Those of us with mortgages – and this is the biggest debt most people will take on – should realise that the management of it is very important. There is a whole range of types of mortgage - if your income is relatively low and you want the security and certainty of knowing what your out-goings will be each month then a fixed-rate mortgage is a good thing for you - you will pay a bit more per month for the security it brings. Every two or three years I review my mortgage and change according to my circumstances. I would recommend that you take out a mortgage with a ‘mutual society’ rather than a bank. This is because they are not making profits for shareholders but for their members and so they give better interest rates.
In recent years in this current economic era new mortgage borrowers have found that the size of the deposit/down-payment required from them has increased and so it has become more demanding financially. You need to review your mortgage arrangements regularly and move or consider moving regularly. There are comparison websites you can look at, or mortgage advisors you can talk to, who will give you current information on this.
Many people do not realise that if you can over-pay on your monthly mortgage payments, even by a few pounds, it will make a massive difference in later years. This is allowed to a certain extent by the terms of most repayment mortgages, other types (e.g. endowment mortgages) may not let you do this. If you can’t manage, say, an extra £25 a month, then consider rounding up your monthly payment to the nearest £10. Done early on in the life of a mortgage, even this small move could save you two or three years of payments at the end of your mortgage term!
Another thing to consider is to shorten the term of your mortgage. This will mean you pay more per month over fewer years. Mortgages of 25 years were the standard that was set up because there were no computers to work out all the different payment options for shorter-term mortgages - it can all be calculated very quickly now. And make sure that your interest rate is calculated on a daily basis rather than an annual interest rate – that will also make a massive difference.
This series of blogs is based on the annual Stewardship seminar from King's Church London
Tuesday, 25 June 2013
Tuesday, 18 June 2013
Retirement and long-term planning
You need a plan for what you are going to live off when you get to 65 or 70+. I have given more thought to this recently as I approach my 50s. From 0 – 20 if you are lucky, you are leaning into your parents, from 20 – 50 you get started in life and support yourself - but from 50 onwards you need to think about what you are going to live on from 70 through to 95 (possibly!) as we are tending to live longer these days! Ideally you may want to be putting money aside in your 20s and 30s so that by the time you are 50 you have an amount building up.
The government want us all to get to the situation where everyone makes provision for their retirement through a pension. People talk about pensions a great deal but aren’t so hot on doing something about it! On the whole, less and less people are in a company pension now but if you are in a government pension they come out well in comparison to those in the private sector. I would suggest that in this area it would be good to talk to a professional pension advisor, someone who is trained and competent.
If your family has handled money well in previous generations then it could well be that you will inherit money from them in due course. If you are likely to inherit money then I would suggest that you would need a long-term financial plan - like my 25-year plan. In my family my Dad has always been open about money – he has told me how much he is earning and how much he has in the bank. This is not a common approach for British people of that generation - but it is one of the reasons that I am open about money in the church!
Think ahead! I would repeat - please make a will. It will cost you about £100 to set up a basic will with a qualified legal person but you can go to W H Smith and get a basic form if you can’t afford £100. You will need a witness for your signature to make sure that it will stand up legally. It is better, for the peace of mind of both you and your family, to have something rather than nothing at all.
This series of blogs is based on the annual Stewardship seminar from King's Church London
The government want us all to get to the situation where everyone makes provision for their retirement through a pension. People talk about pensions a great deal but aren’t so hot on doing something about it! On the whole, less and less people are in a company pension now but if you are in a government pension they come out well in comparison to those in the private sector. I would suggest that in this area it would be good to talk to a professional pension advisor, someone who is trained and competent.
If your family has handled money well in previous generations then it could well be that you will inherit money from them in due course. If you are likely to inherit money then I would suggest that you would need a long-term financial plan - like my 25-year plan. In my family my Dad has always been open about money – he has told me how much he is earning and how much he has in the bank. This is not a common approach for British people of that generation - but it is one of the reasons that I am open about money in the church!
Think ahead! I would repeat - please make a will. It will cost you about £100 to set up a basic will with a qualified legal person but you can go to W H Smith and get a basic form if you can’t afford £100. You will need a witness for your signature to make sure that it will stand up legally. It is better, for the peace of mind of both you and your family, to have something rather than nothing at all.
This series of blogs is based on the annual Stewardship seminar from King's Church London
Tuesday, 11 June 2013
Investments!
Earlier in this series of blogs we looked at the money that you spend - but what are you going to do with the money that you have in your savings? This is essentially about your attitude to risk! And be clear-eyed – there are no schemes that can guarantee speedy riches so, if you see those and are remotely attracted by them you need to realise - if they worked as well as their proposers say they do... we would all be doing them!
