Sunday 25 January 2009

Saving Money

Normally I avoid too much personal finance on the blog. However, having been recognised by The Times as one of the top Personal Finance blogs, I guess I had better do something.

Then as it happens I see this in the Sunday Papers. HSBC writing to people to say overpay your mortgage as your rate drops and save yourself a fortune in the long-term.

Is this a good idea?

On the plus side, saving rates are low so that is wasted, also who wants over £50,000 in a bank account anymore?
Secondly, if you have not lost your job then by keeping mortgage payments the same as before you won't have really altered your monthly budget.
Thirdly, investing in wold markets is a good way to lose your money as the moment as I am proving strongly in the early weeks of this year.

On the other hand there are some rather large elephants lurking int he corner. Firstly, HSBC needs to improve its capital ratios, pulling in more money is clearly in its best interests- hence the advice.

Perhaps even bigger though is that all the money thrown into the system is going to cause some big inflation in years to come. The price of Gold spiked to all time highs in pounds last week. If there is inflation to come then the last thing you want to do is pay debt, as that will inflate away quite quickly (could be painful if interest rates shoot up though...).

On balance I would not take HSBC's advice myself. Much better for me to pay off overdrafts, personal loans and credit cards if you have money available rather than a stable long-term mortgage.

What would you do?


Nick Drew said...

OK, CU I will tell you what I did - get a 'linked' mortgage

(so that what would be interest payments on the savings in the 'linked' account, offset the interest payments on the mortgage (the capital payments on which remain the same), with the added benefit that there is no tax on the interest thus netted-off)

seems to me this logic meets one of your criteria: the mortgage debt is still there to be eroded, should inflation strike (huh!). And overall flexibility is good, too - I can pull the savings at any time if I've a better use for 'em.

But I have to admit I'm putting them on the line as regards whatever credit risk is involved with my bank - and I've lost count of what the govt is doing in that regard (blustering mostly, I think)

just my approach: maybe wouldn't suit all

a_concerned_individual said...

You can guarantee that if the banks are suggesting you do something it will be in their interests not yours. The financial services industry has a history of fleecing its customers yet still they (we) come back for more!

Anonymous said...

We've got a flexible mortgage so that if you pay some off and later regret it, you can borrow it back again. It's been very convenient for us.

Steven_L said...

The Times hack seems to think Bill Quango is a real MP. Where do they get these people from?

On the subject of personal finance, I've been eyeing up a few bonds like you suggest CU.

The market seems to be pricing in a sizeable risk Boots will go under before May is out!

Z A Chaudhry said...

That's quite an informative article. However, i've heard that the UK will likely be experiencing deflation in 2009 and once that happens the borrowers will obviously be worse off.

I'm also wondering about something else. Since most people agree that, considering the situation of banks lately and the economic crisis, it's best to save in the form of gold or silver, shouldn't assets such as property be a good form of saving? By paying off your mortgage now when it's cheaper nominally and in real terms, you would end up with an asset which is quite safe, useful, and most likely to appreciate in the coming times.

lilith said...

Fame, Boys!

Richard Elliot said...

Deserved recognition!!

I'm broadly with CU. Most investments seem to be pretty volatile / risky at the moment. Or at least I'm not doing very well!

Pay off more expensive debts first and then hit the mortgage.

CityUnslicker said...

dearime - you always have the sanest answer along with Drew.

SL - Corporate bonds are, um, strangely priced are they not?

Zain - This is HSBC's argument. but will deflation last long in the face of the huge monetary stimulus?

Bill Quango MP said...

I didn't change the repayments last year from when the new direct debit came in at around 7.5%.
So I overpaid a little, but it hasn't dented the capital enough to make me feel any better.
Doing it again this year, but at a lower 3.5%.

Simon Fawthrop said...

I took this line since taking my first mortgage in 1977. I paid off my outstanding mortgage in 2001, haing moved and remortgaged twice.

There is no feeling better than knowing that no matter what happens (within reason) nobody can take your house away.

JPT said...

I wouldn't take the banks advice on anything nowadays I'm araid.

Lola said...

This is financial advice from a bank? A bank for chrissake! They can't run their own bloody investments and debts so how the hell are they equipped to advise you on yours?

Anyway, advisers advice is mostly coloured by their own life experiences. The current life experience of all banks is that they've made giant personal financial cock ups leaving them with too much debt, which they now need to pay off.

