Tips to Cut the Cost of your Energy Bills

by Magical Penny on April 22, 2013

There are few of us who aren’t feeling the pinch of rising energy costs. Yet, a few simple actions could save us hundreds of pounds every year according to the leading energy-saving advice charity.

 

The Energy Saving Trust Foundation provides free impartial advice to households on how to cut the cost of their energy expenditure. Follow their pain-free advice below to see the difference on your next bill.

 

1. Switch tariffs

If you have been on the same standard tariff for years, a quick search on a comparison website may find you a better deal that could save you hundreds of pounds every year.

Savvy consumers can make substantial savings by shopping around, especially if they switch to a dual fuel deal for their gas and electricity. However, you may find a better tariff is available from your own supplier and you only need to make a phone call to them to start saving!

With energy costs expected to keep rising, fixed rate tariffs are a sensible choice but read the small print as some long-term deals include exit fees if you find a better deal later and want to switch again.

 

2. Pay by direct debit

If you are receiving paper bills and paying them by cash or cheque, you can usually make considerable savings by switching to paperless billing and bill pay by direct debit.

Some suppliers offer discounts of up to £100 for making this small change.

 

3. Wear a jumper

 The Energy Saving Trust estimates that around £65 can be saved every year by turning the thermostat down by just one degree. If you wear a warm jumper and turn it down a couple degrees you could save yourself a massive £130 a year!

The last winter woollies are now heavily discounted in the shops so you could pick yourself up a warm cardigan for just a few pounds. Better still, pay for your warm togs by selling anything you no longer wear. Recycling clothes for money via a clothes-buying website is a great environmentally-friendly way to make some quick extra cash.

 

4. Switch things off

When you don’t need the heating on, switch it off or set up your timer to avoid it being left on unnecessarily. You should also be more vigilant about lights and appliances left on standby. Switching devices off at the plug, rather than leaving them on standby, could save families between £50 and £90 a year, according to the Trust.

 

5. Be energy-wise

Additional small actions, such as only filling the kettle as much as you need, fully filling the washing machine and dishwasher before you use them and line-drying clothes whenever possible, can all help to cut the cost of your energy bills.

 

The key is to be mindful of how much you are using –you could be pleasantly surprised by how many magical pennies you save!

 

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5 Key Secrets For Getting the Right Supplier For You

by Magical Penny on April 19, 2013

One great way to grow your pennies is to start a small business. However, sooner or later it’s likely you’ll need to find suppliers of some kinds to help you deliver your service or product.

For a small business, choosing the right suppliers can be daunting. You need to make sure you’re making smart and safe choices. To do that you need to trust your supplier and reduce the risk for your business. But how do you do that? There are a few important steps you can follow to ensure you get the best from your supplier. By using this guide you can make sure your business moves along the path to success.

1. Look Around Before Settling on a Supplier

Just like your business your supplier wants to turn a profit, so they’re not going to tell you where to get a more competitive rate. It’s up to you to shop around and find the best deal for you. So it’s important that you do your research and find the optimum supplier for your business, one that can supply you with goods and products at a price that’s right for you.

 

2. Who To Trust and Choosing the Right Platform

Once you’ve found a competitive rate, the next step is to find out more information on who the supplier is. The best way is to use easily available platforms that hold established relationships with suppliers and can give you information on them as and when you need it. Schemes like global ecommerce platform Alibaba’s Supplier Assessment are a great way to do this. They allow you to find out information about your supplier that comes from a trusted, verified, and most importantly, third party source.

“When I see a supplier assessment logo, it definitely does build more trust.” – Anthony Martin (businessman and founder of iCracked Inc.)

 

3. Verifying Your Supply Market

In our global economy suppliers are no longer in the same region or even the same country, and it’s not always financially viable or practical to travel to countries to verify where the goods or products are coming from. Make sure that before you go into business, you can see reports or videos produced by an independent third party. These should cover everything from the company’s size and structure, to market experience and R&D capabilities so you’re not just relying on the supplier’s word.

“The verified report is really important for us, because as a small business, we need to [know] that the supplier we’re going to use is trustworthy, and you want as much information about that supplier as possible to build that trust in your brand.” – Tessa Harnett (owns and runs Vurge Jewellery).