You have to make a judgement about the level of risk involved in any investment – low, medium or high - and these will change all the time depending on the economic environment. Up to this point in my life I have been a decidedly low-risk investor. My Dad taught me – only go ‘high-risk’ with money you can afford to lose and I have never got to the point yet where I have enough money that I can afford to lose any! I am ‘low-risk’ by inclination but I want to be tax-efficient too, so I have put our savings into ISAs - a mixture of ‘cash’ and ‘share’ ISAs - and some into pensions. There are also medium and high risk investments available – if you have that amount of disposable income you should definitely get some impartial professional advice about such investments.
This series is based on the content of the annual Stewardship seminar from King's Church London
You have to make a judgement about the level of risk involved in any investment – low, medium or high - and these will change all the time depending on the economic environment. Up to this point in my life I have been a decidedly low-risk investor. My Dad taught me – only go ‘high-risk’ with money you can afford to lose and I have never got to the point yet where I have enough money that I can afford to lose any! I am ‘low-risk’ by inclination but I want to be tax-efficient too, so I have put our savings into ISAs - a mixture of ‘cash’ and ‘share’ ISAs - and some into pensions. There are also medium and high risk investments available – if you have that amount of disposable income you should definitely get some impartial professional advice about such investments.
This series is based on the content of the annual Stewardship seminar from King's Church London
Tuesday, 4 June 2013
Making things easier for your family
In looking at financial matters, make it as easy as possible for those who will sort out your estate if you were to die. Imagine a situation where a husband dies and has always looked after all the financial affairs for the family. Suddenly his wife has to take over this important area and has to find out where she can get the money to pay the household bills, buy food – or even pay for the funeral. She may be completely unaware of how much money is available to her. Many couples would identify with that scenario and realise that only one of them knows what’s going on financially.
It would be a good idea to go through the following questions together and to write down the relevant details:
• Who do I ring if I need to get access to money?
• Where do I find any paperwork?
• Who should be contacted regarding pension payments? This is very important following a death.
These practical details can be helpful, saving a lot of time and a great deal of worry for grieving family members at a time of particular stress, so it’s a considerate thing to have sorted out ahead of time.
Make a ‘To Do’ page - a list of the order in which things should be done following a death and where to go. It may not only be helpful in the case of a death but also in the case of aging parents who may not be functioning as well as they used to and need some-one else to take care of their affairs when they can no longer do so.
This series is based on the annual Stewardship seminar from King's Church London
It would be a good idea to go through the following questions together and to write down the relevant details:
• Who do I ring if I need to get access to money?
• Where do I find any paperwork?
• Who should be contacted regarding pension payments? This is very important following a death.
These practical details can be helpful, saving a lot of time and a great deal of worry for grieving family members at a time of particular stress, so it’s a considerate thing to have sorted out ahead of time.
Make a ‘To Do’ page - a list of the order in which things should be done following a death and where to go. It may not only be helpful in the case of a death but also in the case of aging parents who may not be functioning as well as they used to and need some-one else to take care of their affairs when they can no longer do so.
This series is based on the annual Stewardship seminar from King's Church London
Tuesday, 28 May 2013
The importance of making a will...
Making a will is important because if you are married at the very least you will want to ensure that on your death your assets will go to your spouse - a will ensures that this will happen without major complications. At a time of bereavement the last thing you would want to burden your family with is a complicated financial and legal process – all because you didn’t think to plan ahead and make the necessary arrangements. There are tax reasons to make a will as well as ensuring that your assets go to the person that you want them to.
For example, in the case of a single person who has no children, but has brothers and sisters and parents - if they don’t make a will, their assets go back to their parents. From a tax point of view that could mean that because that will add to the parents’ assets, they will then end up paying inheritance tax on that extra money when they die. It might be better to make sure that such assets went to brothers and sisters or to a friend, a charity, or even to the church. Often single people feel that they do not need to make a will, but it is something you should seriously consider.
If you have children who are under age (they still are legally ‘minors’), you should also give serious thought as to who you would like to look after them if you were to die while they were still young and needing care. Have you asked someone to take responsibility as guardians? That should be high on your priority list. If you were to die, the people who would be considered in line to do this, maybe a brother or sister in some situations, might not actually be your first preference for such a role. Sometimes it’s hard to think about such a drastic scenario but it can become a massive reality for some people. If you want to be considerate in managing your family affairs it would be wise to have thought through this important responsibility. Also you should so arrange things that funds are available to enable those chosen people to look after your children for what could be a period of some years and lessen the financial burden for them – some thought on this is needed. Without getting heavy about such things it is certainly worth thinking about.
This series of blogs is based on the annual stewardship seminar from King's Church London
For example, in the case of a single person who has no children, but has brothers and sisters and parents - if they don’t make a will, their assets go back to their parents. From a tax point of view that could mean that because that will add to the parents’ assets, they will then end up paying inheritance tax on that extra money when they die. It might be better to make sure that such assets went to brothers and sisters or to a friend, a charity, or even to the church. Often single people feel that they do not need to make a will, but it is something you should seriously consider.
If you have children who are under age (they still are legally ‘minors’), you should also give serious thought as to who you would like to look after them if you were to die while they were still young and needing care. Have you asked someone to take responsibility as guardians? That should be high on your priority list. If you were to die, the people who would be considered in line to do this, maybe a brother or sister in some situations, might not actually be your first preference for such a role. Sometimes it’s hard to think about such a drastic scenario but it can become a massive reality for some people. If you want to be considerate in managing your family affairs it would be wise to have thought through this important responsibility. Also you should so arrange things that funds are available to enable those chosen people to look after your children for what could be a period of some years and lessen the financial burden for them – some thought on this is needed. Without getting heavy about such things it is certainly worth thinking about.
This series of blogs is based on the annual stewardship seminar from King's Church London
Tuesday, 21 May 2013
Tax and Inheritance Tax
You have to be earning a certain amount of money to pay tax – but there are certain things that you can do that will help you keep this to a minimum. Checking that your tax code is correct and ensuring that you are getting all the allowances that are due to you would come first. Like the banks, it is not unknown for the Inland Revenue to make mistakes! Completion of your tax return form will also help you to be up to date with this important item and may sometimes even result in a tax rebate! Self-employed people and employees are in different situations and will need different advice on tax matters.
Inheritance tax
Most people think that this will never apply to them but in the circumstances, say, that you have a house that is worth £300,000 with a mortgage covered by a life policy, or if you are employed and have a ‘death in service’ benefit which could pay out £100,000 if you died while you were working - in that scenario there would be £30,000 of inheritance tax for you to pay on your death – a situation which could take you unawares. Some people might consider that it won’t affect them as they won’t be around to be bothered by it! But if we are talking about good stewardship that means that you would want to think about the situation for your heirs and organise your affairs as well as you can rather than doing nothing. A large tax bill after your death is not good stewardship and would result in there being less to pass on to those left behind.
It is well worth taking some qualified advice to see if your estate might be affected by inheritance tax. That is the essence of stewardship – thinking ahead. If you think that your estate might be liable to inheritance tax then you need to make a will - that is definitely a good thing to do.
This series of blogs is based on the annual Stewardship seminar from King's
Inheritance tax
Most people think that this will never apply to them but in the circumstances, say, that you have a house that is worth £300,000 with a mortgage covered by a life policy, or if you are employed and have a ‘death in service’ benefit which could pay out £100,000 if you died while you were working - in that scenario there would be £30,000 of inheritance tax for you to pay on your death – a situation which could take you unawares. Some people might consider that it won’t affect them as they won’t be around to be bothered by it! But if we are talking about good stewardship that means that you would want to think about the situation for your heirs and organise your affairs as well as you can rather than doing nothing. A large tax bill after your death is not good stewardship and would result in there being less to pass on to those left behind.
It is well worth taking some qualified advice to see if your estate might be affected by inheritance tax. That is the essence of stewardship – thinking ahead. If you think that your estate might be liable to inheritance tax then you need to make a will - that is definitely a good thing to do.
This series of blogs is based on the annual Stewardship seminar from King's
Tuesday, 14 May 2013
Good stewardship
Debt is never good - but if you are in debt there are ‘good’ places to owe money and others that aren’t good! You have to look carefully at what is known as the APR on your debt – banks provide a better rate than credit card companies. The percentage you are paying is critically important to the length of time it will take you to pay off the debt otherwise you could end up paying several thousands in interest on a relatively small debt of a few hundred pounds.
Prevention is better than cure and with that in mind at King’s we now provide a Debt Advice Centre called King’s Money Advice. Suzy and Carol Bradshaw head that up and have come to us from Sheffield with a wealth of experience in this vital field of debt advice. They will be a really helpful and important resource for many in debt in our area.
If you are going to prioritise managing your debt you may need careful professional debt advice. Some of the loan companies that advertise in the media that they consolidate debts can result in you paying a final interest rate of 4000%. The so-called lower monthly figure means that the period of the loan is extended - in some cases you can be paying off that ‘smaller’ amount for the rest of your life – or it can seem so. Apart from increasing your income and reducing your expenditure you also need to get the interest rate you are paying down as low as possible. I say again - avoid television loan companies!
This series of blogs is based on the annual Stewardship seminar from King's
Prevention is better than cure and with that in mind at King’s we now provide a Debt Advice Centre called King’s Money Advice. Suzy and Carol Bradshaw head that up and have come to us from Sheffield with a wealth of experience in this vital field of debt advice. They will be a really helpful and important resource for many in debt in our area.
If you are going to prioritise managing your debt you may need careful professional debt advice. Some of the loan companies that advertise in the media that they consolidate debts can result in you paying a final interest rate of 4000%. The so-called lower monthly figure means that the period of the loan is extended - in some cases you can be paying off that ‘smaller’ amount for the rest of your life – or it can seem so. Apart from increasing your income and reducing your expenditure you also need to get the interest rate you are paying down as low as possible. I say again - avoid television loan companies!
This series of blogs is based on the annual Stewardship seminar from King's
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