- Business and Employment
Follow The Money Saving Expert
The Money Saving Expert is one British guy by the name of Martin Lewis who, as his title suggests, knows pretty much all there is to know about how to make the most of personal finances. Saving money is the main thrust of his message, but he's also a good source of information on earning extra money.
Although his realm of expertise is UK-based, his general money-saving advice is universal and can be put to use no matter where you live. Likewise, this Hub is aimed at UK readers, specifically, but I hope at least some of it applies to readers in other countries, too.
Becoming a follower
I first came across the Money Saving Expert around 6 years ago. The TV was on in the background unwatched (waste of electricity, I know) and the BBC's "The Money Programme" was on. It's a show I never watch because it's a bunch of serious-looking men and women talking about equities, bonds, yields and other scary words that just make my eyes glaze over. I was just too lazy to get up and switch it off.
It turns out that was a good thing, because one segment of the show caught my attention. There was this younger, very dynamic and upbeat guy talking about things I could relate to - how to reduce credit card debt, how to save on energy bills, how to get cashback, how to save on weekly shopping, telephone charges, Internet access and lots more. Far too much for me to take in at one go, but that's when I discovered that this was Martin Lewis, the self-styled 'Money Saving Expert', and that, in addition to his regular spot on BBC, he had a website, moneysavingexpert.com that I could peruse at my leisure.
Adopting the Right Attitude
While the information and advice that he was giving out on his website, and weekly on the BBC's Money Programme", was very useful, I learned something even more valuable from him, indirectly. That was:
TREAT YOUR PERSONAL FINANCES LIKE A BUSINESS.
He never stated that specifically (as far as I know), but it was obvious that that's what he was doing. As I mentioned, he was giving out sound advice, and some of it I already knew as it was common knowledge, e.g "Never use a credit card to borrow cash" as the interest rates soon make the debt spiral out of control.
The real secret to success, as I learned, is to foster the right attitude. If you approach money saving half-heartedly or casually, sure, you can make a nice little saving now and then whenever the opportunity presents itself, but in the long run, it's insignificant. It's not going to make any difference to your standard of living.
On the other hand, if you approach it seriously, diligently and with self-discipline, it can (as I soon found out) make a real difference to your standard of living. Don't wait for the opportunities to present themselves. Seek them out. They're out there. Be proactive.
Energy Bills - Real Savings
As a new convert, I started by putting his advice regarding energy companies into action. The advice is:
- Don't stay too long with the same energy company because once they've got you, they don't need anything from you apart from that you pay your bill regularly. All their generous offers are aimed at potential new customers, not existing customers.
- Don't buy gas and electricity from two different companies. Most, if not all, energy companies now supply both, whether they're called British Gas or Southern Electric. They offer a discount to those who combine both on the same bill.
- Pay by Direct Debit and opt for paperless (online) billing for more discounts.
Now here's the clever bit:
To find a new company offering cheaper deals, first go to any price comparison website such as Confused.com and choose a new supplier based on pricing, discounts and bonuses. Don't worry about quality. It's the same gas and electricity that comes into your house regardless of which company's name is on the bill.
When you find a company on the comparison site, you could go ahead and sign up there and then on the comparison site, but DON'T.
Instead, join a reputable cashback site such as Topcashback or Quidco, and sign up with your chosen energy supplier through them. You get exactly the same deal, but the energy company will pay the cashback site a reward for bringing a new customer and the cashback site will pass most of that on to you. That's how cashback sites work.
In my case, I found a new company with cheaper rates and substantial discounts for paying by direct debit, that I joined via a cashback site. They even sent me a 20 pound gift voucher, which I sold on eBay - and a couple of months later, I received about 70 pounds from the cashback site.
Of course, when you do this, that's not quite the end of the story. The new company arranges with the old company to take over your supply, and the old company calls you in a desperate attempt to get you to change your mind. I had an amusing call from the old company.
- Them: Hello - we're sorry to hear you want to change supplier, but we've had a look at your account and we're sure we can match what they're offering.
- Me: No thanks, I'm getting a good rate, good discounts and also good cashback from a cashback site.
- Them: Oh No - You should never use cashback sites. They promote the companies that offer them the most commission. Have you heard of Martin Lewis, the Money Saving Expert on BBC TV? You should follow his advice about comparing prices directly on a comparison site and choosing the best company.
- Me: Yes I have, and it was Martin that advised me to go through a cashback site after finding the best company on a comparison site.
That more or less ended the conversation.
