Tesco’s Supermarket Banking

We had a question on our Facebook page about Tesco’s plans to offer their own banking services brand within their supermarkets.

So now we will be able to bank at Tescos? Is that a good idea? Are the conventional banks worried? Could be a huge development

Owen Repliers

To be honest, you have been able to bank with the big supermarkets for a while now as there have been a number of joint ventures in place between supermarkets and banks to offer financials service products through supermarket stores. Whether it is a good idea depends on the value for money they are offering so as with any bank offering, never assume it is the best deal around without doing a bit of research – whichever brand is offering it to you. I suspect that conventional banks are a bit worried because many would argue that banks are far less effective at great customer service than supermarkets are. The saviour for them, though, is that people seem to be terribly slow at moving their current account from one bank to another, even when they are fed up with the service they are getting from their existing provider.

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

Question regarding IVAs

Inty wrote :

What is an IVA, it seems to be a good way of getting yourself out of a hole….the benefits seem great, is there a downside? There must be long term consequences.

IVAs – yet another one of those acronyms which the financial services industry use! It stands for Individual Voluntary Arrangement and is a formal agreement between the person who owes money (called “the debtor”) and the people he or she owes money to (called “the creditors”). IVAs set out a formal plan for how the debtor is going to repay the creditors over (usually) a five year period. Unlike a debt management plan, which is a much more informal arrangement, an IVA is set up by a licensed insolvency practitioner.

The key benefits of an IVA are that the debtors assets are protected and any debt not repaid at the end of the agreement has to be written off by the creditors. IVAs also avoid the more serious consequences of going bankrupt. They key thing, though, is to get some proper professional advice because your personal circumstances (amount of debt, income etc) all have a bearing on what the best solution may be.

AskOwen now giving financial commentary and free financial advice on Twitter

Just a quick note to let you all know that as well as this blog and our facebook group we are now on Twitter. You can follow me at @OwenWoodley and my CEO Gary Jennison is also on there with @GaryJennison. Together with Gary we are also busy putting up snippets of financial commentary on our YouTube channel.

So far we are delighted with the response we are getting from all these sources. It’s a great way for us to reach a wider range of people and provide the answers to their financial questions.

The Budget 2009

Last week Ally asked “Owen, what do you expect to see in the budget next week and what would you like to see.”

Well, all the noise is that the Chancellor, Alistair Darling, will focus on job creation (including support for Jobcentres etc) and stimulating the housing market. I also suspect that there will be at least the start of some fairly tough measures on tax levels for the well off. What would I like to see? Well my simple view is that the economy will only start to really improve when investors of all kinds believe that the UK is a good place to invest in.

At the moment, they do not because so far at least, our Government believes that it can borrow its way out of trouble. All my experience tells me that if you are already borrowing too much, you cannot borrow your way out of debt – whether you are a Government, a business or an individual – so I hope the focus will be on reducing Government borrowing and Government debt to build some more fundamental confidence in UK PLC. That way, both businesses and individuals will feel more confident about investing for the future.

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

Never a lender or a borrower be

Question from the Ask Owen Facebook group asked :-

Hi Owen,
My gran always used to say “Never a lender or a borrower be”, it seems pretty wise now…although it’d be useful if the banks weren’t all living by that maxim now.

Owen Replies:

I think lending and borrowing is OK for banks (that is what they are there for after all). It is when they started getting involved in all kinds of risks and liabilities which they did not properly understand that things went wrong!

I think the key point here, to use a gran-style phrase, is that banks should “stick to their knitting” in future!

Regards
Owen Woodley
Deputy CEO
Moneyway

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

Billing and Other Taxing Issues

Dan on the Ask Owen Facebook asked :-

Hi Owen,
I’ve been working for a variety of agencies this financial year (9 or 10) and I was wondering if you know what the situation is regarding tax.

I had a £20k job for the first 2 months and have been doing odd bits of work ever since, so I’m guessing I might be due some money back. Is there any way I can speed this process up (last time I was in a similar situation it took 18 months to come through).
Thanks, Dan

Owen Replies:

Not my area of expertise, Dan, but it is definitely worth you getting some proper advice. You need to investigate how best to bill for your time in future as well.

Regards
Owen Woodley
Deputy CEO
Moneyway

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

One Penny Mortgage and a Potential Opportunity

James on the Ask Owen Group Blog asked :-

I read in the news about that couple who’ve ended up paying 1p a month on their mortgage (and they only pay that because it’s the lowest number the bank’s computers can handle)….that sounds great but surely they needto be saving that money to pay it off the equity on the house.
 
