Record numbers of older people are being forced to raise cash against their properties as the pensions crisis deepens. Figures published yesterday by insurer Prudential show 44 per cent of the UK's over-55s are considering taking out a lifetime mortgage - the most common type of equity release scheme - compared with 19 per cent a year ago.
[Daily Express page 31 - 19.10.05]

The Bank of England is now prepared to fire the bottom 5pc of its staff every year, as it adopts management techniques more commonly found at Goldman Sachs or Morgan Stanley. All the Bank's 1,800 staff are assessed each year at Christmas for competence. This year, their managers will tell them if they have fallen into the bottom 90. If they have, they will forgo their annual pay rise, be placed on a year's notice, and have three-monthly reassessments. Those who fail to hit their targets and do not climb out of the bottom 90 will be fired without redundancy payments.
[Daily Telegraph page B1 - 13.10.05.]

Chip and pin credit and debit cards are here to stay. After 14 February 2006 you will be required to know and use your pin when you make a purchase with it. Up until this point merchants have been flexible in giving you leniency and allowing you to sign if you could not remember your pin. No more.

The results of the introduction of the chip and pin cards speak for themselves. Just this year, credit card fraud is down 29% according to the Association of Payments Clearing Service (APACS).

I was reading a recent article in the UK about a Swiss clinic, Dignitas. The Zurich based assisted suicide clinic is thinking of opening an office in the UK in response to a higher demand for its services.

Reading the article reminded me of a conversation I had the other day with someone from South Africa. It was a conversation that I have had many times over my years of helping people. The person felt that they had failed financially and that suicide was the only way out.

There is a saying in the United States, “Guns Don’t Kill People. People Kill People.” It could easily be applied to debt, “Debt Doesn’t Kill People. People Kill Themselves.”

It is indisputable that the emotional trauma of financial problems can be severe. I can think of a couple of reported stories over the years where the specific cause of suicide was linked to financial problems.

Take the sensational case of the university student that hanged herself over her bed of credit card bills, or the printing company executive that returned home from gambling and killed his entire family.

Logically, there is never a single good reason for someone to contemplate suicide due to debt. And don’t even give me that argument that “I’m worth more dead than alive due to the insurance.”

There are always solutions to debt problems. Always! Problem debt is often the outgrowth of other underlying issues. Take the university student. She came from a dysfunctional single parent household where she essentially raised her mother. She had no siblings or close family. She felt all alone. When she got in over her head the financial problems felt overwhelming, and feeling alone did not help the situation. Feeling that she had no one to turn to for help and no hope of ever dealing with the problem, she killed herself. She owed about £12,000.

The printing executive left a suicide note and said that the reason he killed his wife and children was because he was too ashamed to tell them of his financial failure.

The point here is that the best solution to an overwhelming financial problem is never suicide. Never! If your financial situation feels overwhelming then you need to reach out for expert professional financial help. And never accept that there are not solutions. There are always solutions. If you don’t know where to turn for help, contact Myvesta.org.uk.

If you know someone that is talking about suicide, help them to get help. One place you can contact is Samaritans.org. They have many local offices across the UK. If you want to know more about the warning signs of suicide, click here.

In closing, remember that suicide is often a permanent solution to a temporary problem.

An influential group of MPs has attacked MBNA, the American credit card group, over its plans to charge card users an annual fee. MBNA’s introduction of charges of £25 and £15 on a minority of cards in December will make it the only “big-five” credit card issuer to enforce an annual fee. John Mann, the Labour MP for Bassetlaw and member of the Commons Treasury Select Committee, fears that MBNA’s move to reintroduce annual charges, which had almost become extinct among major lenders, could be only the first.
[The Times page 67 - 7.10.05. Also reported in Daily Mail page 39]

Track spending and attack high interest cards to boost debt repayment

RUNCORN, England — As credit card debt has become a way of life for millions of individuals across the United Kingdom, many debtors have found themselves with a wallet full of different credit cards needing to be paid off. Each card carries a different interest rate, different payment address and different minimum payment making it difficult for many individuals to stay on top of their monthly obligations. But when looking to develop a plan to rid yourself of credit card debt, what is the smartest way to begin?

"The first thing anyone needs to do when developing a plan to pay off credit card debt is to track their spending for at least one month to find out where their money is going," said Steve Rhode, chairman of Myvesta UK, a not-for-profit money management organisation. "After determining how much money there is each month to send to creditors, send the largest payment to the credit card with the highest interest rate and pay the monthly minimums on the rest. After the highest rate card is paid off, move those funds to the next highest card. Continue to do this until all the cards are paid off."

