The Money Well

The effects of the economic downturn are all around us and many people are desperately searching for a way to make some extra money whether that is to pay their bills, build up their pension pot or just enjoy life more. If you have a spare room sitting empty then taking in a lodger might be an option that would solve some problems.

There are many reasons why people want to rent just a room. It is probably true to say that it will always be due to lack of funds to rent something bigger but ‘needs must when the devil drives’ and we have to live within our means. Many people renting rooms are the result of failed and broken relationships since it can be hard to suddenly start out all over again and they could not afford to rent a flat. There will also be significant numbers of people whose homes have been repossessed and a single room might be all they can afford.

If you have a spare room available you could make an extra £200 or more each month from renting it out. This is not an insignificant amount of money and would make a huge difference to the financial situation of many people.

There are clearly some downsides to renting out a room. The biggest change you will notice is the lack of privacy. Usually we close our front door and we can do pretty much whatever we please indoors. If you are in the habit of wandering around your home wearing very little you might need to change your behaviour a little.

Then there is the noise issue. With the best will in the world, having another person in your home is going to generate some noise but so long as it is reasonable it is something you must accept. Also you should be considerate of your lodger. If they start work early in the morning or work nights it would be unreasonable to be very noisy yourself if they are sleeping.

Your lodger will probably need to use your kitchen and bathroom and it can be annoying when you want to go and prepare a snack and you find your lodger busily preparing something for themselves. It is just one of those things and you must accept a certain amount of inconvenience like this. They will also need some cupboard space for food in your kitchen and also in your fridge and freezer. It is probably best to allocate a shelf in the fridge and another in the freezer if you can arrange it that way as it makes it quite clear how much space they can take up.

There is a government scheme known as the  Rent A Room scheme which allows you to rent out a room and so long as your income is below £4250 per year there is no tax to pay on that income. Check the details here… Rent-A-Room

There are inconveniences and you should give careful consideration to the effect it would have on your family life but renting out a room could be a great way to help pay the bills, boost your pension savings or just have some money for a great holiday.

Tags: Budgeting, Debt, Living On A Budget, Money // Add Comment »

We are constantly fed the line about the financial crisis started elsewhere. Everybody says that and nobody seems to want to put their hands up and say they caused it. The truth is almost certainly that it was a combination of effects, events and government policies that combined and made it almost inevitable that if nobody noticed how crazy everything was becoming everything would start coming apart at the seams.

Perhaps it was an inevitable consequence of the loosening of financial regulation back in the Thatcher era. There can be no doubt that played a significant part in providing the foundations for the future crisis.

It makes a good story to say that it was something that happened ‘over there’ and the United Kingdom is an innocent victim of those events elsewhere but the facts don’t always seem to support that view. There is an interesting article available online at The Wall Street Journal pointing out that a lot of the facts don’t support the view that, the reason the UK suffered so badly was due to events elsewhere. Certainly it is true that we were severely affected by what happened because of the US housing crash and the reduction of available credit from around the world but we were affected a lot more because of the way our financial sector had been encouraged and supported.

For several years we were all amazed to discover our house value had risen month by month and we wondered how long this madness could go on. Didn’t we? Maybe a lot of people didn’t even think about it but you would expect that those people in the financial industry who saw what was happening would have noticed that things were getting out of control. The value of UK houses was rising faster than in many other places.

In relation to their long-term average, British house prices soared by 88.5% between 1997 and 2007, according to the OECD. In the U.S. the rise was 64.5%. Britain’s household debt rose to 176.9% of disposable income in 2007 from 104.8% in 1997. During the same period, U.S. household debt rose only to 105.8% of disposable income from 64.3% in 1997. The increases in Germany and France were considerably lower.

You would certainly expect the chancellor of the exchequer to have plenty of reports and projections warning them of the inevitable crash that was sure to follow such an unsustainable rise. Surely this is exactly what a chancellor of the exchequer should be doing. Keeping an eye on the financial ball and watching which way the wind was blowing, preparing for the financial storms ahead.

Our current Prime Minister was that chancellor for a long period of time. He was the one charged with ensuring Britain was ready for whatever might happen in the future and we are constantly told that he is the experienced and knowledgeable hand on the tiller and the man to sail us through this  current financial storm.

Mr. Brown also repeatedly praised the City’s “innovative skills,” bragging in 2006 that it was responsible for 40% of the world’s over-the-counter derivatives trade — which includes the now infamous repackaged subprime mortgages. He gave financial institutions a false sense of security by telling them on June 16, 2004, that “I am determined to ensure that we can lock in greater stability not just for a year, or for an economic cycle, but in this generation.”

2006? So that was just a year before all this began to fall apart. If the man who was chancellor of the exchequer was proud of the fact that the UK was a significant player in the repackaged sub-prime mortgage derivatives market that rather suggests that he didn’t understand the way the world of financial derivatives worked any more than the boards of the banks did. They have all been removed for their incompetence but the former chancellor of the exchequer got promoted.

Politics is a strange business.

Tags: Debt, Money, Property Prices // Add Comment »

With all the worries of the world on our shoulders, with the financial problems so many of us are facing and our concerns for the future it is all too easy to forget how lucky we are and ignore the good things about us and our lives.

We become distracted and focus on all the complications of modern life and forget the basics. The important things in life are probably love, health and relationships and if these things are in good shape then having the car repossed ight seem of less significance.

It is easy to become angry with the world and take it out on your partner but your partner is probably your best friend and you should face up to your troubles together and not fight over them. If you can smile and put things in perspective you will be all the happier for it and far better able to deal with whatever difficulties you face. Get things in perspective and recognise what is truly important in your life. Show you care for your loved ones and work with them to decide on your goals and how you might achieve them.

Here is a 16 minute video that might help you see how you can improve your life simply by smiling and feeling good about yourself. It made me feel good and I hope it does the same for you.