4. Read the Contract

Before you sign away and start a relationship with the supplier, make sure to read the contract carefully to ensure you’re not getting into something that could damage your business, like if the supply chain collapses and you’re not protected. It’s important that you check over the details so you don’t get any unexpected headaches further down the line.

5. A Good Supplier Isn’t Just About Price

Although price is an important factor, don’t let it be the only thing that guides your judgment. Other things to consider are reliability—it’s no good getting a great price if the supplier keeps letting you down. Location is equally key—although sourcing it from other countries may be cheaper, they could take a longer time to ship you goods at short notice. So make sure you know how long shipment might take and consider this when choosing the right supplier. You might also find that multiple suppliers works for you, depending on what you want.

If you’re still unsure about what to do, watch this video below to hear testimonies from businessmen and women, talking about their experience with an online platform, Alibaba, that provides verified reports and videos demonstrating the effectiveness of the suppliers the platform supports.

Having this third party verification is essential as it means you can feel confident in all your transactions. And it also means you can gain valuable insight before you commit yourself to doing business with a manufacturer, ensuring you have maximum peace of mind—so you can feel comfortable and assured when sourcing supplies for your business to grow, prosper and profit.

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Magical Pound? – 30 Years of the Pound Coin

by Magical Penny on April 18, 2013

This Sunday (21st April, 2013) marks the 30th anniversary of the launch of the £1 coin.

Launched at the height of the Conservative Government, the £1 coin was reportedly disliked by the late Prime Minister Margaret Thatcher, however, its popularity, and distinctive design led to its forerunner, the £1 note, eventually being withdrawn from circulation in 1988.

The buying power of the little guy has gone down considerably over the last 30 years but it’s still pretty special to many of us, right?

In 1983, chocoholics could buy  5.9 Mars bars for £1 compared to just 1.7 now. Probably a good thing?

For football fans in 1983, £1 would let you watch 34 minutes of a Manchester United match, while you wouldn’t even manage to watch injury time at Old Trafford, with £1 today buying just three minutes of action.

And music fans have suffered too: Fans of Glastonbury would be able to see over 6 hours of entertainment for £1 in 1983, compared to just under an hour now.

The average family’s shopping basket has increased in price too, with a loaf of bread increasing over 300 per cent, milk increasing over 250 per cent and the cost of eggs having surged by more than 400 per cent.

The reason for the decrease in the value of a pound coin is inflation, and that’s why you need to be investing your magical pennies to keep up!

Happy Birthday £1 Coin!

 

Source

But Are Coins As Special Anymore?

In a recent study over half of Brits now prefer to use plastic for the majority of their purchases.

Cash still remains king for small ticket items such as newspapers and magazines, over half of Brits (53%) prefer to use plastic for most of their purchases.

The survey commissioned by Gocompare.com found that 34% of people try to pay with cash whenever possible and 48% said that they didn’t like being without any cash, with this figure rising to 57% for people aged 55 and over.

 As a result, cash is the main method of payment for purchases under a fiver, with 92% of those surveyed saying that they would use cash.

However, for items costing between £5 and £20, just over half (52%) said that they would pay by cash while a third would use their debit card, and 13% would pay by credit card.  With two in five people saying they don’t like to carry a lot of cash around, plastic dominates purchases over £20:

Value of goods

Payment method (%)
£20.01 to £30 debit card (51), cash (28), credit card (20)
£30.01 to £50 debit card (54), credit card (23), cash (21)
£50.01 to £100 debit card (54), credit card (30), cash (13)

The survey found that cash was the preferred method of payment for newspapers (84%), magazines (80%), a round of drinks (78%), a takeout (71%) and when paying tradesmen (56%).

John Miles from Gocompare.com, commented: “Over the thirty years since the pound coin came into circulation, the way we pay for goods and services has changed dramatically with the development of debit cards, chip and pin, electronic and other contactless payment systems.  Despite this, our practical as well as emotional attachment to cash remains strong, particularly for older people, so it looks like the pound coin is going to be around for a good while yet.”

