Tell us about your time on ‘Your Money and Your Life’
Your Money and Your Life was a BBC television series set up as a live, one-stop-shop to answer the UK’s burning consumer questions coming out of “Lockdown”. I appeared on episode 10 of the series as a financial expert to help a UK-based family, the Masons, who had been having money struggles.
Sounds exciting! Tell us about the Masons
Jenny and Paul Mason live in Essex with their two beautiful children Beau and Mia. Although they had spent the past ten years growing a successful building business, they saw a massive drop in demand at the start of 2020 due to the coronavirus pandemic.
This left the family with no choice but to start cutting back on their expenses, resulting in some difficult conversations.
What are some of the biggest barriers you see people face when it comes to money?
The main thing I’ve learned over the years is that most of us have never been taught the basics when it comes to money. However, it’s my job as a financial adviser to help people recognise this and to prevent further mistakes in the future.
What is the first thing you look at when assessing a household’s finances?
I like to start with a households’ fixed monthly outgoings – their bills, memberships and subscriptions. After just 30 minutes of searching for deals on the internet, I was able to save the Masons £62 a month on their mobile phone bill and £61 a month on their television plan – the equivalent of £1,475 a year! With household utilities, if you find a better deal elsewhere call your provider to see if they’ll match it – and if they won’t, switch!
Whoa – that’s incredible! Any more tips?
Cancel all unused monthly memberships. You’ve got to be ruthless! Paying for services you don’t need is money down the drain.
So that’s ‘savings’ covered – any recommendations on what people can do increase their income if they’re feeling strapped for cash?
One of the fantastic things about the internet is that you can make money out of things that are lying around your house. There are £100s to be made either by selling items online or by hiring them out.
The Masons owned some specialist equipment for their building business, so we looked at what they could potentially hire out when they weren’t using it. We calculated that they could hire out their electric gutter cleaner for £50 per day, a cement mixer for another £50 per day, and a jet wash for £30 per day. Not too shabby.
Of course, not everyone runs a building business, but there are other items worth considering to hire, such as bicycles, lawnmowers and even parking space. Focus on things that someone else would want to use, but not necessarily buy or store in their house. You can check with your Local Authority to see if your items are safe to lend out.
We also searched for the Masons’ house to see if there were any unused items that we could sell online. Within moments we had found an old mobile phone worth a potential £100, a designer bag worth another £30, and an old lampshade which we reckoned could fetch another £5. Every little helps!
What’s your advice when it comes to debt?
According to The Money Charity, the average UK adult had £4,264 in unsecured debt in January 2020 – no small sum. Debt and its associated interest charges and fees can be a massive headache for households to manage, but there are ways to stop debt from spiralling out of control.
Other than the Masons’ mortgage, their biggest monthly outgoing was their loans – which cost the family £800 every month. When tackling debt, the primary objective should be to minimise the total amount of interest paid, as this is money you will never get back.
For the Masons, I recommended that they combine their three existing loans, by taking out another loan at a cheaper rate and using it to pay off the more expensive loans. This is called ‘debt consolidation’.
Provided you have a good credit history you don’t have to remain stuck in a loan at an uncompetitive rate. Much like your bills and utilities, if you think you are paying too much, call your lender and haggle!
In the end, I found the Masons a new, cheaper loan at an APR of 2.9% which reduced their monthly loan payments by £380 a month, saving them £4,560 a year!
Does this advice change for credit card debt?
The Masons were also spending nearly £700 per month on credit cards, the majority of which was going on interest payments. For this, I recommended a ‘balance transfer’. This is where you transfer your expensive debt from your current provider to a new provider at a 0% interest rate.
You typically have to pay a one-off transfer fee, but once you’ve moved the debt you’ve no interest to pay for the length of the 0% period. After switching their debt to an 18 month 0% credit card I was able to save them £327 a month.
Between their loans and their credit cards, the Masons were able to save £3,924 a year in debt repayments!
Any final advice?
I spent just a few hours helping the Masons with their finances by looking at their bills and utilities, sourcing items around the house that they could sell or potentially hire out, and by reducing their debts. Had we not done the money makeover, they would have wasted £9,959 over the next 12 months in unnecessary or avoidable expenses.
My recommendation to the Masons, and to anyone reading this, is to take out an hour every six months to check on your finances and make sure you’re on the best rates and cheapest deals. I guarantee that if you invest the time to look after your finances at least every six months, your finances will look after you!