I know we are meant to take the cash from all these rate cuts and go out and spend, spend, spend but surely getting your house paid off should be a priority.

Regards
James

Owen Replies:

James – I thought exactly the same thing when I read that story. What a great opportunity to drive the size of their mortgage down much more quickly. I have personally put up my mortgage repayments recently to take advantage of these uniquely low rates.

Regards
Owen Woodley
Deputy CEO
Moneyway

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

Question about savings and investments from our Facebook group

Newcomer Dan Fry posed a tricky question on our Facebook group this week

So given that the interest rate is so low what are the best options for pensions and savings. Obviously I’m not expecting you to come up with a fool proof risk free option, it’s just that at the moment I have a cash ISA and a stakeholder pension and I’m sure I could probably be doing more with my savings.

Sorry, I am going to have to duck this one for legal reasons! You really need to get some proper advice from a regulated independent financial advisor who will assess your needs and, crucially in this marketplace, your appetite for risk! In addition to that, you will need to make some guesses as to the likely length of the recession and, therefore, how long interest rates are likely to stay at current levels. I think “guesses” is the operative work there, because very few experts agree on what the interest rate environment might look like in a couple of years time.

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

Question on family finances

We received the following question from Whit last week :

My mom has been retired for a while and my dad just got laid off in his late 50s. I’m a senior in college and I’m really worried about my family’s financial situation, as I’m the only person in the family right now with a job. With a plain ole English degree, and little experience, how am I going to support my parents, and my ailing grandparents, and also try to start a life of my own? I keep reading articles and blogs about just generally not spending exuberantly and saving more than you spend and I’ve been doing that, but the tides have suddenly changed and I don’t think that it’s going to be enough.

Owen Replies : That is really tough for you and I am so sorry you have all that worry. It is no scrap of comfort but you are not alone. This is going to sound a bit crass, but you can only do what you can do and you can only operate within whatever means your income provides. I don’t know where you live, but governments are doing just about everything they can (some would say too much) to get the economies moving again and to generate new jobs so whilst unemployment is pretty certain to increase in the UK over the coming months, it looks unlikely to get up to the level of the early 1980s. My usual advice to people is that if you don’t have enough money to go round, the worst thing you can do is to put you head in the sand and hope the problem will go away. Much better to front it out with your bank or whoever you owe money to and ask them to help. The very best of luck with it all.

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.

Question on the government’s car industry initiative (updated again)

We had a comment from Alex on our Facebook group last week, he asked

If the government were to bring in a car loan guarantee scheme how would it work, I mean how much potentially would it cost? And would they have the say over what was a risky debt?

It’d certainly help a big industtry and secure jobs but are we not just re-establishing the problem we had in the first place…the potential for unsustainable debt?

Owen replies “Desperate times call for desperate measures, Alex, and I think that is what this one is. If you look at the major car manufacturers in the US – Ford, Chrysler and GM – they are all saddled with an unsustainable cost base and working practices which so heavily protect the employees that the businesses are simply uncompetitive in a global economy.

Car manufacturing in the UK does not have quite this problem, but even so, these are all businesses which have to radically change if they are to survive in the long term. A bit of short term Government aid, whether £2bn or $20bn, will not solve those underlying problems. To your question, there is not much detail on Mr Mandelson’s scheme yet, but most of the car industry think that it will make little or no difference to anything I’m afraid.”

The debate continued over the Facebook Wall. Ian Wilson added his question

I don’t suppose there’s any reason you’d know but exactly how hamstrung are they by european rules when coming up with these bailouts?

The banks seemed to get aid no problems but the car industry bailout seems to be bound up with red tape.

and Owen responds “You raise a really interesting point which I think we will hear a lot more about over the coming months. The fact is that the problems with banks have been so serious and, crucially, so enormous in terms of their potential impact on the world economy, that the usual rules for governing state protectionism have been temporarily thrown out of the window.

The problems in the car industry, to be blunt, will not have the same impact as the banks so the potential for bending the rules is less. Having said that, I think the “red tape” you talk about is more to do with the fact that this is a scheme which even its designers are not quite convinced about yet.”

Ask Owen is about providing impartial financial advice for those concerned about managing their money. The country is suffering a serious economic decline and with people concerned about increasing costs of living and fuel bills, teamed with worries about job losses and house repossessions, it is a daunting time; so if you have a question to Owen fill in the comment box below and he will answer.