Rising Inflation – Flat Wages

May 8, 2013 12:10 pm ⋅ Leave a Comment ⋅

Its no surprise now that wages are in general terms flat, with very few among us seeing the small annual pay rise that was common pre-recession.  Even more sadly, apart from those with pay frozen, there are those with wage cuts and redundancies… let alone the queues at the job centre.  Add to the mix that inflation is increasing at an alarming rate (that 2pint milk now costs 50% more than it did 10 years ago), its evident that the gap between spending and income is widening.

In the fourth quarter of 2012, the Office For National Statistics (ONS) found that real income per head had fallen by £13 to £3,767. Meanwhile, expenditure per head has increased by £4. As a result, household saving had fallen as household must now spend more.

While demand hasn’t really increased and people have been careful with what they have recently, with incomes rising more slowly than inflation, its having a catalytic effect and many ordinary people are now being forced to borrow money in order to get by.  When in need of instant cash borrowing, payday loan providers are who many people are turning to, usually if they don’t have very good credit and can’t access loans in the form of bank loans or credit cards.

There are two effects of the increased borrowing and the widening gap between real income and rate of inflation. Firstly spending will be low, this will counteract all off the government’s attempts to increase spending as a means to stimulate economic growth.  As a result to the fall in spending, firms will see fewer profits, leading to more people becoming unemployed. Homelessness charity Shelter has stated that 8 million people are on the verge of losing their jobs. With no way of being able to save, this is a very worrying situation; being dubbed as ‘the British saving crisis’.

The government need to act and are likely to do so in another attempt to increase spending. Ironically, a likely policy to increase spending could be to encourage borrowing, further widening the gap between income and spending. More borrowing would mean more spending, as people have more access to money, however incomes will not be changing.

To increase economic growth, the most effective method would be to increase spending, but when we take into account that the bad financial standing Britain is as right now was caused by unsustainable borrowing, it wouldn’t make sense to encourage such a thing. In the short run, while borrowing might increase economic growth, in the long run it will come back and burden Britain once more.

A more concrete solution must be thought of as opposed to borrowing, inflation needs to be slowed down and real wages need to catch up fast.

Posted in: Budgeting, Personal Finance ⋅ Tagged: , , , ,

HSBC Loses Out on Profit in Compensation Payouts and Fines

April 1, 2013 12:40 pm ⋅ Leave a Comment ⋅

HSBC has had to set aside more than $1.4bn in order to compensate British victims who were mis-sold payment protection insurance. Money laundering issues have also led to the bank paying out nearly $2bn in fines to the United States.

As a result, HSBC has had a 6% percent decline in annual profits. The bank made a pre-tax profit of $20.6bn (£13.7bn/€15.8bn) in 2012.

According to the bank, the underlying profit rose 18% to $16.4bn. Underlying group revenues also increased 7% to $63.5bn due to a 10% to $18.2bn from its global banking and markets division. The bank was also faced however with $5.3bn accounting charge due to the rising value of its own debt in the financial markets.

The Chief Executive Officer, Stuart Gulliver said “HSBC made significant progress in 2012.”

“Based on our current understanding of the capital rules we are extremely well-placed with regard to Basel III compliance, re-establishing our position as one of the best capitalised banks in the world. This provides a firm base on which to keep growing the business organically and allows us to increase dividends to US$8.3bn”, he added.

The bank has said that Gulliver’s pay for the entire year will total to $7.4m, with a $1.95m bonus although overall bank bonus payments fell back 15% to $2,9bn.

The two major assets which have assisted the bank are the Capital One Financial, the US credit Card division and Ping An, a China-based insurance group. Both together have provided the bank with a further $12bn.

Posted in: Business ⋅ Tagged: , , , ,

Overview of George Osborne’s Budget 2013

March 22, 2013 12:26 pm ⋅ Leave a Comment ⋅

The Chancellor of the Exchequer George Osborne recently released his 2013 budget which detailed his plan for the coming year 2013-14.  The new budget sees benefits for some groups and drawbacks for others – an overview is provided here:

For public sector workers, excluding the armed forces, once again pay scales will be restricted and pay rises will fall beneath inflation by 1%.  For many workers in the sector, this has been going on for 5 years.

Groups interested in climate change may be disheartened to hear of the new plans to harvest gas from new sources recently found. This is part of an initiative to help the public by obtaining more fuel and increasing energy investment.

