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Trusting in the Power of the Internet to Make Money
Wednesday, June 10th, 2009Ageing Britain: Don’t bet the house on passing your savings to the children
Saturday, May 16th, 2009The high cost of caring for the elderly is forcing many people to sell off the family home. Sam Dunn looks at some alternatives
More and more homes, once considered inheritance windfalls or “pension substitutes” for the children, are having to be sold off instead to pay for care home fees for elderly parents.
In many cases a lifetime’s savings will end up in the clutches of a care home. And the “scattergun” approach from local authorities in explaining the choices will leave many no option but to sell a family home, age charities and specialist advisers warn.
Kicking off an Observer and Guardian series on ageing Britain, Cash unveils the labyrinthine and often costly path to shield a family’s finances from serious damage.
“Too many people are being caught out by the cost of long-term care, and all they have is the home of a parent as the only asset which has to be sold. It becomes a crisis when they realise that it’s all tied up in the home,” says Alex Edmans, care funding adviser at Saga.
At the heart of the problem lies the intensive cost of care – staff wages and accommodation. With care-home fees hovering, on average, at ?470 per week (?24,500 a year), according to Age Concern/Help The Aged, or ?664 per week for nursing care, the sums needed dwarf average mortgage repayments and can eat through a lifetime’s savings at breakneck speed.
The bare facts are stark: if you live in England and have more than ?23,000 (?22,000 in Wales) in so-called “capital”, your local council will assess you as being able to meet the full cost of your care home (for exceptions see panel below). To calculate what counts as “capital”, tot up all your savings, any investments and the value of your home.
Nearly four in 10 of the estimated 420,000 care-home residents or their families pay their own way because they fail the means test for local authority help, a recent report from Age Concern suggests. Also, the system has created a burgeoning resentment as the penalty is felt most by higher earners who save and invest over their working life, rather than by lower-income families, many of whom are unable to set aside any sizeable savings and therefore qualify for free care.
Penny Loveday, who lives in the London borough of Croydon, was forced to sell her parent’s home to help pay fees for a care home in Folkestone, Kent, that looks after her mother, who has dementia.
“My parents were very careful with money throughout their life, and if either could see what’s happening to their savings they’d be so furious. We just hope that all the family’s inheritance isn’t wiped out.”
Eventually, to cover the costs, Loveday used some of the money from the house sale to pay for an annuity – or income for life – from Partnership Assurance that will cover her mother’s fees.
Despite the forbidding complexity, advisers report greater numbers of families desperate to try to find a way to protect their assets from rapid depletion. With advance planning there’s plenty you can do, but be ready to change your plans: a much delayed green paper on long-term care due out next month is likely to have implications for all funding.
The golden rule is: the steps must be taken when you’re healthy rather than in response to an illness, warns Irene Borland, care advice manager at NHFA.
“If you take action when you’re fit and well, your moves cannot be considered by your local council to be a deliberate ‘deprivation of assets’ – where they can discount your actions as having been a clear act to shield your finances from being considered.”
Do so in the days after suffering, say, a stroke or heart attack and your local authority can include it as part of its means test.
While it is worth visiting an adviser who has the CF8 qualification (a care funding qualification), here are some of the things you might be told.
• Put your home in a trust
Sever a joint tenancy on your mortgage deeds to become “tenants-in-common” before putting your home into a trust, and you can shelter half or all of it from the local authorities. “A ?200,000 house whose ownership is halved between surviving spouse and children and put into trust could see only ?100,000 qualify for council means testing,” says Jenny Margrave, who runs her own solicitor’s firm. “You may be separating the property but you’re losing a lot of control to trustees,” she says.
• Take out investment bonds
Unlike savings, property and most other investments, investment bonds include life insurance and can’t be considered for mean-testing. These bonds typically let you withdraw 5% a year and invest in funds for both long-term capital growth and/or income. The minimum investment is normally ?5,000 or ?10,000.
• Split your savings
Separate any joint savings and reduce the sums local authorities can means test.
Thanks to complex rules, a husband and wife with ?100,000 in a joint account would see the local authority take up to ?54,000 if one or the other went into a care home before means testing, and as much as ?72,000 in total, Edmans says. “However, split the accounts so there’s just ?50,000 in each, and the local council can take just ?27,000 from it.”
