Common sense is beginning to prevail

I was going to post yesterday about the Wrestling World Cup Final except that Blogger wouldn't let me in for some reason.  As most of the world has already commented on it I won't waste time.

Instead I'll turn my attention to this.  The Financial Services Authority (FSA) is considering banning self-certification mortgages.  About time too!!  When these 'modern' mortgages were announced a few years ago I said that it would all end in tears.  I mean, where is the sense in lending people hundreds of thousands of pounds without them having to prove they can pay it back? 

The 'old-fashioned' multipliers were there for a reason.  They made sure that you had some money left to live on after paying the mortgage AND made sure you could continue to afford the payments if the interest rates rose.  These days people have mortgages that they can barely afford, let alone heat their property and feed themselves.  I don't know what they're going to do when interest rates do rise again - and they will.  A rise of 0.5% is going to catch a lot of people out and start a whole raft of repossessions.  When we got our first mortgage interest rates were about 10%. We asked our advisor to work out what the repayments would be if rates rose to 15%, something he said wouldn't happen.  Well it did, and we could still afford it (just).

Look at what has happened to energy and food prices in the last couple of years.  Prices have rocketed, beyond what most people (experts and jo public alike) would have expected.  It isn't just the traditional poor and/or working class who are having to decide whether to eat or heat their home.  This is spreading upwards through the other social classes too.  I wonder if this is what Labour meant by 'social mobility'.

More sensible mortgage lending will have a downward impact on house prices as less people can get a mortgage to afford the current silly prices; though there may be an increase in price as less people can afford to move (supply and demand at work).  Hopefully, prices will settle to levels that are affordable for our young people.   

Let's look at an example.  Average starting salaries for graduates are between £20,000 and £25,000 (and assume that those without a degree will have an average start of much less).  The average price for a one bedroom shared ownership flat (part buy-part rent) seems to be about £40,000.  Owning your flat outright averages at about £100,000.  This would be unaffordable to the graduate under the 'three times your salary' rules.  The graduate would need a very large deposit AND have some to pay the legal fees.  Like I said, prices are probably going to come down until they reach a level that people can sensibly afford.

I'll be honest and admit I have no idea how the part buy-part rent system works.  Obviously the total outgoing must be considerably less than the mortgage would be on the true value of the property, but I do wonder how the difference is made up.  Rents can only be lower than the mortgage outlay if the money borrowed (by the housing association) to buy the property is much less than it's value. 

The rise in the number of properties available by this method shows how unaffordable property has become to vast portions of society.  Maybe we should be doing like our continental cousins, where renting is the norm.  It's only in the past 50 years or so that owning your own home has been attainable by the vast majority of the population.  Before then this was only for the rich.  Are we back to this?  Do we want to be back to this? 

I must admit that, having sampled renting and ownership, I prefer ownership.  We can decorate how we want, rip out a fireplace that we don't like (or a kitchen or a bathroom) and, unless we are being repossessed (or compulsorily purchased to make way for a new road), we are not beholden to our landlord's whim as to how long we can stay there.  My home is my security blanket (apart from my family, of course).  It is here waiting for me when I get back from work.  It is somewhere I can shut the door and keep the world out.  I can put my feet up and relax.  It is comforting, and I'd hate to lose it.  That doesn't mean I'll never move from here.  Far from it, I have some very definite ideas of where I'd like to live.  It's that I am not constantly aware that the next letter from the landlord could be the 'adios' letter.  This place is mine for as long as I want it.

Well, this has been a meander through the world of property possession, hasn't it.  I hope you followed it.

The future's bright.......

...... the future's mine for the taking.

I blame Ros - yes Ros, if you're reading this, I know I'm not allowed to really.  Ros is someone I've known on and off for a few years.  She is a life coach, amongst other things, and she offered me some sessions as I was at a crossroads in life (no more HE) and not sure which way to go.  Thanks to Ros and her probing questions I now know exactly what I want and, thanks to research and Gemma (one of my AAT tutors) I know how to get there.  Blood, sweat and probably tears appear large in the next 5 years or so but, oh my, it will be worth it.