There will also be some amendments to housing benefit, as the building of social houses will take longer, therefore no improvements have been made to waiting times. Although with right-to-buy schemes, the length of time required to have occupied the home before being able to purchase the property has been reduced to 3 years. This will hopefully help tenants who want to buy their home.

In a measure to establish more income from tax evaders, steps will be taken to deter businesses from purchasing companies at a loss to reduce tax. This has the potential to generate approximately £4.8 billion over the course of 5 years.

On another note the budget does have some positive aspects for drivers with the expected fuel duty rise cancelled. This is a welcome decision for many drivers who found the rising fuel costs to become a burden.

Those seeking to purchase a home will benefit from the help-to-buy scheme which will enable them to receive 20% of the value of their property as long as they have 5% that they can put down as a deposit first. Homeowners will also benefit as property prices are set to rise.

Beer duty has seen a reduction by 1p in an attempt to boost British pubs. In contrast to this wine, spirits and cider have all seen a rise in duty tax with wine now costing 10 pence more, spirits 38 pence more and cider 2 pence more.

Posted in: Budgeting, Finance ⋅ Tagged: , , ,

Options When it Comes to Debt Management

March 18, 2013 9:24 am ⋅ Leave a Comment ⋅

People who want to clear the debt that they have accumulated have a number of different options. Each set of circumstances is individual and the method you use to reduce your debt will depend on how much money you owe and the income that you have available.

For some people, it can be as simple as learning to budget more strictly and following the mantra of spending less than you earn. If you find that you are just falling short of your payments each month, look at where you can make some savings on regular expenses, such as utility bills, grocery bills and consider switching your mortgage if you can find a better deal with another provider.

It may be that you have more serious debts to contend with and that budgeting alone won’t be enough to clear them. In the UK debt help comes in a variety of forms, depending on the level of debt you are faced with. There are many different debt management companies and financial charities that you can contact for an initial consultation.

Common debt solutions include:

Debt management plan

This is where you agree a monthly repayment for all your creditors, but it goes to the debt management company which then redistributes it on your behalf. A debt management plan can help in terms of administration for multiple debts and the debt management company may be able to negotiate a lower interest rate for you.

Debt consolidation loan

An alternative to a debt management plan is to take out a new loan to cover your existing unsecured debts. You then have one single payment to make each month, and debt consolidation loans usually have a lower rate of interest than credit or store card bills. You need to be strong-willed enough not to be tempted to start spending on credit cards, etc, until your debt consolidation loan is paid off, otherwise you could end up back in the same position you started in.

IVA

In the UK, people with debts greater than £10,000 owing to three or more creditors can enter into an Individual Voluntary Arrangement (IVA) which is a legal agreement drawn up between the person owing money and their creditors and passed by the court. Creditors aren’t obliged to agree to this, but usually do as it strengthens their chances of recuperating their money. When people seek bankruptcy advice, they will often be informed about taking out an IVA instead. IVAs can be a better option than declaring bankruptcy as your assets will not be put at risk.

These are just some of the options available to someone in debt, but before going ahead with any of the debt management solutions offered by third parties, you should seek independent financial advice.

Posted in: Personal Finance ⋅ Tagged: , , , ,

Struggling With Monthly Expenses? Could a Payday Loan Help?

March 13, 2013 11:20 am ⋅ Leave a Comment ⋅

For people struggling with short-term cash flow, a payday loan can be a real life saver. All manner of bills and expenses need paying every single month, and if you don’t have available funds it can quickly send you into a financial panic.

How to apply for a payday loan

Fortunately, applying for a payday loan is a quick and painless process. There are a vast number of legitimate payday loan lenders on the internet today, who offer cash in your bank account in only a few hours.

The best part about the application process is that you don’t need to give your life history in order to get approved. The majority of lenders don’t do a credit check, and don’t care if your financial history is less than perfect.

All they are concerned with is whether or not you meet their simple criteria. Basically, you have to be 18 years of age or older, have a recognised bank account, and have some form of regular income that can be proved.

If you tick these 3 boxes, then you should have no problem at all getting approved for a payday loan.

The downside of payday loans

While payday loans are a great way to get yourself out of short-term financial hardship, they can quickly turn into a nightmare.

This is especially true if you fail to pay back the money on time. When this happens, you will be subject to a number of “late payment” fees, which can quickly leave you with a huge amount of debt.