• Defer payment until after death
If you have less than ?23,000 in savings and assets, you can ask your local authority to take a charge on your home and take payment upon selling your property at death, although it won’t always be able to do because of its own budget funding. This could save you having to sell your property.
“Although you have the current danger of your property falling in price,” Edmans says, “it’s better than going for equity release – a large upfront and costly lump sum – and you could end up only paying a small sum overall.”
• Take out an immediate needs annuity
This has the benefit of limiting your fees liability and sets aside an amount for inheritance. The downside is expense. You’ll need a lump sum of four or five times the cost of annual care – roughly ?80,000 to ?90,000 – to buy this annuity which is paid straight to your care home. It covers the shortfall between what you can afford and the cost of care, but if the person in care dies soon after buying a pricey annuity the money is gone, warns Pauline Thompson of Age Concern.
“Huge price differences apply. If you’re comparatively healthy, you’ll end up paying a lot more compared to someone having Alzheimer’s, say.”
Assets on the line
In England, if you have been assessed as needing a care home place and your assets are below ?23,000, you should be entitled to some support from your local authority. If you have less than ?14,000 you will be entitled to maximum support although you’ll still contribute your income minus ?21.90 per week for personal expenses. If your assets are between ?14,000 and ?23,000, you’ll pay a “capital tariff” of ?1 per week for each ?250. In many circumstances your home will be excluded: it will automatically be ignored if a surviving partner, or other relatives aged 60 or more, live there. If a relative has moved in as a carer, this could help reduce future care costs. In Scotland, care fees are not free, as often imagined, but the state will cover nursing and personal care costs, leaving you with the bill for accommodation.
• The Observer and the Guardian will continue their Ageing Britain series over the next few weeks. Cash would be interested to hear about your experience of care home funding or your opinions on how it could be tackled. Email us at cash@observer.co.uk or write to Cash, Kings Place, 90 York Way, London, N1 9GU.
- Paying for long-term care
- Property
- Savings
- Long-term care
guardian.co.uk ? Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
Is car finance a waste of time?
Saturday, May 9th, 2009Is car finance a waste of time?
YES, says Hayley Parsons, Founder and chief executive of price comparison website gocompare.com
That new car smell must be powerful stuff: it’s the dealer’s equivalent of the eau de baguette supermarkets pump round their stores to keep the tills ringing. It’s the only way I can explain how responsible people who would usually shop around for the best deal on everything from clothes to home insurance will temporarily park their senses at the showroom door and sign up to a forecourt finance deal within minutes.
The smell softens you up. The salesman and his two best friends, fear and desire, do the rest. “Yes it’s a beauty isn’t it?” he says. “There’s a lady coming back this afternoon. Has the cash but wants her friend to see it.” He pauses long enough to read the look of dismay on your face and then throws a safety line. “Still, if you like it, it’ll only take a few minutes to sort out finance and you can drive her home.” Gotcha!
The love affair with your new wheels may last thousands of miles but your affection for the finance deal may fade considerably quicker. The first cracks will appear when you realise the interest rate is almost certainly substantially more than you’d pay on a personal loan through an independent lender. The price in the windscreen which looked an absolute steal may turn out to be more like daylight robbery once the cost of the finance has been added.
A particularly cunning salesman’s ruse is the offer of a seemingly competitive flat rate of interest. To the untrained ear they sound very similar to the rates quoted by the leading personal loan providers but there’s a big difference: the flat rate of interest is on the whole of the borrowed amount for the entire term of the loan rather than the steadily reducing balance of a normal personal loan. The APR for a flat rate loan is much higher than the headline interest rate, so ask for the equivalent APR and then watch the salesman squirm as he tries to explain the big difference.
Another tactic is the upsell. Once the salesman sees you’ve taken news of the monthly payment figure in your stride he’ll have a go at getting you to part with more money. Pointing to a car well outside your previous price range he’ll explain that by increasing your monthly payment by ?15 a week you could buy that little beauty instead. Before you know it you’re driving home in a car you didn’t really want at a price you didn’t want to pay. Sucker!