You see, many years ago I started an Association of Accounting Technicians (AAT) Level 2 course.  Unfortunately life, and moving house/counties, got in the way and I didn't finish it.  Years passed and I was quite happy as a stay-at-home-mum, then home education (HE) became our way of life so working outside the home became awkward.  So this August I took the plunge and re-signed on to the Level 2 course, now run as an NVQ award (sheesh!!!) with the intent that I would earn a few pennies playing with numbers - and I adore maths so numbers don't scare me. 

So, the AAT run three levels of courses (2, 3 & 4), after which you can either a) go on to university and do whatever else needs to be done to get an accounting degree (the AAT courses mean you don't have to do all the years), or b) get a job at some point during your AAT studies and hopefully your employer will encourage you - and fund - the rest of your AAT studies as well as your Chartered Accountant/Management Accountant studies.  All in all option b), the one I shall be following, should take 5 years or so.  After that, and a few years experience, I have been told by Gemma that Financial Accountants can earn £120 per hour, and Management Accountants can earn £160 per hour!!!!!  Not being the totally greedy type (yeah, right) I've kind of decided to go for the £120 per hour job.

Financial Accountants deal with what has happened - they have a paper trail to build a picture of how the business has been doing in previous years.  Management Accountants deal with the future - crystal ball accounting if you will - projected profit and loss over the next few years, likely investment required, income/expenditure forecasts.  Hence the higher pay packet.

Ros's life coaching has helped me realise that I am money-oriented.  Reward me enough and I will work like a slave.  Also I value financial freedom (don't we all, I suppose).  I like the idea of being able to afford the nicer things in life - not necessarily being able to afford everything (that's no fun), but certainly a decent standard of living - including a nice home in a very rural setting with a pool and several acres between me and the neighbours, oh and a Ferrari 430 of my very own.  Yes, a lot of it is probably pie in the sky but if you don't dream you can't set yourself a goal.  I'm also concerned that A's health may be a factor in how long he works before retiring - he already has achy joints (arthritis runs in his family) and a back problem - so I want to be in an earning position so that if he has to cut his hours or stop working completely I can take up the slack.

And besides, the way this government has cocked things up and put the country in a mountain of debt that will take years to clear (don't get me started on borrowing to make up a shortfall) I don't want to rely on the state pension provision.  I want to be able to retire when I'm ready, not when some faceless bureaucrat in Whitehall decides I can.

So, watch this space, this girl is going somewhere!

Where are we supposed to find the money?

Petrol/diesel is at an all-time high. Everyone is feeling the pinch from this. It affects all of our lives. The wholesale prices of goods goes up as it costs more to get them from the manufacturers/producers to the retail outlets. Taxi and bus fares will rise, if they haven't already.

Mortgage rates are rising. The deals that were around at Christmas just aren't there anymore. Prices are beginning to fall. Anyone coming to the end of a mortgage deal is going to find the new monthly payment a shock, if they can find anyone prepared to offer them a mortgage at all. If your house has dropped in value since you took out your last deal you will struggle to find another lender willing to offer you a big enough mortgage to cover what you owe. And don't get me started on Council Tax!

Today we are warned that gas and electricity prices could rise by 40% this winter. No, not £40, 40%. If your yearly bills come to £1000 now, you could find they rise to £1400 by this time next year! On top of all the other financial squeezes above a lot of people are going to suffer.

Pensioners are on a low fixed income. Where are they going to find that sort of money? The same goes for those on the various Carers/Disabled allowances. Even those of us who have, until the last few months, been ok are going to find it hard.

As people start spending less in the shops, then some shops and businesses are going to fail. Their employees will lose their jobs, adding to the numbers of those who have to decide whether to have a hot meal or enough hot water for a wash!

I've been complaining to friends for a while that in the last 5 years my food bill has doubled. The contents of my trolley haven't changed that much. Yet the government would have us believe that inflation has been below 2.5%! So I've been investigating where it gets its figures from.