Do you still love coins? Or do you prefer the convenience of plastic?

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Business Liability Insurance

by Magical Penny on April 12, 2013



cautionRunning a business can be hard work. Whether you’re the owner or the manager you have staff to think about, suppliers to contend with, rules, regulations and red tape – and that’s all before you’ve seen a client or a customer. The last thing you’ve time to think about is your business liability insurance.

And yet being in business – especially in our increasingly litigious climate – is all about being liable. You have responsibilities to the staff you employ, the customers that visit you or buy from you; you need to protect your stock, your cash and the building you trade from. But on top of that your business liability insurance costs money – money which you’d happily not spend in the current climate!

Just like it’s recommended that you get an accountant  (find accountants in Manchester here for example), to ensure everything financial is above board, protecting your business against liabilities is also recommended – because without protection, you might find yourself calling the receivers instead of opening for business. Supposing your stock was destroyed in a fire? Your premises were affected by a flood? Supposing a customer fell over a poorly-placed cable, or a member of staff fell down some poorly-lit stairs?

In every case, the business faces a potentially devastating loss or a hefty bill for compensation. All scenarios which could see the business closing down can be protected against with properly arranged business liability insurance.

But in the current economic climate too many business owners either don’t want to keep their policy up to date, or they’re simply too busy.

Maybe the solution is to hand the problem over to an expert company who have a specialist department dealing with nothing but business liability. They’ll make sure that you have exactly the cover you need at the most competitive premium.

And you can rest assured that a specialist insurance department will have dealt with plenty of other businesses like yours – so they’ll know the areas where claims are likely to arise and they’ll be able to make sure that you are properly protected.

That way, if the worst happens, it will only be an interruption to your business – not the end of it.

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How to Pay off Debt

by Magical Penny on April 12, 2013

How to pay off debtFocus.

Mastering financial focus is really important if you are to be prepared to grow your savings and begin investing for your future.

You already know that you do your best work when you take the time and focus. With focus you can achieve great things. But focusing is hard.

One minute you could be reading about the power of focus then…something else comes up. But focus is important when it comes to paying off debt and growing your pennies. I won’t need to tell you that there are lots of distractions that can part you from your pennies and there’s also lots of different priorities that can make reaching any financial goal difficult.

Here are some techniques and strategies to help you remain focused on your financial goals:

 

Short Term: Paying off debt and building some savings

Paying off debt is the first thing you need to do if you’re to grow your pennies. Why? Because, simply, it’s so expensive! Paying off debt could include credit cards, car debt and other small loans you may have (although not Student loans at this stage). If you’re going to be successful at focusing on paying down your debt there are 3 strategies that could help you maintain focus on your debt management plan.

 

Technique 1: The Debt Snowball

Popularised by Dave Ramsey this strategy to remain focused involves writing all your debts down in order from smallest debt to largest debt:

Debt example:

£100                Dentist                           5%  interest

£500                A friend                         0%  interest

£2500              Credit cards                27% interest

£12000            Car loan                       7% interest

Whilst making minimum payments on all of the debts, if you’re following the Debt Snowball plan, you begin putting any extra money you make available in your budget towards the smallest debt. By focusing on the smallest loan you can quickly get the first two in the list paid off. Once this is done you’ve now cut your list of debt in half and can ‘snowball’ that extra money that you had been paying on those debts into attacking debt #3, the credit card. This method helps you stay focused because you begin seeing progress straight away and once the little debts have been paid you quickly have more money available to begin paying off the bigger debts. By the time you get to the last debt the debt snowball is in full effect, feeding off your previous successes.

The Debt Snowball is certainly a powerful tool to help give you focus because it’s a plan that gives you quick results.

Technique II The Debt Avalanche

Did you notice that in the Debt snowball method the interest rate wasn’t considered? This is because the Debt snowball focuses on debt balance  for the ‘quick win’ of paying off small debt. Quick wins are a great way to help maintain focus.