According to Rhode, when people fall behind on their bills it's not always because they don't have enough money to cover their expenses.

"Quite often it's a problem of organisation, motivation and time," he said. "People simply don't have the necessary skills or are too busy to effectively put together and maintain a payment plan on their own. That's where our AllPaid program steps in. We take over the responsibility of handling the bills and are able to reduce debt faster than people can do on their own."

For more information on Myvesta UK's AllPaid program, or to access free online calculators to assess your debt, visit Myvesta.org.uk online. Individuals can also call free on 0800 1116 885 for free advice and information.

View the Myvesta UK press release.

Myvesta Opens British Office to Aid Consumers in Debt

RUNCORN, England,

- Not-For-Profit Organisation Provides Unmatched Service and Assistance

With debt levels across the United Kingdom rising to new and higher levels, the American not-for-profit organisation Myvesta has opened an office in England to assist consumers facing financial difficulties. Myvesta, established in 1994, brings its years of experience assisting individuals with complex financial problems to the United Kingdom as Myvesta UK.

"We are a truly unique organisation offering the most comprehensive assistance anywhere. Most people think of us as a financial crisis centre," said Steve Rhode, Chairman of Myvesta UK. "Having lived through bankruptcy myself in 1990, the services Myvesta offer come from the heart. We have a willingness to help people find a better way through the pain and suffering that money troubles can create."

Online, the Myvesta.org.uk web site contains a vast amount of free information available for visitors. Users can download self-help publications, evaluate their debt with financial calculators, take a money personality test and obtain answers to their financial questions through an online radio show all at no charge.

Myvesta UK, headquartered in Runcorn, offers a wide range of free advice via their Freephone on +44-0800-1116-885 as well as customised programs to help people in trouble with hands-on assistance.

"When helping people with money problems there is no one-size-fits-all fix. We specialise in developing customised solutions for each person," Rhode said. "We recognize that people are individuals and need a resolution as unique as they are along with tender loving care to help them through a difficult time in their lives. Our distinctive approach allows us to offer the most comprehensive solutions available and truly help those who are in need."

Myvesta UK is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials and services to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta.org.uk online.

Credit card firm MBNA is penalising some customers with annual fees of £15 or £25. Selected cardholders face the new charges from November. It is believed MBNA is targeting customers who pay their bills in full each month, but the company is being vague. A spokesman says a 'small number' of customers have been written to, but said the company couldn't go into details of why they have been picked. It also won't say why the fee varies from £15 to £25.
[Daily mail page 43 - 05.10.05.]

The consumer watchdog is to investigate leading credit providers amid fears that they are flouting laws that require the advertised headline interest rate to be offered to most applicants. Legislation on the advertising of loans and credit cards, which came into force in October last year, forbids banks from offering enticing low interest-rate offers unless 66 per cent of customers are successful in their application. But a recent investigation by the Office of Fair Trading (OFT) found that 60 per cent of advertisements for loans and credit cards were flouting these laws. Moneyfacts, the price comparison website, welcomed the move by the OFT. A spokesman said: "This is great news for consumers because they will know that if they apply for a loan or a credit card they will have the same chance of being successful, whatever lender they apply with." Moneyfacts has criticised the OFT’s reliance on trading standards officials and citizens advice bureaux to weed out lenders that break the law.
[The Times page 51 - 4.10.05.]

Total UK personal debt broke through the £1.1 trillion barrier (£1,100,000,000,000) in June 2005. This is 11 months since it broke through the £1 trillion barrier in July 2004.

Britain's personal debt is increasing by £1 million every four minutes.

At the end of August 2005 the total UK personal debt was £1,122bn. The growth rate remains strong at 10.5% for the previous 12 months. 2004 saw the largest single-year increase in debt (£116bn) since the Bank of England was founded in 1694.

Total secured lending on homes in August 2005 was £931.8bn.

Total consumer credit lending to individuals in August 2005 was £190.5bn.

Total lending in August 2005 grew by £8.9bn. Secured lending grew by £7.6bn in the month and consumer credit lending grew by £1.3bn in the month.

Average household debt in the UK is approximately £7,713 (excluding mortgages) and £45,437 including mortgages.

Average owed by every man, woman and child in the UK is approximately £18,757 (including mortgages).

Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,087 per average UK adult at the end of August 2005. This figure translates into a 10% increase on the previous year's levels and a 45% increase since 2000.

The rapid increase in households’ borrowing has raised total debt to close to 150% of annualised aggregate post-tax income according to the Bank of England. They predict debt may continue to increase more rapidly than income over the next few years.

Since the turn of the century in just over 5.5 years (based on figures available at 1st October 2005):

Total UK personal debt has increased by £513bn (84%) from £609bn to £1,122bn
Total secured lending on homes has increased by £438bn (89%) from £494bn to £932bn
Total consumer credit lending has increased by £76bn (66%) from £115bn to £191bn
Total credit card debt has increased by £24.2bn (76%) from £32bn to £56.2bn
Base Rate has decreased by 1.5% from 5.5% to its current rate of 4.5%
Average house price has increased by £89,867 (93%) from £96,340 to £186,207
Average earnings have increased by £5,077 (28.5%) from £17,803 to £22,880

Plastic card / Personal Loans: Total credit card debt in August 2005 increased to £56.18bn.

According to the BBA the proportion of credit card balances bearing interest was 76% in July 2005.

According to APACS, the UK payments association, more than 22 million adults in the UK made purchases online during 2004, accounting for 262 million transactions totalling £16 billion. Credit cards accounted for almost three quarters (72 per cent) of all online transactions, which meant that 11p in every £1 spent on credit cards was spent online.

The average interest rate on credit card lending is currently 15.75%, around 11 percentage points above base rate.

2.3 million personal loan agreements totalling £12.45 billion were entered into in the second quarter of 2005. Most were for cars (~ 30%), home improvements incl. goods & furniture (~ 24%) and debt consolidation (21%). A significant gap exists between the low rates advertised by lenders and the average rates actually paid (1.8% higher for £15,000 loans) by borrowers once they have applied for the loan and been credit checked. Personal loans are typically available between £1,000 and £25,000 with the average loan size currently at £5,500.

According to the latest annual report from APACS nearly two thirds of adults have a credit card and multiple card holding is a growing phenomenon in the UK. More than six in ten card holders held more than one card in 2004, with one in ten holding at least five.

Plastic cards in issue were 190m in 2004. This works out at an average of 4.1 plastic cards for every adult in the UK.

There are more credit cards in the UK than people according to APACS. At the end of 2004 there were 74.3m credit and charge cards in the UK compared with around 59 million people in the country.

270 plastic transactions took place every second in the UK in 2004.

Servicing Debt: Calls volumes to the Consumer Credit Counselling Service (CCCS) grew 30% in 2004 and are predicted to rise by 50% in 2005. While the most common clients to seek help from CCCS are mid thirties with a job, a mortgage, children and £28,700 worth of debt, CCCS is increasingly counselling people under 25. The average under 25-year-old owes £15,000 and account for 12% of their clients.

Economic Lifestyle research shows that over 558,000 pensioners are still paying off mortgages, well into their retirement years. In addition, they were shocked to uncover that over 3 million pensioners live on under £10,000 per year. By 2007 the number of people over state retirement age will be greater than the number of children in the UK.

County court judgements (CCJs) against personal debtors in the first half of 2005 rose by 15% to 290,643.

The figures for the second quarter 2005 show that the total number of individual insolvencies has increased by 36.8 per cent on the same period as last year and has risen to its highest level in 45 years. Bankruptcies have risen by 27.5 per cent and Individual Voluntary Arrangements (IVAs), an alternative to bankruptcy, have risen by 69.6 per cent when compared to the figures for the same period last year. The number of people who have become bankrupt or entered into an Individual Voluntary Arrangement (IVA) in England and Wales in the last 12 months is 54,227. Personal bankruptcies have broken the 40,000 barrier for a 12 month period for the first time.

According to the latest Department of Trade and Industry (DTI) Survey:

8% of Individuals have monthly repayments on unsecured borrowing > 25% of gross income
9% of Individuals have monthly repayments on secured and unsecured borrowing > 50% of gross income
5% of Individuals are finding their household’s debt repayments a ‘heavy burden’
4% of Individuals currently in arrears on at least one credit commitment/ domestic bill for more than 3 months
In December 2004, 1.2 million electricity and 1 million gas domestic customers were repaying debts to their gas or electricity supplier. The average debts were £161 and £149 respectively.

One in five people say they regularly avoid checking their bank balance because they are too scared to find out how much money they have according to Lloyds TSB.