With those real savings in the bag, there was no stopping me. I applied the same principles to other utilities and services and changed my telephone provider, Internet provider, car insurance, house insurance, bank accounts, and more - all done through a combination of comparison sites (for finding the best deals) and cashback sites (for signing up and receiving cash rewards). Within a reasonably short time (although it didn't seem at all short at the time), I was several hundred pounds better off in actual cash, and my monthly and annual expenses were significantly reduced.
A word of caution when using cashback sites. Don't sign up for anything you don't actually need. Some of the cashback offers are so attractive that it's tempting to sign up for something just for the cashback. That's bad business. If you sign up for something costing £100 per year, such as a book club membership, and you get £60 cashback, you're still £40 worse off. Only use cashback sites for purchases that you would be making anyway.
Also, keep in mind that cashback isn't guaranteed until it's actually in your bank. Big companies can mostly be relied upon to pay the cashback site, but smaller companies, sometimes don't. If the cashback site doesn't get paid, neither do you.
Probably the Money Saving Expert's most valuable service is the solid advice given on debt relief. Briefly, he shows ways to clear off high-interest credit card debts or loans by securing interest-free or low-interest loans.
He also goes into a lot of detail about balance transfers on credit cards, where you can apply for a new card with a good low interest or zero interest introductory rate for a year and transfer your complete existing balance, and close your old account. Then you pay as much of the debt off as possible during the low or zero-interest period. At the end of the year, just before the regular interest rate is due to apply, and if any balance still remains unpaid on the card, you apply for a new card and transfer the balance again for another year of low or zero percent interest rate. Unfortunately, a sense of loyalty prevents many customers from doing this - although probably less now as banks have suffered a severe loss of respect in recent times.
Those who have a poor credit rating can't get low-interest credit cards, but they can still get very high-interest cards that they can use to build up a better credit rating in order to apply for a low-interest card. This takes real self-discipline and understanding of the small print. The cards, whether low or high interest, must never be used for cash withdrawals, and any purchases made MUST be repaid in full within the one month interest-free period that most cards give. If not, the whole plan falls apart as interest will then be applied.
For any ongoing existing credit card debt, the advice is NEVER to pay just the minimum monthly payment. One of his BBC demonstrations showed how long it takes to clear a standard-interest rate credit card debt of a few hundred pounds by paying only the minimum monthly payment. It takes thirty or forty years! So ALWAYS pay more than the minimum and, in fact, always pay as much as you possibly can.
Why are Companies So Generous to New Customers?
Of course, it's not generosity at all; it's business. They know that the vast majority of customers hate changing companies, and that when they do get a new customer, the chances are that the customer will stay with them for many years - a lifetime in many cases. Customers, in general, don't want to be involved with the hassle of changing companies. They follow the "If it ain't broken, don't fix it" principle, or they feel guilty due to a misplaced sense of loyalty.
Loyalty to your local plumber, hairdresser and car mechanic, etc., who have provided good personal service over the years is commendable, but it's wasted on multinational conglomerates that have probably changed hands several times while you've been with them and are now owned by some billionaires halfway across the world.
For the company, giving away a hundred pounds or offering attractive introductory discounts and rates as an incentive to join is nothing compared to the many thousands of pounds they'll get over the coming years from that same customer.
It's a tried and tested system that has served them well over the years. It's not guaranteed, however. A tiny minority of customers slip through the net. That's us - the ones who do it our way - like a business, and who reap the benefits.
MoneySavingExpert and MoneySupermarket
Martin's site, moneysavingexpert.com, or MSE, soon became one of the most successful consumer advice sites in the UK. His reputation for objective, unbiased advice was well-known, so it was a bit of a shock to some of his faithful followers a couple of years ago to learn that he had sold it to the huge online comparison site, MoneySupermarket.com for a very nice sum of money.
Cries and laments of "Martin has sold us out for a million pounds" (or whatever the amount was) could be heard in the site's forums from his faithful followers.
It's not true. Yes, MoneySupermarket bought it, but Martin is still in charge of running the site. He runs it as fairly as ever and doesn't let his new bosses compromise the site's integrity. If MoneySupermarket's main rival, Confused.com, is currently offering a better service, then that gets clearly mentioned. Can you imagine Google doing something similar? "Our Chrome browser is very good, but right now Firefox is even better."
Obviously MoneySupermarket is aware that the site's success is not only due to Martin's wide knowledge and engaging personality, but also to his well-known impartiality. If that was compromised in any way, the site would no longer be one of the UK's most trusted and popular consumer advice sites.
MSE also has a large and active forum with many different money-related topics. It's a great place to pick up info from people who've actually tried various money-saving and money-earning strategies and are quite happy to talk about their experiences. It's worth joining for that reason even if you don't contribute to it.
© 2015 chasmac