In contrast, the Debt Avalanche (I love these names!) is based solely on the interest rate, and nothing else. Using this method you can take the same debts and order them in interest rate order: the price you are paying to carry the debt:

Debt example:

£2500              Credit cards                27% interest

£12000            Car loan                       7% interest

£100                Dentist                           5%  interest

£500                Friend                          0%  interest

Credit cards are often the most costly form of debt and in this example it’s 27% interest rate is a costly expense. After paying the minimum monthly payments on all the debts, the Debt Avalanche method demands that you concentrate on paying off the highest interest rate debt, the credit card in this example, first. Once complete you would then move onto the car. Those other ‘cheaper’ debts will have to wait.

Despite being the optimum method of paying off debt from a cost perspective, the Debt Avalanche can be the hardest strategy to remain focused on –sooner or later you are going to tire of throwing your money at the debt every month without seeing any meaningful progress. Reducing a £1000 debt to £900 does not have the same phycohlogical boosting effect that paying off a £100 debt does. On larger debts such as a  large credit card balance or a car the size alone can make paying it off a very unappealing idea.

However Flexo @Consumerism Commentary gives a great suggestion in cases like this: rather than focussing on the number of debts paid off, focus on key milestones: the first £500 paid off, the first £1000 for example. Keep focused by keeping your goals short-term –and celebrate when you reach them! You may still be in debt but if you’ve paid off your first £1000 you’ve made excellent progress on your path towards growing your pennies. It might seem contradictory to celebrate (and spend a little) when you are still in debt but you should recognise the psychology of the process to help you stay focussed.

Technique III -the Debt Tsunami

So to recap, the Debt snowball orders debts in balance size order for those ‘quick wins’ quickly reduce your list of accounts and simplifying your financial life; the Debt Avalanche optimises the cost of the debt by making you prioritise high-cost debt first before moving onto others. So far, so good. But I’ve recently become aware of another technique for staying focused when paying off your debt that I’d love to share with you:

The Debt Tsunami (coined by Adam Baker) works in the same way as the Debt Avalanche but includes a great tweak: Consider both the interest rate and it’s emotional impact:

Debt example:

£500                Friend                          0%  interest                   BIGGEST Impact

£2500             Credit cards                27% interest                Impact

£100                Dentist                          5%  interest                  A little impact

£12000            Car loan                      7% interest                  No  impact

 

In this example, owing money to a friend is having a big impact-it has changed the dynamic of the relationship. This is hardly surprising: although borrowing from family and friends may seem the ‘easy’ way to get money if you need it, it’s not generally a good idea. The Debt Tsunami takes this into account, pushing the ‘cheap’ loan above the credit card debt in the priority list. The dentist loan also has a bit of emotional impact: perhaps in this example you don’t want to be asked about the loan when you go for your next check-up. You therefore move it up ahead of the car loan, despite the lower, and therefore cheaper, interest rate.

By working on the debt that makes you feel the worst emotionally you harness those negative feelings to give your debt reduction plans an incredible amount of focus. This focus will eventually take you out of debt and prepare you to begin seriously growing your pennies.

Now that’s a great thing to focus on!

What techniques have you found useful when paying off your debt?

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Urban Mining – Are you throwing away gold?

by Magical Penny on April 11, 2013

You may not have given it any thought, but when you throw away your old electronics, you could be throwing away GOLD!
Millions of pounds worth of gold and silver are sitting in landfills around the world in the form of precious metals hidden away in the components that make up our outdated electronics.
  • $21 billion worth of gold and silver are used to make electronics every year.
  • Precious metals recovered from electronic waste waste can be 50x richer than ores mined from the ground.
  • Up to to 50 million tons of electronic waste are estimated to be scrapped every year worldwide.

 

It’s an interesting story, although it might not be worth the time and effort on a personal level…but collectively, it’s a different story!
There’s wealth all around us.

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Annuities Explained

by Magical Penny on April 11, 2013

Annuities can be a complicated, but, in short, they are a way to turn a lump sum into a regular monthly income. They are  insurance products and are most commonly used to make sure you don’t run out of money when you stop working.

If you are nearing retirement you have some options to consider:

 

You don’t have to convert your pension pot into an annuity when you stop working

If you have other savings outside of your pension, such as a Stocks and Shares ISA or Brokerage account, you could live off that money and let your pension pot continue to grow. It can be worth delaying using your  your pension pot, especially if you retire early. The older you are when you take out an annunity, the more income you will receive per year, typically.