Rule number one: organise finance first. Research the best loan deals and get the money in your account before you go to a showroom. Some low interest rate credit cards may be cheaper than forecourt finance, and cash is king. Having the money there and then puts you in the driving seat. Whipping out your debit card may not give you the same feeling as waving a wad of notes under the salesman’s nose but the effect on him is the same. When the money’s at your fingertips you’ll never pay the asking price again.
NO, says Paul Harrison, Head of motor finance at the Finance & Leasing Association
Like me, you probably paid cash for your first car. It probably didn’t cost much and probably wasn’t very stylish. I can still see the look on my parents’ faces when I offered to save their French hatchback from the scrapheap!
As you get older, aspirations change. You’ll probably want to buy a new and improved car but there’s no denying it’s an expensive purchase and few of us will have the cash under the mattress, especially in current conditions. So the alternative is a loan.
Millions have turned to finance sold in dealerships to fund their purchase. The Finance & Leasing Association has, despite the wider downturn, seen a rise in the popularity of specialist motor finance provided by member firms. Last year more than 53% of new car buyers purchased their pride and joy using dealer finance, up from 47% in 2007. In fact, FLA members provided almost ?18bn of financing last year. So why the increase? Since the credit crunch, much of the ultra low-rate credit has disappeared. But since dealer finance is secured against the car, lenders can be more flexible in terms and conditions.
Tell your local dealer you have a monthly budget of ?180 and he will probably be able to offer a product and repayment schedule that matches what you can afford – as well as handing over the keys to a shiny new car. Tell your dealership you’re expecting a pay rise next year, and they will be able to arrange a deal where your monthly repayments are lower and a “balloon” [or one-off, final] payment is deferred until the end of the term, when your salary has increased. This flexibility is invaluable at a time when we are all trying to scrimp and save.
Dealers can offer an array of finance products depending on whether you want to own your car or rent it for a couple of years. Hire purchase has traditionally been the most popular form of motor finance, but in recent years personal contract purchase has increased in popularity. PCP gives customers the freedom to hand back the car and walk away, put down equity towards a new deal or make a balloon payment to take ownership. Leasing is also attractive because of its lower monthly payments. Flexible finance extends to all cars – be it a ?7,000 runaround or a ?50,000 luxury saloon.
We all live hectic lifestyles and dealer finance aims to be as convenient as possible. There is no long-winded application process. Simply walk into a dealership and a specialist will guide you through the process. A decision on your application is usually made within minutes, so if the car you want is there you could drive it away the same day.
Many dealers can combine finance with add-ons such as extended warranties, breakdown cover and payment protection should you lose your job. One regular payment covering all your motoring expenses really is about as convenient as it gets. It really is a buyer’s market: there’s never been a better time to get a car on finance.
• Do you change your car regularly? If so, do you let the dealer arrange the finance or do you prefer to find the money yourself – possibly borrowing elsewhere? Write to Cash, The Observer, Kings Place, 90 York Way, London N1 9GU, email cash@observer.co.uk or join the debate online at guardian.co.uk/money
- Motoring
- Automotive industry
- Interest rates
- Borrowing & debt
- Personal loans
guardian.co.uk ? Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
The great green giveaway
Friday, May 8th, 2009Where to look to make some serious savings
Householders wanting to save money on bills could be forgiven for not making their gas supplier their first port of call. After all, British Gas and the rest want to make more money out of us, not less, don’t they? But energy companies are sitting on thousands of pounds in largely unclaimed grants and benefits – going well beyond the free energy-saving lightbulbs that many already dish out to households.
Energy companies must also offer grants to enable householders to make their homes more energy-efficient in order to hit carbon emission reduction targets under a government initiative, the Carbon Emissions Reduction Target (Cert), launched in April last year.
Some 40% of this cash must be directed towards vulnerable households, such as those on benefits – but the bulk of the money used for the grants is available to anyone. If your own gas or electricity supplier is not offering anything, look to its rivals. Anyone can take up the offers from any energy company, not just their own supplier.
Water companies are also giving away free water-saving gadgets – and even your local council is getting in on the act by offering discounted compost bins.
