questions now. And Dawn's written in and she says "my mortgage deal's coming to an end this month. Which is the best type of mortgage for me to move onto?" That's quite a big question isn't it?

L: Well it's too broad to answer here because it depends on what Dawn is looking for. Does she want a fixed rate, if so for how long? Does she want a rate that she knows can come down, but can't go up, something like a capped rate, or does she want a discounted rate? Now the best thing for Dawn to do is go and see a mortgage broker, not just your bank or building society, a mortgage broker or an Independent Financial Adviser who can sit down, look at all her assets, her liabilities, and then ask the right questions to get the right deal

H: So go and see someone who knows, and maybe don't try and do it all on your own

L: Yes I mean again you can do it on your own, but if you go and see an expert, he or she will ask you the right questions, for Dawn it could be fixed rate or it could be capped or discount, I don't know. There are plenty out there so seek proper advice

H: Ok Dawn well I hope that helps, go and see someone who knows basically. Now another one's come in from Dave, he says "I've just cleared my student debt and I'm wondering about investing in a house rather than a pension. I'm in my late 20s, what do you think?" That's very forward thinking isn't it?

L: It's forward thinking, I mean everybody should have a pension ok because you get tax relief, so every – if you're a basic rate tax payer, if you pay in £100 the government will add £20

H: Right so worth doing

L: If you're a high – that's worth doing because of that. And how are we going to live when we retire? However you also need a house to live in

H: Yes

L: So you've got to think about it. I mean it may not be the right time to buy a property at the moment

H: No

L: You might have to wait another 6 months or so; you need to weigh that up. Both have negatives, I mean the negative on both would be you can't touch your pension until you're 55 at the earliest and the negative for property if you buy something now it could zoom down

H: Yes

L: You don't know, so just take your time there, you've got plenty of time, take 6 months to a year and just think about what to do, what's best for you

H: But pension obviously very, very important. I didn't start my pension until maybe a little bit too late

L: No pensions are vital –

H: The earlier the better

L: You're going to get a state pension, but how much is that going to be worth when we all retire?

H: Not very much

L: So the earlier you start the better, yes absolutely

H: And how much should you be putting in to your pension?

L: How long's a piece of string? I mean depends on circumstances. Again you need advice on this. I mean I would always say don't let it effect your standard of living, but you do have to put something away for a rainy day and pension is part of that planning process

H: Yes. So enjoy your life today but then think a little bit about tomorrow as well

L: You have to, yes

H: Well Dave I hope that's useful, maybe try and do both in the long run, or don't put all your eggs in one basket

L: Yes

H: Another question in from Catherine Wilson and she says "our mortgage is interest only, but with two young children we really think it's time to start paying off some of the capital, but that would increase our monthly outgoings by over £300. How important do you think it is to start paying back the capital? We both have good public sector pension deals."

L: Right well it is important but you don't have to pay £300, you could do bit and bit. I mean interest only just means exactly what it says on the tin, you were – if you borrow £100,000 and it costs you £10,000 in interest, that's what you pay every year, and you pay it monthly. Capital repayment means you are paying some of the capital back so that in the end of the term, and a normal mortgage term is 25 years, with capital interest you know that in 25 years time the mortgage is finished

H: Yes

L: Interest only means in 25 years time if you continue doing that, £100,000 if you borrowed £100,000, it's still what's owed

H: It's like renting really isn't it?

L: It is but you've got the capital appreciation – you hope – on that house

H: Yes but then you've got to sell it in order to realise that

L: Yes. So if you can afford £300 a month, yes do it because you should start repaying, but if you don't then think of another sum that you can afford and start paying that off as well. You've got decent pensions remember coming because of your jobs, so that's quite important, so if you can afford to pay it off, then continue to pay the mortgage and pay bits off as well

H: And how about maybe paying into an ISA or something as an alternative, I know that endowments had a bit of a nasty name didn't they?

L: I'm not a lover of endowments

H: No

L: And I'm not particularly a lover of ISAs in regards to a mortgage repayment –

H: Right

L: Vehicle because you are subject to the vagaries of the market, of the stock market. Now 20 / 25 years time it should be fine and historically it will be, however if you're really worried about repaying your mortgage then you should do a capital repayment mortgage and it's really as simple as that. If you don't want any risk involved then you do that type of mortgage

H: Ok. Well I hope that's of some help. Pay off a little bit rather than nothing, it's a start isn't it?

L: Yes

H: Ok well Sylvia's sent in an interesting question, it says "never mind property or stocks and shares, I'm thinking of investing in some art work for the future with the likes of Banksy and Hurst commanding crazy prices for their art, it's surely a safe bet." Is anything a safe bet?

L: Well I don't think anything is a safe bet but a lot of people are saying art is one way of saving.  Yes I don't have an issue with that, you've got to be very, very careful and it is extremely risky, but if you want to take that risk then that's fine

H: You've got to really know what you're doing haven't you?

L: Absolutely

H: Because how do you know –

L: Well you don't

H: Yes it's a bit dodgy isn't it?

L: Yes but if you can and you're happy to take that amount of risk, and bear in mind I always look at risk on a scale of 1-5, 1 being very low risk and 5 being very high risk, that would be a 4 or a 5

H: Right so there we are, it depends how risky you are, how – what sort of a risk taker. Maybe invest in a bit of art and some more safer bets as well

L: You could do

H: You know it's worth a go isn't it? I was talking to my mother-in-law about this actually, you can actually get some interest-free loans for art from the Arts Council, so you know that's another way of looking at it isn't it, if you haven't got the cash straight away. Now cracking on with your questions actually, we've had loads coming in, keep them coming in, all you have to do is type the question and your name in the box on the screen, press submit and it'll come through to us here, and Sarah did just that and she says "my grandma is on a fixed income which is very painful given that council tax, petrol and utility bills have all been increasing above inflation. However she is old school and insists on writing cheques rather than using direct debits" – a lot of older people are like that aren't they? "Which could save her money." What else could she do if she doesn't want to use direct debits?