Money is the most common cause of arguments (44%), most respondents argued about spending priorities, particularly if not working according to Relate. Low income couples are more that twice as likely to argue over money issues than middle/high income families. Money related arguments are also more common if the couple have children under 10. More women than men were likely to argue over trust and secrecy issues related to money. Equal proportions of men and women argued about lack of money.

According to the FSA Financial Risk Outlook 2005 over a quarter of families have at least one credit card where the outstanding balance is not cleared each month, owing nearly £2,500 on average (14% higher than last year). Student Loan Company outstanding debt rose sharply, and is now 27% higher than in 2003.

The number of consumer debt problems dealt with by Citizens Advice Bureaux has risen by nearly three quarters over the last seven years, figures released today by the national problem-solving charity reveal. Consumer debt issues seen in bureaux stood at 706,700 in 2003/4 compared with 405,800 in 1996/7 – a rise of 74%. Bureaux dealt with nearly 1.1 million debt-related issues last year, a figure that also includes housing, utilities and benefits-related debts. But consumer debt is by far the biggest type of debt problem for which people come for help.

A quarter of those in debt are receiving treatment for stress, depression and anxiety from their GP.

Students / Youth: According to the National Union of Students (NUS) the estimated average student expenditure for academic year 2005/06 (39 weeks) is £10,493 in London and £8,810 outside London

One in three prospective students underestimates the cost of university and a quarter expect their unprepared parents to foot the bill, research showed today. The survey by the Association of Investment Trust Companies (AITC) showed young people expected their debt on graduation to stand at £7,208, while their parents estimated it would be £9,741. However, research by Barclays bank puts the average debt for those finishing university this year at £13,501.

One in four parents say they have adult children who are still living at home. Student debts and the difficulty in getting a foothold on the housing ladder are often blamed for offspring being unable to leave home. The study suggests one in seven parents with adult children have remortgaged or taken out a loan in an attempt to help. The modern-day dilemma has spawned the term kippers, standing for "kids in parents' pockets, eroding retirement saving".

Parents who give cash to their offspring to help them out if they are struggling financially could be doing more harm than good according to research by NatWest. Children who accept handouts from their parents are 25% more likely to go overdrawn than those who never accept help. Overall a third of young people said their parents had never taught them how to manage their money.

Housing: According to the Office of Deputy Prime Minister the average house price in the UK in July 2005 stood at £186,207 (£195,191 in England). UK annual house price inflation fell to 4.0 %. Annual house price inflation in London was 0.9%.



Halifax estimates the cost of owning and running a home rose by 6% in 2004/05 to £6,303, driven by higher mortgage servicing costs and rising council tax bills. Halifax forecasts a further 2% rise in annual housing costs to £6,406 in 2005/06 with a likely fall in mortgage servicing costs partially offsetting rising utility and council tax bills.

Housing data has been fairly consistent this month:

One month after the Bank of England lowered interest rates to 4.5% the number of buyers and the number of sales were up by approximately 4% in August according to the National Association of Estate Agents (NAEA). The number of houses on estate agent’s books also increased as sellers regained confidence in the market. The percentage of first timers fell slightly to 7.7% which is 20% lower than last year.
According to the National Association of Estate Agents (NAEA) the average time taken to sell a property between instruction and exchange of contracts now stands at 20 weeks.

The Council of Mortgage Lenders cut its forecasts for house price growth in August 2005 and now believes property values will fall 2% this year and will not grow at all in 2006.

The average fixed rate mortgage in August was 5.23% and the average variable rate mortgage was 5.61%. Fixed-rate mortgages accounted for 54% of all loans in August, the highest proportion ever since monthly records began in 1998.
According to the Nationwide UK house prices fell by 0.2% in September and they estimate the annual rate of house price growth in the UK at 1.8% - its lowest since May 1996. The number of house purchase approvals increased to 97,000 in July, their highest level for a year and just above the average for the last 12 years.

The average loan approval for house purchase in August was £130,500.

Housing 1st Time Buyers: The average house price in the UK in July 2005 for first time buyers now stands at £153,168 which is an annual increase of 6%.

The Council of Mortgage Lenders (CML) estimate in August 2005 that the first time buyers average new loan is 87% of the value of the property and that they borrow 3.22 times their income (based on income figure provided by buyers in their mortgage application and may reflect one or more incomes).