Here is a taster of what’s available.
Insulation
What’s the offer?
British Gas runs a DIY insulation scheme on behalf of the office of the London mayor, Boris Johnson, allowing you to insulate your home at a bargain price. You can order a DIY insulation kit which includes insulation rolls, pipe lagging, protective gloves, goggles and instructions. The kits cost £99, but with a £50 cashback from the mayor and British Gas, it will end up costing £49. Alternatively, you can have professionally fitted cavity wall insulation from £250 and fully fitted loft insulation from £274, both of which come with £100 cashback.
Who is it open to?
London residents only. If you receive benefits, you may be entitled to free insulation.
How do I get in touch?
Call 0845 070 5059 to find out if you are eligible.
What’s the offer?
London Warm Zone is a grant funded by EDF Energy and London local councils. It provides free cavity wall and loft insulation to customers on qualifying benefits and people over 70. A price of £183.75 for loft insulation, and £183.75 for cavity-wall insulation, is available for others. (the going rate for a three-bed house is around £434 or for a four-bed, £555).
Who is it open to?
Londoners – but a similar scheme is run by EDF nationwide.
How do I get in touch?
0800 389 7286 for the London scheme and 0800 096 9966 for the national EDF scheme.
What’s the offer?
Council tax rebate from British Gas working with local councils. Receive up to £125 off your council tax bill by having your home insulated by British Gas.
Who is it open to?
Anyone living in the 64 local council areas where the scheme operates.
How do I get in touch?
For the list of participating councils visit British Gas, or call British Gas on 0845 971 7731.
What’s the offer?
Independent company Affordable Energy has an offer running until the end of next year for loft insulation and cavity wall insulation from £189, reduced from standard charges of up to £500.
Who is it open to?
Pricing is subject to a no-obligation survey and quote, and is free to recipients of qualifying benefits.
How do I get in touch?
Call 0800 096 6356 or online.
What’s the offer?
For certain low-income householders, there is even more on offer – this time for free. In last month’s budget, the chancellor announced he was increasing the grant available to anyone eligible for the government’s Warm Front scheme. This is directed at vulnerable households and provides a package of insulation and heating improvements, such as central heating or an upgraded boiler, up to the value of £3,500 (£2,700 before the budget). The amount available to those off the gas network, (using heating oil) has increased from £4,000 to £6,000.
Who is it open to?
Anyone over 60 in receipt of income support, council tax benefit, housing benefit, Jobseeker’s Allowance (income-based) or pension credit. It is also available to householders with a child under 16, or pregnant women with maternity certificate MAT B1 in receipt of one, or more, of the same benefits. Some other households on these benefits, or who receive disability living allowance, and a small range of other allowances, may qualify.
How do I get in touch?
Go to www.warmfront.co.uk or call 0800 316 2805
Water saving
What’s the offer?
Newer toilets often have dual flushes, but if you have an older model you can reduce the amount of water you flush down the drain by making the cistern smaller. Do this with a brick, or with a “Hippo” – a bag that sits in the cistern.
Who is it open to?
Many water companies offer these for free. Thames Water will send a Hippo or a silica-filled Save-a-flush device to anyone in the UK – and up to 50 of each to its customers. Anglian Water has its own version, Save-a-Flush Freddie.
Thames Water also offers its customers discounted water butts. You can save £20 on a butt and stand that normally retails at £69. Anglian Water offers water butt kits on a buy-one, get-one-half-price deal.
How do I get in touch?
Your water company may do something similar, so give it a call before you buy one from a DIY store.
What’s the offer?
ShowerSmart, a small device that attaches to non-electric mixer showers or bath/shower mixer taps. It saves both water and the associated energy with heating hot water. Testing has shown it can limit the flow rate in a typical shower to 7.7 litres per minute, saving more than 21,000 litres of water per year for an average family of four. This leads to less energy being used to heat water and a potential corresponding cut in average domestic energy usage. Gas and metered water bills combined can be reduced by around £60 per year – depending on household energy and water supplier.
It aerates the water supply, so, crucially, there is no, or little, perceptible difference from the restricted flow for anyone using it.
