Financial nuts and sledgehammers

Inflation is falling. That's good news after the Bank of England keeps telling us we're spending too much and using interest rate rises to batter anyone with a non-fixed rate mortgage.
I phrase it that way, because people who don't have a mortgage at all, who've already paid for their house, are way better off, with lots of opportunities for cash savings. People who got a fixed rate mortgage early enough are ok too. But if you have a mortgage at a discounted rate (if it's not discounted you need to renegotiate) then all these interest rises have been costing you.
Thing is, are the people with variable rate mortgages the same people spending money on credit cards and going into debt? Are these the same people having such an impact on inflation? And can we trust the inflation figures anyway, as they've been so tinkered with over the years for political ends?
My point is, if you want to stop people spending, then increasing the base lending rate isn't necessarily going to change it. Those with the fewest debts will continue to spend, while those with debts bear a greater burden. Wouldn't it be better to encourage people with debts to spend the additional amount they're having to pay to meet a rise on a personal investment instead? 20% of the population isn't saving any money at all, let alone investing it seriously. If we don't save, we'll always be in debt. No way out of it.
Wouldn't a more "outside the box" approach be to increase the amount of tax relief on pensions? So if you pay into a pension you get some more money from the government, rather than just paying it all back into a chain of banks? This encourages better personal financial practice and stops people spending frivolously.
Ok, it's no panacea, as the wealthier will continue to be better placed to take advantage. But it is an improvement on money going back into banks and people falling into heavier debt.
By the way, it's Credit Awareness Week this week, if you're interested.

PDF to happiness

I've been doing some work for Dresdner Kleinwort recently, who conduct some interesting macro-economic research. One of their stars is a guy call James Montier, who writes about behaviours involved in investing. He's written a particularly interesting article on the psychology of happiness, which is well worth the read even though it's in a PDF.

Guardian of good intentions

How can a newspaper that distributes so much unsollicited extra paper now recommend to us how we should recycle their bloody wallcharts?
Similarly, having been sent a scare-mongering brochure about people stealing my identity from Morgan Stanley that will be ok if I buy another product from them, they then sent me loads of credit cheques that I'll never use that I now need to shred in order to prevent my identity being compromised.
Fucking hypocrites.

Shift down

At the risk of being called a hypocrite, let me point you in the direction of National Downshifting Week. This -- albeit horribly designed -- web site has advice on how to lead a more relaxed lifestyle and save money to boot. It's not all completely thought through, but it is worth the read, particularly when it comes to initiatives relating to the company you work for.

Demi-pension

It's a bit of a hobby-horse of mine, pensions. There are a couple of things about them I'd like to reiterate:

1. They almost certainly offer the best return on savings available in the UK, as the government actually invests your a rebate into the plan; if you're a basic-rate taxpayer, for example, the Treasury pays in 22p for every 78p you contribute.


2. The earlier you start to contribute, the more you'll save. Even if you start piling in loads of cash in your thirties, you'll never make up what you would have made if you'd started contributing a tiny sum in your twenties.

This applies to private pensions, of course, be they stakeholder or otherwise. But this is what you have to rely on now as successive governments have ducked the bullet on state pension contributions. Moreover, if you look back to 1950, there were roughly five workers for every pensioner. But by the time I hope to retire, around 2030, the ratio of workers to pensioners will have halved. That means half the money to help me out in my old age; and when the full state pension is currently around £70 a week just think how far it'll go by the time you retire.
I could point you in loads of different directions for information about pensions and why you need to save more. For the moment, however, I'm going to stick to this article in the excellent Motley Fool, which sets out all the changes that are taking place to pensions from the new financial year.
You should take advantage of some these changes as you can, even though they may seem unpalatable. If not, just spend 2 minutes on this form to see how poor you might end up.

Wise Counsel

It's easy to harp and criticize, which is why I do it so often. Take an article from this weekend's Observer for example. The strapline began: "Debates about platonic relationships started with When Harry Met Sally ...". So not with Plato then.
On occasion, however, I prefer to relate something practical, so if you live in the U.K. this one's for you. (If you don't live in the U.K. come back soon and I'll have thought of something else.)
Death and taxes may be certainties, but there are always opportunities to reduce the burden of the latter. Fiscal forbearance should always apply and with Council Tax you can check whether you're over-paying very simply via the online valuation list. Simply enter your details and find out if your property is in the same band as your neighbours. If it's not, you can apply straight away to have it reassessed, albeit under a number of set criteria.
I've just done this and had our house dropped a band, saving us probably a hundred-odd quid a year... not sure how much exactly because Barnet council don't publish their rates. Would have been good to say "Here's what you would have paid..." Anyway, it's worth trying for two minutes of your time.