Nevertheless, to be serious, debt is Not A Good Thing for most ordinary folk. So pay off the most expensive first working down to your mortgage. Overpay by all means if it within your budget to do so.

Remember, life works like this...

Get born. Grow up. Get a job. Start paying PAYE (The taxmans got you). Get a wife. Get a house aka get a mortgage (The bank and the employer have got you). Now you have to go on going to work at the employer you may hate who pays you just enouigh so you don't leave, to pay the mortgage and the taxman. Moral? Steer clear of women, well marriage or long term commitments really.

The three wierd sisters - HMRC, Banks, Employers.

Confession. That's me screwed. I have wife plus four littl'ns. Sigh.

Anonymous said...

aaaa片, 免費聊天, 咆哮小老鼠影片分享區, 金瓶梅影片, av女優王國, 78論壇, 女同聊天室, 熟女貼圖, 1069壞朋友論壇gay, 淫蕩少女總部, 日本情色派, 平水相逢, 黑澀會美眉無名, 網路小說免費看, 999東洋成人, 免費視訊聊天, 情色電影分享區, 9k躺伯虎聊天室, 傑克論壇, 日本女星杉本彩寫真, 自拍電影免費下載, a片論壇, 情色短片試看, 素人自拍寫真, 免費成人影音, 彩虹自拍, 小魔女貼影片, 自拍裸體寫真, 禿頭俱樂部, 環球av影音城, 學生色情聊天室, 視訊美女, 辣妹情色圖, 性感卡通美女圖片, 影音, 情色照片 做愛, hilive tv , 忘年之交聊天室, 制服美女, 性感辣妹, ut 女同聊天室, 淫蕩自拍, 處女貼圖貼片區, 聊天ukiss tw, 亞亞成人館, 777成人, 秋瓷炫裸體寫真, 淫蕩天使貼圖, 十八禁成人影音, 禁地論壇, 洪爺淫蕩自拍, 秘書自拍圖片,

做愛的漫畫圖片, 情色電影分享區, 做愛ㄉ影片, 丁字褲美女寫真, 色美眉, 自拍俱樂部首頁, 日本偷自拍圖片, 色情做愛影片, 情色貼圖區, 八國聯軍情色網, 免費線上a片, 淫蕩女孩自拍, 美國a片, 都都成人站, 色情自拍, 本土自拍照片, 熊貓貼圖區, 色情影片, 5278影片網, 脫星寫真圖片, 粉喵聊天室, 金瓶梅18, sex888影片分享區, 1007視訊, 雙贏論壇, 爆爆爽a片免費看, 天堂私服論壇, 情色電影下載, 成人短片, 麗的線上情色小遊戲, 情色動畫免費下載, 日本女優, 小說論壇, 777成人區, showlive影音聊天網, 聊天室尋夢園, 義大利女星寫真集, 韓國a片, 熟女人妻援交, 0204成人, 性感內衣模特兒, 影片, 情色卡通, 85cc免費影城85cc, 本土自拍照片, 成人漫畫區, 18禁, 情人節阿性,

Anonymous said...

情色電影, aio交友愛情館, 言情小說, 愛情小說, 色情A片, 情色論壇, 色情影片, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊美女, 視訊交友, ut聊天室, 視訊聊天, 免費視訊聊天室, a片下載, av片, A漫, av dvd, av成人網, 聊天室, 成人論壇, 本土自拍, 自拍, A片, 愛情公寓, 情色, 舊情人, 情色貼圖, 情色文學, 情色交友, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 色情遊戲, 情色視訊, 情色電影, aio交友愛情館, 色情a片, 一夜情, 辣妹視訊, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊, 視訊美女, 美女視訊, 視訊交友, 視訊聊天, 免費視訊聊天室, 情人視訊網, 影音視訊聊天室, 視訊交友90739, 成人影片, 成人交友,

免費A片, 本土自拍, AV女優, 美女視訊, 情色交友, 免費AV, 色情網站, 辣妹視訊, 美女交友, 色情影片, 成人影片, 成人網站, A片,H漫, 18成人, 成人圖片, 成人漫畫, 情色網, 日本A片, 免費A片下載, 性愛, 成人交友, 嘟嘟成人網, 成人電影, 成人, 成人貼圖, 成人小說, 成人文章, 成人圖片區, 免費成人影片, 成人遊戲, 微風成人, 愛情公寓, 情色, 情色貼圖, 情色文學, 做愛, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 寄情築園小遊戲, 色情遊戲, 情色視訊,