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Detox your finances: How to control your personal finance

Detox your finances: How to control your personal finance

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Detox your finances: How to control your personal finance

4.5/5 (6 valutazioni)
273 pagine
3 ore
Dec 12, 2011


Detox your finances leads you through a detox programme which will put the cash back into your bank account, and help keep it there. Most people spend more than they earn and buy lots of stuff they don’t really need. Detox your finances shows you how to earn more, spend less, save what you can, invest wisely and sell things you no longer need. Discover brilliant ideas to help evaluate your financial priorities, manage credit efficiently, set and keep to budgets, and make your money work as hard as you do.
Dec 12, 2011

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Detox your finances - Infinite Ideas

Brilliant features

Each chapter of this book is designed to provide you with an inspirational idea that you can read quickly and put into practice straight away.

Throughout you’ll find four features that will help you to get right to the heart of the idea:

Try another idea If this idea looks like a life-changer then there’s no time to lose. Try another idea will point you straight to a related tip to expand and enhance the first.

Here’s an idea for you Give it a go – right here, right now – and get an idea of how well you’re doing so far.

Defining ideas Words of wisdom from masters and mistresses of the art, plus some interesting hangers-on.

How did it go? If at first you do succeed try to hide your amazement. If, on the other hand, you don’t this is where you’ll find a Q and A that highlights common problems and how to get over them.


‘Money is better than poverty, if only for financial reasons.’ – Woody Allen

It makes the world go round. It’s the root of all evil. Time is money. A fool and his money are soon parted.

Whatever you think of money, it plays a central role in our lives. At a basic level, it helps to clothe and feed us, to put a roof over our heads, and pay the bills. If we have a bit more money to our names, we might aspire to a bigger home, a flashier car, maybe an exotic holiday. Having money can help us to feel free and secure.

And yet do most of us feel free and secure? Probably not.

For many of us, life can feel like a constant financial juggling act. We probably owe money on our credit cards, our living costs are going up, our children want ever more expensive trainers, and even the modest wish to have a secure income stream to pay for our home and to secure our pension seems pretty ambitious.

Besides, how much money is enough these days? A hundred thousand? A million? Ten million? Who can say? Spectacular falls from financial grace do happen. Remember ear-munching, low-punching boxer Mike Tyson? He’s managed to blow an estimated personal fortune of $500m and end up over $15m in debt.

‘There was a time when a fool and his money were soon parted, but now it happens to everybody.’ – Adlai Stevenson

OK, so we’re not likely to have that sort of money available to us. If we did, I’m sure we would make a better fist of it than Tyson did. The fact is, though, that quite a few of us have got into some very unhealthy financial habits. If you’ve ever used a credit card to spend money you didn’t really have on something you didn’t really need, you should know what I’m talking about. Perhaps you’re carrying long-term residual debt on your high interest charging credit card. Or maybe you’re ignoring the fact that your mortgage or pension arrangements are heading for shortfall.

Whatever your personal financial situation, there’s probably room for improvement. That’s where this book comes in. It’s aimed at anyone who would like to do one or more of the following:

Earn more

Spend less

Manage what you have wisely

Save what you can

Sell stuff you no longer want/need

OK, so that’s pretty much everybody on the planet: let’s get a bit more specific about the content.

This is a book about the principles of managing your personal finances, presented in the form of 52 ideas. Some of these ideas are action oriented, others are more reflective. All are designed to get you thinking about your personal situation.

What I’m offering you is a series of prods and prompts that add up to a comprehensive financial health check. Feel free to dip in and out of this book wherever you would like.

‘Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.’ – Groucho Marx

If you’re a bit concerned about dealing with all of the technical gobbledegook that the financial field has spawned, you can relax. This book is intended to be a plain English guide for real people like you, not financial specialists. This is not a book for those who want a specific tip about whether to buy Consolidated and sell Conglomerated. Nor will you find phrases like ‘fiscal drag’ (well, only once anyway). And although the suggestions made in the book are very practical, they express broad principles, not specific and detailed advice.