 

In fact, you don’t have to convert to an annuity at all, thanks to new rules by the UK Treasury

Before 2011 you would have been forced to convert your pension pot into an annuity at age 75. But now, instead you can consider ‘income drawdown’, which allows yearly withdrawals between £0 and 100% of the basis amount of the pension fund, (the % allowed per year depends on your age). This option allows you to keep your money invested in the markets for potential further growth, rather than being forced to buy an annuity at a certain time (which locks in your level of income). The capped drawdown limit is reviewed every 3 years before age 75 and every year thereafter.

And if you can verify that you have a guaranteed lifetime income of £20,000 per year,  there is also an new flexible drawdown option which will allow withdrawals above the capped drawdown limit.

Sources of income which count towards the guaranteed lifetime income required are state pensions, defined benefit pension schemes, scheme pensions and lifetime annuities.

 


When you get an annuity, you can take a tax-free cash lump sum

You can take up to 25% lump sum of your total pension fund when you purchase an annuity. This can be good because that lump-sum money has never been taxed and never will be. It wasn’t taxed when you put it into the pension, and it doesn’t get taxed when you take it out.

That’s a rare deal!

But it’s important to note that taking out a lump sum reduces the amount your annual income will be because it reduces the pension pot value which is is buying the annuity.

 

Factors that affect the level of income an annuity will provide:

  • The size of your pension fund (and if you have reduced it with a tax-free lump sum)
  • Age: the older you are, the more income you will receive from your annuity.
  • Health and lifestyle:  You may be entitled to enhanced annuities. As an annuity is a form of insurance,anything that will increase the odds that you dying early ‘enhances’ what your annuity pays. Examples include diabetes, smoking habit, and a Body Mass Index of 36 or more.

 

The most important things to know:

Once you’ve signed an annuity contract, you can’t change your mind, but before you have signed you can shop around for the best rates – you are not limited to the annuity option presented to you by your pension provider. It’s also worth noting that using your pension pot for an annunity means you won’t be able to pass it on to your heirs – the capital is gone forever.  If you wish to leave an inheritance it’s worth keeping some of your savings outside of an annuity.

The annunity provider is making a bet that you’ll not live long enough to receive all your money back, otherwise they would not be able to afford to keep providing an income for those who live a long life and receive more than they put in.

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4 Ways to Save Money in the Home

by Magical Penny on March 18, 2013

Inflation and energy costs are spiralling much faster than the average salary and UK families are feeling the pinch.

The bad news is that economy specialists are predicting the financial situation is not likely to improve for at least another five years. The good news however, is that we have some tips you can use to save money by making improvements to your home and changing your electrical appliances.



Insulate your home

The most obvious methods of retaining the heat in your home is to fit sufficient insulation in the loft and replace your windows with double glazing. Although this incurs an initial outlay you can realistically save around 20% on the cost of your fuel bills. But you will increase your savings further still by making small changes to your home that make a big difference.

The more obscure insulation solutions are also less costly such as covering over the cracks in your floors and skirting boards and insulating the loft hatch. With these extra little touches you can increase your saving on energy bills up to 30%. If you can´t afford to replace your windows or doors with energy-saving replacements caulking and weatherstripping will still make a difference.

Clean the gutters

Gutters are the first line of defence and protect your home from water damage – a costly home repair, but also a problem that brings cold into your house. Excess water coming in from the outside cause damp in your basement, cracks the foundations, rots wooden rafters, attracts wood-eating insects and causes leaks in your roofs and drains. Keeping your gutter clear of leaves and twigs goes a long way to protecting your home from all these problems and will save you substantial costs on energy bills and potential repair work.

Change central heating habits

A lot of central heating systems these days are becoming outdated and increasingly expensive to run and maintain because they use more energy than the new energy-efficient models or over-heat rooms because they are not controlled by a thermostat or radiator.