L: Well I think she should try and start using direct debits because –

H: Right, so maybe Sarah could help her out setting those up

L: Yes I mean bear in mind direct debits are very, very safe. If there is a mistake on a direct debit the bank will refund your money instantly. You do get discounts for direct debits and in this case I do think that you may need to change the ways, because it makes more sense

H: Yes a lot of utility companies, if you pay by direct debit they will give you discounts

L: They give you discounts, yes

H: What else could she be doing, it's very difficult for pensioners isn't it?

L: It is very difficult because everything seems to be going up and income doesn't

H: Yes exactly, they're stuck aren't they?

L: Look around to switching utility bills, you know there's some providers out there that if you have electricity and gas with them they will give you a discount, and they'll give you a discount for direct debit. Things like that you need to look at

H: Yes, ok

L: Any insurances that you have it may be cheaper doing it online as well, so something that you need to think about

H: It is quite tough for pensioners though isn't it?

L: Yes

H: Because you are stuck there really aren't you, you can't exactly go and do a paper round can you?  When you're a granny. Ok well – we're talking about how May is such an expensive month, summer's coming up, people going on holidays and what have you.  Can the internet save you lots of money?

L: Certainly for any insurances, annual insurances for holidays, for families it's a lot cheaper than if you buy, if you go to your local travel agent and you buy via a travel agent it's hugely expensive. You can – you know you can save nearly half, if not more, by doing it on the internet, so look at – for insurance and things like that – yes internet's superb

H: I do a lot of shopping on the internet actually and the comparisons –

L: You save money don't you?

H: Are actually very good, and actually Judith has written in, and she's obviously quite canny because she says "should I use a comparison site to change my household bills?"

L: Well not just one comparison site, look at 2 or 3

H: Right

L: And you'll get an idea.  But absolutely that's the right thing to do

H: Ok. And there's quite a lot of those around actually –

L: Yes there are

H: For all sorts of insurances and what – and we just didn't have that in the old days did we?

L: I know, and we had to do it ourselves or go to a broker to do it for us. I mean I've put top ten savings tips on talktalk.co.uk website

H: Right

L: And it's just basic tips, very simple, it's not going to affect your standard of living hugely, but it will save you money, so take a look at that

H: Ok and what are the things to pay off first, if you're in an absolute hole, is it ever too late?

L: No it's not, but you do have to speak to people, and the things that you have to pay first are the ones that are charging you the most interest

H: Right

L: If you've got a card that's charging you 20%, or a card that's paying, charging you 0%, obviously the one to pay off first is the one that's charging you 20% because it's costing you more money to have that loan there than the one with the 0%. So it's just using some common sense

H: Yes ok. And do you think that people aren't very good at common sense and money, because when I was growing up, nobody really bought on the never never, did they? People –

L: No that's right

H: People saved for cars and what have you, whereas now people are just spending willy nilly, and I haven't got anything on my credit card because it just terrifies me because that's how I was bought up, but do you think that we're just becoming a nation of just spenders, not worried about the future?

L: I mean there's no question about that, as I said you know a million pounds every 5 minutes is increased, it is because we are a nation of people who love spending

H: Yes

L: And sometimes you have to curve that in, and times are hard, and the credit crunch will see to that, but we do need to curb our spending. If you haven't got the money don't spend it, and if you find it too easy with the credit card, get rid of the credit card

H: Yes cut it up

L: Cut it up. And if you go out on town one – you know for a weekend, instead of taking a credit card, take cash. Take – you know if you've got £80 in your pocket you can't spend any more, that's how to do it

H: Ok good tips. Just basic isn't it?

L: Yes

H: But we're all a bit rubbish at it aren't we?

L: It's not rocket science, it is common sense but yet it's very easy for me to spout it and you've got to action it

H: It's addressing it, you've got to – if you're getting in trouble you've got to stop it haven't you and action it. Now Dave Smith has sent a question in and he says "I'm quite good at saving" – that's good – "but spend a lot of money on my family so my savings need to work harder.  Where is the best place to put them?"  That's a good question isn't it?

L: Right – yes I mean if you – you should look at tax-efficient savings firstly and that's an ISA, they're not called cash ISAs any more or stocks and shares ISAs, but if you – you could actually put £3600 a year into a cash ISA so look on the high street for various financial institutions and do that. That's your first port of call because it's instant access and it's tax-free

H: Ok. And if you're in a right pickle, bankruptcy – what do you think of that?

L: Last resort

H: Great. Don't go there

L: No it is a last resort, there's other things that you can do before bankruptcy

H: And what about debt consolidation, there's a lot of those adverts on the telly

L: I'm not a lover of debt consolidation; you need to seek proper advice and that means going to the Citizens Advice Bureau, especially if you're in debt. Citizens Advice Bureau should be the first port of call, not a debt councillor

H: Ok good advice there

L: Ok

H: Some firm words there as well from Lawrence.  With a name like Mr Gold, he's got to be doing something right hasn't he? Well Lawrence has put together some tips actually, 10 top tips on how to get your finances under control and you can find those on the website which is www.talktalk.co.uk, and just remember don't keep your head in the sand, if you've got financial problems then make a decision, it's better to make a decision than no decision at all. Anyway today's the most expensive day of the year so it can only get better from here can't it? Thanks very much for watching the Consumer Advice Show and we'll see you again soon, bye bye

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