Also, you may have a higher interest rate added to the loan, which will add even more money to the total amount payable.

With this in mind, you should only ever apply for a payday loan if you are certain that you can meet the payment deadline with no problems. If there is any doubt in your mind then you should seek out alternative forms of lending.

Getting payday loans every month

Some people get stuck in the habit of applying to payday lenders every month to help with their monthly expenses. Ultimately, this is not what payday loans were designed for, so if you find yourself in this situation you need to find a way out.

Take an honest look at your monthly expenses and see what costs you can cut out. For example, do you really need that premium cable television package?

Once you start to cut costs, then it will become easier to meet your essential expenses without the need for constant payday loans.

Posted in: Personal Finance ⋅ Tagged: , ,

Buying a Car on a Budget?

February 26, 2013 1:03 pm ⋅ Leave a Comment ⋅

When thinking about purchasing a new car in today’s financial climate which is the best option for people on a budget?  Nowadays many people can opt for different ways to get a car: used, leasing or new car offers – but which is the best choice?

For people on a budget they have to buy within their means. The cheapest way to obtain a car is buying used/ pre-owned. A benefit with buying this is that most of the time a new car will decrease in value by 25%-40% – this is a significant loss accumulated over the first two years. So why not let someone else take the percentage decrease? Purchasing a slightly used car that is two years or older could prevent from this drastic depreciation occurring and provide you with a cheaper deal. Obviously the negative with a used car is the fact you can never be guaranteed the car is in working order, although most cars have long warranties that may still be in effect.

Leasing a car is an option that has appealed to many people. Leasing a car has advantages and disadvantages that many should consider. A large payment isn’t needed to be put down on the vehicle, it only tends to be the first months payment, taxes, registration and security deposit amongst a few others. When you have reached the end of the lease you don’t have to worry about selling it on. The negatives with leasing are no damage can occur to the car, the agreed mileage needs to be met otherwise servicing can be refused, no modifications can take place as you technically don’t own the car and you will need maximum insurance cover.

Dealerships at the moment are trying to retain customer loyalty; one way they are doing this is through offering cars on finance. With many new car offers available at the moment a deal can be easily found with little deposits needed and low monthly fees. Take for example with this Hyundai dealership, a new Hyundai i20 can be financed with a deposit of £159 and the same price per month. Offers like this are very appealing for people on a budget as the cost is spread out and a lot easier to handle. The customer will have the peace of mind that the car will be under warranty and perhaps less will go wrong with a new car than a used car might, tax will be low and less costs will be carried out on maintenance. There are disadvantages however with depreciation occurring within the first two years, and some offers do contain high interest rates so it is always worthwhile checking the interest rates with each offer.

There are many advantages and disadvantages of the different ways to acquire a car. Weigh up each decision and decide whether or not it will suit you and your finances available. Don’t jump in at the first offer available shop around and try to find the best deal out there for you.

Posted in: Budgeting, Personal Finance ⋅ Tagged: , , , , , ,

Banker’s Association on interest rate scandal: “There is no excuse for mis- selling”

February 13, 2013 11:20 am ⋅ Leave a Comment ⋅

Anthony Browne, chief executive of the British Bankers’ Association has spoken out on the mis sold interest rate swap scandal.  This comes after a report by the Financial Services Authority found that 90 percent of interest rate hedge products sold to small business owners were ‘outside regulations’.

An FSA investigation found that business owners were not always aware of the risks involved in buying these financial products. Interest rate hedge protections are intended to protect borrowers from future changes to interest rates on their loans. However, falling interest rates meant some customers faced increasing charges they could not afford to pay.  The issue was brought to media attention after a number of businesses failed because they could not afford to exit the schemes or pay charges.

In some cases banks were paying commission to those who sold interest rate protection schemes.

Mr Browne admitted, “There is no excuse for mis-selling” and that banks were “determined” to stop it. Mr Browne said banks were “changing remuneration practices” to make sure there was “no financial incentive” for staff to sell products to companies who did not need them. He added that banks would be setting up reforms to ensure the problem did not occur in the future.

Several British Banks including HSBC, Barclays, Lloyds and Royal Bank of Scotland have agreed to recompense customers who were inappropriately sold “very complex products” which they did not understand.

However, just how much banks are will have to pay is still unclear. Lloyds has reportedly set aside £400m whilst the Royal Bank of Scotland initially estimated the bill might come up to £50. However financial experts have suggested the real cost could be anything between £1.5b and £10b.