With a long-term focus on saving energy to protect the environment, government laws are likely to be updated in the next couple of years that will mean you pay penalty green tax if you are using more energy than you should be to heat your house. To avoid fines replace energy guzzling systems with an efficient bio-mass model that uses wood chips, solar, wind and water power rather than carbon filled fossil fuels. As well as extra green tax you will also save up to 20% on your fuel bills.

If financial restraints make switching your old boiler for an energy-efficient heating system there are short-term measures you can take to reduce the amount of energy you use. Valliant research shows that most people will start using their heater in October, but delaying this until the colder months set in will save you around £19 a week.

Likewise, if you delay the time you put your central heating boiler on at night and in the mornings and turning it down by 1 or 2 degrees could save you round 10 per cent on your fuel bill each month. Prepare to wrap up warm in fleece coats and blankets during the coldest winter nights.

Use less energy

There are many ways you can use less energy in your home. Turn off lights if you don´t need them on and unplug electrical appliances rather than leaving them on stand-by mode. You could also replace appliances that drain energy and replace them with energy-efficient models. The main culprits are washing machines, tumble driers, dehumidifiers and refrigerators. You can also use a microwave, hob or a camp stove to prepare meals rather than the oven.

Given the increase in energy bills the winter months are always the most costly for households, but by making upgrades to your household appliances and a little ingenuity to your home improvements you can save yourself several thousand pounds over the next five years.

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Things To Know About ISAs

by Magical Penny on March 15, 2013

It’s ISA season, the time of year where you should be checking you’ve used as much of your tax-free allowance before the new financial year in April.

 

Source:  http://www.nutmeg.com/

The Nutshell of ISAs from Nutmeg:

  1. There are two types of ISA
  2. This year’s allowance is £11,280
  3. Isas are popular -don’t be left out!
  4. Cash is King – but saving for the long term should be in stocks and shares for their growth potential.
  5. ISA Limits have increased over time
  6. Stocks and Shares ISAs can hold a wide range of assets, not just stocks and shares!
  7. Tis the season to be saving
  8. ISAs are great for dividends
  9. No tax on interest-bearing investments
  10. It’s easy to transfer

 

 

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Getting the Most out of Your Accountant

by Magical Penny on February 27, 2013

 

 When you are in business you need to trust people to help you, be part of the team, whether that is as an employee, a partner, or as an external resource. External resources may include anything you pay for like your banking, your business accountant, even your cleaner.

 

All these suppliers are there to help you make your business run more smoothly, it’s only right that they are fairly remunerated for their services, but it’s also up to you to ensure no one is slacking. It is a strange fact that most businesses would notice immediately if the cleaners weren’t doing their job, and give them a hard time for it. Yet if their professional advisers aren’t pulling their weight they are more likely to get away with it – at least for a time. And you don’t need me to tell you who is on the higher day rate!

To make a relationship work closest to its best potential both parties need to contribute, and in business that might mean simply spending time with the other partner, in this case the accountant, and sharing plans and desired outcomes.

 

Your business will be better equipped to succeed if you have a plan, even if you don’t get around to writing that down.

Writing a business plan need not be difficult, and you can always find someone to help you. Once it’s written down it doesn’t mean you can’t change it as circumstances demand, but it does mean that it is easier to share with members of your team who you might not see that often.

 

Arrange meetings with your accountant every few months, and certainly as you approach your year-end and the end of the tax year.

Their advice could save you a lot of money at that time – but be prepared to be honest about what you are trying to get out of the business. If you don’t need to take every penny of profit then you might be better off putting an amount into your pension before the end of the tax year.

 

When you are planning a big purchase it is worth a catch up with your accountant too.

That might be buying assets that are obviously for the business, or something like a car that you consider to be more for your own use, but that still can be applied as a business purchase.

If you don’t keep the accountant up to date then you can’t expect them to be able to make suggestions, but likewise they should be asking you questions as well to find out more about what you are trying to do.

 

You should regularly challenge all your outgoings with a view to ensuring that everything is paying its way and delivering excellent value for your costs.

Your accountant will gradually become a bigger cost as your business grows. Keep on top of the relationship and ensure you are at least getting great value, and ideally saving considerably more than it is costing you through benefitting from their good advice.

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