In case you’re wondering who I am to be offering you pointers about your personal finances, I’m somebody who has experienced fiscal highs and lows, been in and out of debt, and who has worked in and around the financial sector for a number of years. You might also like to know that I’ve got all the money I’ll ever need in my life – provided I die by half past two today.

OK, that’s enough preamble. Let the detox begin.

1. Red is the new black: Time to face your credit card demons

Awash in credit card debt? Here are some strong pointers for how you can manage your way out of financial trouble.

Health experts are bemoaning the fact that we’re fast becoming a nation of fatties. The thing about the population carrying a few extra kilos is that it’s pretty obvious to the most untrained of eyes. Take a walk down your local high street and watch people waddle.

Our readiness to take on previously unheard of levels of debt is a different story. Barring a spectacular fall from monetary grace, our financial health is our secret. How could the couple two doors along afford to have that conservatory built? Who knows? How can the neighbours manage to put all three of their children through private education? How can the office administrator go on quite so many expensive holidays?

What we do know is that collectively we are carrying more on our credit cards and mortgages than any previous generation. The average household has debts of around £38,000, with many of us owing between six and twelve times our household’s annual income.

Debt’s the way to do it

We’re debt junkies. Go to college and come out with a qualification and a pile of bills. You’ve chanced on a bargain in the sales but you’re a bit short this month? No problem – stick it on the credit card. Whether it’s buying a house or a car or just paying for Christmas, resistance to debt has never been lower.

Somewhere along the line, we’ve succumbed to the delusion that owing money is sophisticated. We look on that elderly uncle who’ll only buy something when there’s cash in the bank to pay for it as some kind of financial ingénue rather than as a model of financial prudence.

And, of course, it’s getting ever easier to pile up the debt. Credit card companies seem to fall over themselves in their haste to bump up our credit limits, and then send us a letter telling us the ‘good news’ that our capacity for debt is now that much greater. Damn their eyes.

Even worse, they’re now sending us blank cheques every few weeks. Aside from the fraud risks posed by these unsolicited letters falling into the wrong hands, these cheques usually have punitive conditions – no interest-free period, a transaction fee and often less than attractive interest rates.

Don’t get me wrong. Used sensibly, credit cards can be a neat budgeting tool, which can provide a bit of financial flexibility. And borrowing money via your credit card can be extremely positive if you use it to buy smartly. If, for example, you had used your credit card to buy some tickets for a big theatrical or sporting event and then put them up for sale on eBay, you can make a tidy profit. Part of the trouble is that most of our credit card spend tends to go on buying liabilities rather than assets. Borrowing money to buy things that go down in value is a very bad habit to develop.

According to some estimates, most households in the UK have at least five active credit cards, including store cards, at any given time. Do you know what your total credit card debt is? Do you know what rates of interest you’re paying on the cards you use? Chances are they vary quite widely.

Target your most expensive cards

Here’s my advice. Find the card that’s charging the highest rate of interest and focus on paying that off as soon as you can. Don’t add to your woes by using it to buy anything else. All those other cards? Just send them the minimum payment until you’ve cleared public enemy number one. Once that’s done, turn your financial firepower onto the card with the next highest rate of interest. And so on.

You might be thinking at this point that a suggestion to clear off your credit card debt is hardly ground-breaking advice. Maybe it isn’t, but I do know that poorly managed credit cards are the source of many a mate’s financial woes. Also, there’s a world of difference between people that understand the concept of good credit card management and those of us who adopt an active strategy. As the wise old Chinese proverb says (although thinking about it, maybe it’s a Klingon bon mot), ‘Thought without action is sterile.’

How did it go?

Q What you’re suggesting looks like it’ll take ages. Why shouldn’t I just consolidate all of my credit card debt into one loan?