The Business Secretary Vince Cable said it was important that companies be recompensed promptly particularly those which were in financial distress.  Mr Cable said he had been in contact with the Federation of Small businesses, the FSA and individual banks to ensure all necessary action was being taken: “It was highly unethical – …. It comes on top of all the other stuff, the Libor scandal, the payment protection insurance and it is absolutely essential that… the banks [need to] clean up their act… they are going to have to turn over a new leaf and operate in a different way”, said Vince Cable.

To find out more go to InterestRateSwapsClaim.co.uk.

Posted in: Finance, News ⋅ Tagged: , , , , ,

UK’s Gross Domestic Product Down by 3%

February 5, 2013 5:15 pm ⋅ Leave a Comment ⋅

Its well known that the economic recession across the world has affected almost all countries, the United Kingdom not excepted. In the past four years, the UK has already experienced what it is to have many businesses in the market failing and banks are having a hard time recovering. Based on a report given by the United Kingdom’s Office for National Statistics (ONS), studies have showed a three percent (3%) decrease of the UK’s Gross Domestic Product (GDP).

The said fall was labeled as one of the worst GDP updates released during the fourth quarter. It was bad news for the country’s economic performance. This figure was based on the collated data given and analyzed by the Statisticians who work for the Statistics Office. The data has shown the cause of the fall might have come from the decrease in output coming from  productions that are situated in the northern parts of the country. The said result is alarming and could be bringing Britain to another recession that is more likely to happen, the third time. The citizens have already raised their concerned in a shocking figure that would hit the government and their policy for the economy. The government was said to be criticized by the Economic head of the IMF, also known as the International Monetary Fund.

Meanwhile, some members from the government have given their comment on the issue of the GDP downfall. The report has claimed that there are two ways to face the current problem, one is facing it and the other one is running away from it. A statement coming from the Chancellor George Osborne explained that the country is facing a very serious economic problem but the people should not run away and give up but instead make way to recover from the  fall.

Posted in: Finance, News ⋅ Tagged: , , , , ,

San Francisco residents opt for debt consolidation to reduce their credit card bills

January 11, 2013 2:59 pm ⋅ Leave a Comment ⋅

Do you use your credit cards for making every purchase? Have you fallen into credit card debt? Such problems arise when you swipe your plastic money randomly but pay no heed to repay the card balance on time. You incur excessive credit card debt and thus, high interest rate. You will have to look for suitable ways to pay down the dues soon. Debt consolidation is a viable option that helps you merge your multiple bills into one and eliminate them with a single monthly payment. Being a resident of San Francisco, you may choose debt consolidation San Francisco to get rid of credit card bills.

Debt consolidation – Possible help to eliminate the credit card bills

If you have amassed excessive credit card bills, you may opt for debt consolidation and get rid of such problems. Read on to know why debt consolidation San Francisco is so helpful for the San Francisco residents.

Diminish the rate of interest – Debt consolidation enables you to avoid paying high interest rate on your outstanding dues. The credit card companies impose high interest rate when you do not pay off the bills on time. However, this program gives you the facility to diminish the rate of interest on your bills so that you can manage with the payments.

Go for one payment every month – You can go for one payment every month on your outstanding bills. When you’ve multiple credit card bills, you cannot keep a track of how much you owe on each card. As such, merge all your dues into one and enjoy making a single monthly payment in order to solve debt problems.

Boost your credit score – When you do not pay the bills on time, it drops your credit score by several points. There are times when you miss out some payments. All these will hurt your credit score. Enroll with debt consolidation and improve credit score. You’ll be able to become credit worthy soon.

Get help of the professionals – When you can’t repay the credit card bills on your own, it is better to get help of the professionals. They will be able to suggest you a suitable solution so that you can make the payments on time. This will also help you manage personal finances in a better way in future.

Negotiate properly with creditors – When you enroll with this program, the debt expert deals with the creditors in order to solve your debt problems. With their negotiation skills, they convince your creditors to lower the interest rate on your outstanding dues.

Wipe away your debt problems – Credit consolidation enables you to wipe away your debt problems that you, other wise, find it difficult to manage on your own. Make sure you pay down the bills on time when you choose this option to come out of debt problems.

Choose a good debt consolidation company and get rid of credit card dues as early as you can. This, in turn, will enable you to become debt free.

 

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Posted in: Finance