The Office of National Statistics publishes the Retail Price Index (RPI) each month. There are different versions of the RPI depending on whether you want mortgage interest payments and/or indirect taxation such as that on fuel/cigarettes/alcohol etc. The relevant link is
http://www.statistics.gov.uk/CCI/nugget.asp?ID=21 or to find out what is included and why go to http://www.statistics.gov.uk/elmr/04_07/downloads/ELMR_April07_Wingfield.pdf

I don't have time to read it and give you the summary today. I'll come back to it soon.

More Governmental U-Turns

The Irish voted a big fat "No" to the Lisbon Treaty, meaning that the Treaty was dead in the water. The legislation surrounding the treaty stated that it HAD to be ratified by all 27 member states. The Irish are the only Europeans to be given a referendum on this, thanks to it being written into their constitution. So you'd think that, thanks to the Irish vote, the Treaty would be finished.

Within hours members of the French and German governments were saying that they would be investigating ways to continue with the Treaty and come to some 'legal' accommodation with the Irish. In other words, they're going to continue with it anyway. And politicians wonder why nobody trusts them.

Yesterday's papers reported that Gordon Brown had already spoken to these members to confirm that the UK's ratification process would continue. Today's papers say that Gordon Brown is going to tell the EU that the Treaty cannot be ratified.

http://www.timesonline.co.uk/tol/news/politics/article4138792.ece

I don't suppose there's any chance of us being given a referendum, as we were promised in the last election campaign? Thought not.


Following my rant about not being able to supplement your NHS cancer treatment with privately bought medicines (which aren't available on the NHS) imagine my surprise to read this in today's Times

http://www.timesonline.co.uk/tol/life_and_style/health/article4138315.ece

Yes, our government has once again made a knee-jerk response and then U-turned under the weight of public opinion. You'd think by now they'd learn to think a little.

More Labour absurdity

Did you know that if you are receiving NHS treatment for a medical condition and you decide you would like to privately purchase some medication not available on the NHS to improve your chances, you would then be unable to access ANY treatment for that condition on the NHS?

Scandalous, isn't it?!

This is becoming a big issue in the treatment of cancer. If you hear of a drug that may prolong your life, but NICE (National Institute for Clincial Excellence - what a misnomer!) decide that the costs outweigh the benefit and don't approve it for the NHS to use, you would then have to decide whether to forgo this drug and keep all the other NHS treaments and drugs; OR you could scrape together enough money to supply this drug and find that the NHS will no longer provide you with any treatment related to your condition.

Labour do not want to create a two-tier health system. Someone should tell them that there has been a many-tiered health system in this country for years. Private healthcare has always been around, even before the NHS came along. And on the NHS you have the postcode lottery - where you live decides what treatments you get for various conditions. Even when NICE give the go-ahead to the NHS to use certain drugs, not every PCT (Primary Care Trust) will prescribe them (usually citing cost).

So you get into the ludicrous situation of one PCT willing to prescribe drugs for Alzheimer's but not drugs that would greatly improve a terminal cancer patient's life expectancy, and another that would do just the opposite. Neither condition, Alzheimer's or terminal cancer, will be cured by the treatment. The drugs are just for palliative care, to make life more comfortable for the sufferer and their loved ones as they would all have more time together.

A group of NHS doctors are preparing to take on the Department of Health over this. Have a look at their website http://www.doctorsforreform.com/.

There isn't enough money in the NHS to pay for all the new drugs that are available, especially with all the managers and admin staff they're having to employ to monitor the PCTs compliance with all Labour's targets. Co-pay, as part-NHS and part-private treament is called, will soon be the only way forward. France operates their health-care in this way. The patient pays the bill in full and is then reimbursed, receiving somewhere around 70% of the cost. The French also pay about 20% (in some cases more), which is taken from their gross salary in much the same way as we pay National Insurance (NI), that goes into the pot to pay this 70%.

The French system is not perfect, especially seeing as it is about 6 billion euros in debt, but I don't think any health-care system is. The NHS can no longer afford to treat everyone for every illness. We are either going to have to pay more NI or contribute towards our treament as and when we need it.