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FOOL'S EYE VIEW
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Before joining the Fool earlier this year, I had an unremarkable career in financial services that began in 1987, when I was but a callow youth of 19. In other words, I've spent my entire adult life working in banking and insurance. Given my background, you'd think that I would love personal finance. Granted, I love talking and writing about money matters, which is fairly handy when you consider my job! However, it's undeniably a love/hate relationship, because there are so many things that annoy me about personal finance that I prefer to avoid. I'll vent my spleen by giving you with some examples: 1. I hate financial direct mail Left unchecked, the offers of mortgages, loans, credit cards, home, motor & travel insurance can turn into a flood. Ironically the STB factor (Straight To Bin) for financial mail shots is so high that about 99% ends up as landfill or recycling. With my recent MBNA credit card statement, there were no less than six different leaflets – it was hard to find my bill amongst all the filler! To me, mail shots are a complete waste of time. I would never buy a financial product in response to a mail shot, as I love shopping around for the best deal. I send it all back with a demand to be removed from all the company's databases and mailing lists. This helps me to see my doormat. 2. I hate hidden fees Don't put up with this: if you feel unfairly treated, fight every time, refuse to pay and threaten to take your business elsewhere. Dogged determination is the best way to fight these unfair and unreasonable charges. 3. I hate penny-pinching I admire this talent but am unable to live this way. I set off with the best intentions, keeping a close eye on my spending, only to splurge cash when caught off guard or carousing with friends. It's not that I can't budget at all, it's just than I can't do it constantly and wish I was better at it. Until that day arrives, I'll keep grumbling about budgeting. 4. I hate over-priced insurance Here are some of my "never buys": mortgage endowments, home insurance from your mortgage lender (see point 9), payment protection insurance, travel insurance from travel agents, extended warranties, home service warranties, etc. etc. We all need insurance to protect ourselves and our families, homes and property. Nevertheless, unless you shop around, you're going to be pillaged. Read about more Financial Products To Avoid. 5. I hate debt Eventually, I took action. I re-organised my finances, sold some shares and then paid off my cards one by one until my debt was gone. I remember how great it felt when, a year or two later, I realised the value of our investments was greater than our mortgage. From this point, we were effectively debt-free - and I intend to keep things that way by staying Foolish! 6. I hate poor service That's all very well for shareholders, but we customers end up loathing the organisations that have "centralised their operations to improve efficiency." It's a battle to speak to a real person without visiting your local bank branch these days. Ultimately, unhappy customers vote with their feet – hence the strong growth of customer-focused businesses such as Direct Line. 7. I hate long term planning It's purely the deferred gratification that gets me down. I don't like to wait patiently until I'm 60, or 50 at the earliest, before I can see the benefit of my saving. However, unless I find a better way of saving for retirement (ISAs?), I'm going to have to lump it. 8. I hate unexpected bills It's at times like these that we are forced to dip into our "rainy day" money to shell out for the unexpected emergencies of life. I don't have a lot of cash - I prefer to keep my capital in shares - so I hate having to stump up a wedge of cash for urgent repairs. 9. I hate mortgage lenders Many borrowers are paying the full standard variable rate, which can be two whole percentage points over base rate. For a £75,000 mortgage, that's £1,500 a year income for the lenders, who rely on customer inertia to boost their profits. Furthermore, mortgage lenders generally sell some of the most over-priced and high-charging products around. Many of the worst life assurance, endowment, payment protection and home insurance policies are pushed by mortgage lenders. I make a point of never placing any other business with my mortgage lender, as shopping around has shown me that my lender is just not competitive for other products. 10. I hate my wallet It's become so fat that I end up using both hands to wrestle it in and out of my jacket pocket. I know it's time for a clean out but I'll give it just a couple more days! Watch this space for more on the faults of finance. In the meantime, what do you hate about money? Let us know by posting on our discussion board, using the feedback link below.
Financial firms are nothing if not persistent – they account for more direct mail in the UK than most other businesses combined.
When financial firms make mistakes, it's the devil's own job to get them to cough up an apology and some compensation – but it can be done. However, if we punters make the slightest slip up, we get walloped with fees and penalties left, right and centre. What a wheeze –charging us for £35 for a call, letter or e-mail to let us know that we are 37p overdrawn!
There are many smart Fools on our Living Below Your Means discussion board who are amazingly skilled at accounting for every penny they spend.
Let's be clear here: I don't hate all insurance policies; I only hate the over-priced, poor-value products that seem to make up the bulk of what's on offer.
I identify strongly with the people posting on our Dealing With Debt message board. Until about five years ago, I was hugely in debt, with about fifteen credit cards and loans. My net wage was less than my monthly repayments, so I was working full-time for the lenders – eek!
It's a sad fact that service isn't what it used to be. I long for the days when people were more well-mannered and bank managers wore frock coats. A growing reliance on technology, combined with staff cutbacks, means that many operations run their customer service departments on a shoestring.
I know that putting money into a pension is a great idea, as every pound I put in is boosted by tax relief from the chancellor. I like the fact that my pension fund isn't taxed and therefore grows faster. I'm even comfortable with the ups and downs of the stock market, knowing that shares outperform every other investment over the long term.
I never knew what cold was until my boiler died last December. It was almost two weeks before the engineer replaced it, during which time our house became a fridge. Even worse was the bill when the work was done: a whopping £1,200.
Don't get me wrong, I love being a homeowner and I don't even mind having a mortgage, because it's a voluntary debt and will be even more competitively priced when I get a better deal or switch lenders. What riles me about mortgage lenders is that they take advantage of their customers.
My nice Italian-leather wallet is suffering a great deal. I've allowed it to grow bloated with credit-card slips, cashpoint receipts, bits of paper with information scribbled on them, etc.