A This can work very well, particularly if you can track down an attractive rate of interest. The critical thing is what happens to your credit cards once you’ve used your loan to clear them. Unless you go the whole hog and shred them, there’s a real danger that you’ll start using them again. Fast forward six months or so and you’re having to both pay off your loan and face the distinct possibility that your credit card debt is heading south again.

Q OK, I’ve steered myself away from a consolidation loan and now have direct debits set up for all my credit cards so that I never miss a payment. So do I have everything under control?

A The important thing about credit card debt is to manage it, not just keep it at bay. Setting up a bunch of direct debits that ensure that you pay a minimum amount every month is not enough. For sure, congratulate yourself on never having to incur a late payment charge, but don’t expect ever to clear your card that way.

Here’s an idea for you

When Marlon Brando cries out ‘The horror, the horror’ towards the end of Apocalypse Now, he hadn’t, to the best of my recollection, just opened his latest credit card statement. When the statements for your cards turn up over the next few weeks, make a note of the interest charged in each case, tot up the total interest you pay each month and multiply it by 12. That will give you a ballpark figure for the year. If that doesn’t make you cry out in anguish, you may be beyond redemption.

Defining ideas

‘I don’t borrow on credit cards because it is too expensive. There’s no question that a credit card is an expensive way to do borrowing. I would not recommend to anyone that they chronically borrow on a credit card.’

Matthew Barrett, chief executive of Barclays Bank

2. I think therefore iPod: Learn the art of tantric shopping

If you’ve ever bought something and then regretted it almost immediately, then this idea is for you. You’ll learn how to save money by avoiding impulse purchases.

There’s a Marx Brothers’ film – I think it’s ‘A Night in Casablanca’ – where Groucho is hired to run a hotel.

On arrival, he makes an announcement to staff, which goes something like this: ‘There are going to have to be some changes around here. From now on, if guests ask for a three-minute egg, give them a two-minute egg; if they ask for a two-minute egg, give them a one-minute egg; and if they ask for a one-minute egg, give them the chicken and tell them to work it out for themselves.’

Maybe Groucho’s motives are questionable but he did manage to hint at today’s retail world in which speed of delivery and instant gratification have become the norm. There’s an episode of The Simpsons where a gigantic new deep fryer is being installed. Perhaps you remember the following exchange:

Shop owner: It can fry a whole buffalo in 40 seconds.

Homer: (wailing voice) Oh, I want it now!

As ever more demanding customers, we want better quality, we want cheaper prices and, above all, we want it more or less immediately. The bookshop owner who tells us that it will take two weeks to order the book we want is seeing increasing volumes of business going to internet booksellers. ‘Now’ is becoming the only acceptable delivery time.

There’s physiological evidence to suggest that going on a spending spree gives us a short-term high. We actually enjoy buying stuff. Just as we’re prone to comfort eat to cheer ourselves up and to allay anxiety, so comfort spending is a path to retail orgasm.

Let’s be honest, it’s probably something we’ve all experienced. There we are, wandering through a department store and we see it. It could be a TV, a cool top, a DVD… but it’s a must-have. Chances are that until you saw it, you didn’t even know that it existed. But now you’ve seen it and you want it – badly. You know you’re a bit short this month really, but you reach for your plastic chum and it’s yours.

Feels good, doesn’t it? The weird thing is, of course, that a few weeks down the line, that must-have doesn’t always seem quite so necessary to your life. If you’ve ever thought to yourself that you have a wardrobe full of clothes and nothing to wear, chances are that you’ve been a victim of premature retail ejaculation.

Incidentally, don’t imagine that you’re only at risk when you’re out shopping. It won’t be long before most retail accidents happen at home. Shopping online is just as dangerous when gratification is only a mouse click away.

So here’s an idea that will save you money and help reduce the clutter in your home. From now on, every time you come across an item that you would normally be tempted to splash out on and which costs a significant amount (you decide what counts as significant), hold back from buying it. Go home and put it on your 28-day list. Make a note of the item, the date you saw it and the cost. If after 28 days you revisit your list and still think it would be a good buy, then consider acquiring it. If you

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