Who is it open to?
The ShowerSmart has been approved through the Cert scheme and is free to every home in Britain for a limited period – after that, it can be bought for £10. It can be fitted mainly on showers connected to the mains pressure-fed hot water systems and pumped showers. It is not suitable for electric, rainwater or multiple jet showers.
How do I get in touch?
People can apply for the ShowerSmart through the Guardian, by calling either 0800 4080471 or going online
Composters
What’s on offer?
Don’t pay full price for a compost bin at the garden centre before checking whether your council offers subsidised bins. In some areas, bins that normally retail at £40 are being offered for as little as £12 – and some councils even throw in a free kitchen caddy for your food waste.
Who is it open to?
Everyone.
How do I get in touch?
Either contact your council, or visit recyclenow.com and type in your postcode.
Renewable technologies
What’s on offer?
The Low Carbon Buildings Programme offers grants of up to £2,500 until June next year (or until funds run out) for installation of renewable technologies. These include solar photovoltaics (solar panels), wind turbines, and ground source and air source heat pumps.
There is also the Scottish Community and Householder Renewables Initiative, which provides grants of up to £4,000 for installation of renewable technologies.
Who is it open to?
The Low Carbon Buildings Programme grants are open to householders across the UK. The Scottish Community and Householder Renewables Initiative is only available to those in Scotland.
How do I get in touch?
Low Carbon Buildings Programme: visit www.lowcarbonbuildings.org.uk or call 0800 915 0990.
Scottish Community and Householder Renewables Initiative: visit energysavingtrust.org.uk/schri or call 0800 512 012.
Contacts
Energy Saving Trust: go to energysavingtrust.org.uk or call 0800 512012 for details of all the above grants and more and to be put in touch with a local energy adviser in your area.
- Home improvements
- Energy bills
- Household bills
- Property
- Green building
- Energy efficiency
- Energy
guardian.co.uk ? Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
Bank holiday bargains
Friday, May 1st, 2009The long weekend means an extra day to spend with the family, but that need not mean extra spending
Herald the start of spring (and the promise of another four-day working week – oh, how we love them) with our guide to fun and free (or at least slightly cheap) things to do this long weekend.
Get gardening
The weather is meant to be pretty decent this weekend, so with an extra day off there is no excuse not to get your garden in order.
If you’re planning an al fresco summer, Wyevale Garden Centres has knocked hundreds of pounds off its garden furniture, and you should check out Argos – its simple but stylish teakwood garden set has been reduced by more than £300.
Garden centre chain Notcutts has knocked £7 off its strawberry planters (now selling for £10.99), while Homebase has 10% off everything today and Saturday, including its grow-your-own range of herbs, vegetable plants and fruit seeds. And while you’re busy planting, why not set aside a tiny pot to bring to work and join our office allotment project while you’re at it.
Celebrate in old-fashioned style
What’s May Day bank holiday without a spot of maypole dancing? Give it a whirl at a park near you for a family day out. Homewood Park in east Somerset is throwing a May Day garden party with afternoon tea and dancing, while there are Punch and Judy, Morris men and a hog roast at Cranbury Park in Winchester. Or why not take part in one of the oldest May Day celebrations in Padstow, Cornwall, where thousands are expected to congregate over the weekend.
May Morning celebrations will have started early this morning in Oxford, but the festivities are likely to carry on over the weekend. Meanwhile, Londoners can head to Alexandra Palace for the bank holiday funfair where you can ride the merry-go-round and eat ridiculous amounts of candyfloss (entry is free).
Or for something entirely different …
Join in a Sikh celebration instead. The festival of Vaisakhi was a few weeks ago, but is being celebrated quite spectacularly this Sunday in Trafalgar Square. Vaisakhi on the Square opens with Sikh prayers and promises traditional and contemporary Asian music and dance and plenty of homemade veggie food. You can pop down for free from midday.
Take a break
It’s too late to book a hotel for a last-minute escape, but that is not to say you can’t enjoy a day trip away. Check your Nectar points or Tesco Clubcard balance and perhaps treat yourself to free entry into theme parks, castles and other attractions across the country.