The average deposit required by first time buyers in the second quarter of 2005 was 21.0% of the purchase price. Based on repayment loans, in the UK, repayments as a percentage of income for first time buyers were 23.3% in the second quarter of 2005, up from 22.9% in the previous quarter and up from 21.4% one year ago

High Street Spending: Conditions for retailers remain mired in difficulty according to the CBI as they recorded the fastest year-on-year sales decline in its 22 year history during September 2005.

The RAC estimate the cost (including depreciation) to run a privately owned car from new for a period of three years with an annual mileage of 12,000 is £424/month for a 1201cc – 1500cc car and £627/month for a 2000cc car.

An astonishing £1.46 billion is spent at car boot sales every year in the UK.

The average wedding costs around £16,000, yet 45% of couples - some 117,000 nationwide - have no financial planning to pay for the big day, a study by stockbrokers Brewin Dolphin Securities found.

Switch estimate that the average guest can expect to spend a total of £300 on all the expenses that a wedding entails (including £55 on the wedding gift, £90 on travel and accommodation, and close to £100 on a new outfit and £30 on alcohol, as they toast the success of the happy couple). This figure rises to £465 for those included in the pre-wedding celebrations as well as the day itself.

More people in Britain have two cars than no car at all, according to the National Statistics' annual social trends research. 29% of people have two or more cars while approximately 26% of people are without a car.

Money Education / Financial Literacy: Around 15 per cent of 18 to 24- year-olds think an individual savings account (ISA) is an iPod accessory, and one in 10 reckon it's an energy drink. With rising personal debt levels in Britain, and a lack of long-term savings, better money management seems a pressing issue.

According to Standard Life over half (57 per cent) of UK adults say they have not drawn up a will meaning they would die 'intestate'. A further 19 per cent have had a change in circumstances since drawing up their will, meaning it could now be out of date.

Nearly four out of five people do not know that APR refers to the interest and other costs of a loan, four in ten admit they do not understand mortgages or ISAs, and a third lack confidence in their financial affairs. These are some of the results of a survey conducted recently by Mori. One in five did not understand the concept of inflation. Nearly a third did not know that insurance products are designed to protect their owners from unforeseen events. Only 30 per cent could calculate four per cent interest on £2,000 over two years.

Savings: Whilst the concept of ‘spending the kids’ inheritance’ may be nothing new, it appears that many of those in their forties or fifties are prepared to spend their own retirement funds to finance their current lifestyles. According to Insight Investment, well over a quarter of forty and fifty somethings (29 per cent) say that enjoying their money now is more of a priority than investing for the future. This ‘live for the moment’ attitude is despite well over a third (39 per cent) of those aged 45-54 admitting to having no investments other than residential property, a situation in which more than one in four (27 per cent) of the over 55s also find themselves.

Savers continued to invest heavily in building societies during August. More than £1 billion (seasonally adjusted) has been invested in building societies in each of the last three months – the first time this has occurred for over four years

The majority of Britons would be unable to cope financially in the event of a minor household emergency according to the Alliance & Leicester. Just 28% said they had money put aside which could be used to replace household appliances, such as a cooker or fridge.

Long-term saving is an alien concept to two thirds (65%) of UK adults, according to research from IFA Promotion. And it’s not just the younger generation who live for today; a worrying three quarters (74%) of 30-50 year olds and nearly half of over 50s (43%) have never saved for anything for longer than a decade. 4.6 million UK adults (10%) admit they have never saved for anything at all, and this rises to a larger proportion (17%) of under 30s who have grown up with today’s credit culture. Saving seems to have fallen out of fashion in favour of instant consumer gratification.

Over eight in ten (81 per cent) Britons contributing to a pension - some 16.7 million nationwide - expect a pension shortfall when they retire, according to new research commissioned by Brewin Dolphin. On average, people are expecting a 30 per cent deficit in their pension pot.

Compiled by Richard Talbot

The minimum wage will increase today to £5.05 an hour, up from £4.85, while 18 to 21 year olds will get 15p more at £4.25. Further increases are planned.

Planning to Live a Long Life?

A sharp increase in life expectancy in the past ten years is posing bigger problems for both pension funds and life insurers and adding to the pressure for raising the retirement age, according to new figures.The Continuous Mortality Investigation (CMI), which publishes its results once a decade based on trends over a three-year period, said the chances of a 65-year-old man dying within a year of retiring were now 30pc less.It added: "A 65-year-old man may now expect to live on average until he is 86 years and seven months, an increase of 3½-years from when the previous tables were published."
[Daily Telegraph page 33 - 30.09.05. Also reported in The Times page 52 and The Independent page 57]