A friend and I decided after a 鈥渇ew鈥 drinks to do seven marathons over a short period of time to raise money for charities.
One of the greatest pieces of advice came from the sports psychologist at the London Olympics at the time who told us to think long and hard about our 鈥渨hy鈥 behind the reason for doing them.
鈥淲hen you come face to face with pain, torment and doubt, you will need the answer, that ace card which tells your subconscious that this is a really good idea.鈥
More of Peter McGahan's columns
New year鈥檚 resolutions are just the same. Giving up pickled onions, cakes or artichokes might be something you鈥檇 like to do, but if there is no driving 鈥渨hy鈥, it falls into the subconscious as nothing more than a wish or fuzzy dream.
Stopping smoking so your grandchildren can see your smile at their wedding is a bit more engaging and likely to happen, especially if you can visualise that amazing smile back.
Up to our ears in Brussel sprouts and indigestion tablets, financial resolutions are as appetising an idea as cardboard chewing. They are, however, a great idea.
If you use credit cards, try and pay them off immediately. Credit cards have become increasingly easy to swipe as you jog by, with the average spend per month hitting its highest level since FICO鈥檚 records began. Added to this is the average credit card charge rate hitting a two decade high of 21.49%.This was with bank base rate at 0.1%. The lowest card rate today is 9.9%, so consider a swap if the obvious options aren鈥檛 available.
Consider consolidating onto your mortgage. Don鈥檛 worry about the length of time of the loan as you can overpay using the interest you are saving. One of the better fixed rate mortgages today is at a rate of 1.24%. If you added 拢10,000 to repay a credit card debt at 21.49% (the cost in just interest is 拢2,149 or 拢179 per month, so you have no chance of repaying the capital), the saving by adding it to the mortgage is 拢2,025 per year in interest as the interest cost is just 拢124 per year or 拢10 per month.
In well under five years the original debt would have been repaid in full using the interest saving alone. Don鈥檛 have a home? The best personal loan rate is around 2.8% based on suitability. So, get a grip of all your expensive debt for good.
When you spend, buy things which are sustainable and will last rather than having to keep replacing them regularly (my best tip). Replace your view of money by that of time. It鈥檚 a great strategy for 2022. Look at what you really value, ie time with your children, golf, holidays and so on. Consider that each spend is 鈥渪鈥 hours of work to replenish that, and that is 鈥渪鈥 hours not doing what you really value.
I鈥檝e mentioned this before but don鈥檛 compare yourself to others. The world is a stage and you don鈥檛 know what people really have let alone what they are going through. It鈥檚 also not a happy place and an expensive one too, as we try to compete financially and can never win.
Create an emergency fund of savings and don鈥檛 mix up 鈥渃ash flow鈥 with the need to repay mortgages. If you have 拢10,000 set aside, that is a lot of mortgage payments if things go wrong, but if you have paid that off the mortgage, you have no cash flow and could fall into arrears and it鈥檚 a downhill battle.
Make a will. There is nothing worse than dealing with an estate where there is no will. Aside from the confusion, quarrels and in-fighting, is the grieving family dealing with banks who won鈥檛 give you any information, added to the inevitable legal costs that will apply.
Finally, do a full refresh of your financial plans if you have not looked at them in the last two years. Product costs and competitiveness are vast with some pension funds having given nearly 10 times the return per week than others. If you don鈥檛 use an independent financial adviser, please do.
If you have a financial question please call 01872 222422 or email info@wwfp.net or visit
Peter McGahan is the. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority. The FCA does not regulate credit cards, will writing and some forms of mortgage and inheritance tax planning.
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made. All information is based on our understanding of current tax practices, which are subject to change. The value of shares and investments can go down as well as up. Your home may be repossessed if you do not keep up repayments on your mortgage.