If it is a long drive to your destination make sure you stock up on snacks before you leave; the service station will charge more than double for bottled water, crisps and sandwiches than your local supermarket. If you are catching the train you should keep hold of your ticket – the Days Out Guide has two-for-one entry vouchers for National Rail travellers at loads of attractions including the London Dungeon and Madame Tussauds.
See in spring at the Circus
The Moscow State Circus tours the north of England this spring, leaving Bolton on Monday and heading on to Skipton and Halifax – prices are between £10 and £27. The Chinese State Circus is in Southampton until Monday, before moving to Brighton, and Zippos Circus is making its way through Surrey – save £3 off each ringside seat when you book online (prices are between £8 and £20 for adults and £6 and £14 for children).
Make a meal of it
If you’re in the capital, head down to the Slow Food Market at the Southbank Centre to enjoy amazing fresh farmers’ produce that is sustainably produced. Entry is free and you might be able to get your hands on enough free samples to constitute lunch.
Still peckish? You can enjoy a leisurely light lunch on the cheap – Pizza Express’s latest voucher is giving two-for-one on any main course from their new “light” Leggera range (the offer is valid over the bank holiday).
You can also buy-one-get-one free with the Gourmet Burger Kitchen May Day voucher or get two-for-one at Italian eaterie Ask.
- Saving money
- Consumer affairs
- Restaurants
- Restaurants
guardian.co.uk ? Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
Small changes to cut costs
Wednesday, April 29th, 2009From printing discount vouchers to picking up coins off the street, what are you doing to make your money go further?
What money-saving tricks have you discovered to get you through these cash-strapped days? Research revealing the penny-pinching measures that many consumers are resorting to certainly rings bells with me – now that eating out has become a luxury, more than half of diners have recently used a discount voucher to get more meal for their money, according to the findings of comparison and switching service uSwitch.com. Ding!
Printable vouchers offering two main meals for the price of one at many restaurant chains, currently downloadable from the likes of Vouchercodes.co.uk, MyVoucherCodes.co.uk and Restaurantvouchers.co.uk, are hugely popular. And I’m cheering the fact I can now swap my Tesco Clubcard loyalty vouchers at four times their in-store redemption value for tokens to spend in my kids’ favourite eaterie, Pizza Express.
I’m not so in tune with the 15% of UK diners who say they’ve cut their bills even further by not paying the service charge – that’s surely taking tight-wadding tactics a step too far, but I’m definitely getting a lot louder about complaining and demanding a refund if restaurant food is not up to scratch.
When I can get my act together, I’m with the 51% of consumers who are dusting off the Tupperware and taking packed lunches to work. And my admiration knows no bounds for the 20% who are now doing a John ‘Free’-da to save on hairdressing costs by cutting their own or their family’s hair. If only I had the required skills to snip and layer, or, failing that, the time to join the 10-week Hairdressing for the family course at my local adult education centre.
My husband is one of the 52% of consumers who now stash their small change, amounting to a total of £1bn, in adult piggy banks instead of letting it disappear down the back of the sofa. Both children have also become obsessed with stacking all spare one, two and five pence pieces of late; my son using his to buy secret (ha!) chocolate stocks and my daughter hoarding them to cash in every few months, assisted by a bank cashier with fixed grin and gritted teeth.
I can also identify with the 36% of UK adults who admit they are much more likely to stoop for small change they happen across in the street than they were a year ago. I superstitiously feel it’s tempting fate to reject the “gift” of even one free coin in this climate, and it seems I’m not alone in this – 49% of recession-hit Brits say they pick up as little as 1p if they find one.
But while I am with the majority of consumers in being increasingly loath to pay full price for goods, I can’t claim to be one of the three-quarters of UK adults who are shedding their British reserve and haggling for cheaper deals. Instead, I’m a fully paid-up member of the 12% who are too embarrassed to haggle – possibly even the 7% who would rather go without than pluck up the courage to drive a hard bargain with a retailer.
I wonder if, alongside the hairdressing courses, adult education centres might consider running How to haggle for wimps. What measures have you been taking to recession-proof your pockets during this slump?
- Consumer affairs
- Saving money
guardian.co.uk ? Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds