MONEY COMMENT
How To Get A Personalised 15% Pay Rise

By Cliff D'Arcy
July 15, 2003

Years ago, I worked for a fast-growing privately owned insurance company. Business was booming and, at the end of a year of hard graft, I was hoping for a promotion or bumper pay rise. Alas, I was to be disappointed, as everyone received the same 6% increase. Disgusted, I went to hand in my notice to the marketing director, only to discover a long queue outside his door!

What happened later was very educational: employees who complained about their 6% pay rise (including me) received a further 9%, whereas those who didn't kick up a fuss got nothing extra. This taught me a valuable lesson, which I often quote when talking about financial complaints, "the squeakiest hinge gets the grease"! So, if you've recently been disappointed with a pay rise (in some industries, they are practically non-existent at the moment), why not award yourself a permanent 15% pay rise?

Roughly two-thirds of British workers earn less than £25,000 a year. After deductions (tax, National Insurance and pension) of approximately one-third of gross salary, this leaves around £16,800 annual take-home pay. 15% of this figure is close to £2,500, so we need to gain £2,500 a year to be 15% ahead. Here's how to do it:

• Move your mortgage: the difference between the standard rates of major mortgage lenders and the best deals is 2% or more. On a typical interest-only mortgage of £61,400, a 2% saving equates to £1,228, so we're halfway there.
• The typical credit card debt is around £1,600 and the average standard interest rate is around 15%. Switching this debt to a card charging 0% for six months and repeating this trick until the debt is repaid will save £240 annually.
• If you have a personal loan with £5,000 outstanding and three years to go at a typical high-street interest rate of 15% APR, re-financing with one of the Best Buys would save something like £240 a year.
• The cost of life insurance varies enormously. A 35-year-old non-smoking man choosing a Best Buy instead of going to a high street bank for cover of £100,000 over 20 years could save around £215 a year.
• Shopping around for motor insurance and not buying home insurance from your mortgage lender could easily save £150 a year.
• Switching energy suppliers saves a typical household around £140 a year.
• Save 60% by not buying travel insurance from travel agents - a £100-a-year reduction.
• Transferring £3,000 of savings from a typical easy-access account to a Best Buy tax-free cash mini-ISA could increase the interest you earn by around £80 a year.
• Changing your bank account from one of the Big Four banks to a Best Buy account could mean thirty times as much credit interest and half as much interest charged on overdrafts. You could benefit to the tune of around £60 a year.
• Investing £5,000 in a low-cost index tracker instead of a high-charging managed fund could save you £50 a year in charges (and £300 in the first year).

The grand total is £2,503. Of course, there are many more wheezes you can learn to save money on financial and other products: visit our Personal Finance and Learn To Invest areas for more ideas.

Who knows: if you tell your boss (and colleagues) about your newfound Foolish financial talents, s/he may be impressed enough to reward you with another pay rise on top of your 15%!

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